Thus, the alternative telco, has accused rivals of adopting "unsustainable pricing", contributing to an uncertain future for the telecoms industry.

The result of such pricing pressures means that Thus is unlikely to hit its expected revenue growth for the year.

This assessment comes as Thus reported its latest figures for the three months to the end of June. Q1 pre-tax loss fell 39 per cent to £13.9m, compared to the same time last year, while turnover was up 11 per cent to £71m over the same period.

William Allan, Thus chief exec, said: "The well publicised corporate failures and financial restructurings within our sector continue to create uncertainty in our target markets. It is clear that some of our competitors are reacting to these events with unsustainable pricing.

"We expect pricing pressure to remain a factor throughout the year, resulting in slightly lower than expected revenue growth."

Elsewhere, turnover at its Internet business (principally the Demon brand) was up 22 per cent on last year at £22.5m.

In part this was boosted by an increase in the number of ADSL subscribers, from 1,806 last year to 8,142 at the end of June 2002.

But as the number of broadband customers increased, dial-up revenues fell by around £1m to £4.5 million as numbers of dial-up customers fell.

By mid morning shares in Thus were down 0.86p (7.4 per cent) at 10.8p. ®