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Telus Corp. T-T said growth in cellphone subscribers plummeted in the first quarter, sending its own shares – as well as those of its competitors – tumbling on Thursday.

Investors sold off on fears that the recession is finally hitting the growth engine of the telecom industry, wireless services. Until today, telecom stocks have widely been viewed as a safe haven for investors, thanks to the companies' strong cash flows and healthy dividends.

On Thursday, Telus's stock price declined 10 per cent in afternoon trading, Rogers Communications Inc.'s RCI.B-T fell 6 per cent and shares of Bell Canada's parent BCE Inc. BCE-T dipped 1 per cent.

Telus, the nation's No. 2 phone company, said it netted 48,000 new cellphone customers in the quarter, 46 per cent fewer than the 88,000 added a year earlier.

That figure represents a growth rate of just 0.3 per cent for the three months ended March 31, compared with 4.8-per-cent growth in the previous quarter.

The weakness “is directly related to the economy,” Robert McFarlane, Telus's executive vice-president and chief financial officer, said in an interview. “We are seeing a flow-through effect.”

The company said it was unable to attract as many new customers as it had expected and also saw more account closures, especially amongst businesses.

“The worsening trend is believed to be primarily due to the weakening Canadian economy, including: lower consumer confidence and a resulting decrease in retail sales, including customer deferral of buying decisions; lower and more cautious business spending; and lower employment levels,” Telus said in a press release.

In addition, Telus said the average revenue per user (ARPU) declined 5.6 per cent from a year earlier, to $58.39 from $61.88.

The company blamed the slide on greater use of low-rate plans, decreased roaming revenue as people travel less, and less use of its “Mike” push-to-talk service that is popular among companies in manufacturing, construction and energy.

“The prerelease comes as a big negative surprise and is likely to impact all wireless stocks,” Jonathan Allen, an analyst with RBC Dominion Securities Inc., wrote in a report. He had expected Telus to add 83,000 net new wireless accounts and ARPU to slip just 2 per cent.

“Net adds are likely to be soft at both Bell and Rogers this quarter,” Mr. Allen added, but he said Telus may be the worst hit.

Telus does not normally release preliminary subscriber numbers. The Vancouver-based company is scheduled to release complete first-quarter results on May 7.