The online real estate and homewares site has also cut about 120 staff as the Beijing Olympics slowed its operations.

The decision to pull the Soufun initial public offering, planned for mid-2008, comes only weeks after Mr Trujillo failed to meet a deadline of June 30 to have 5 million customers moved across to a new $400 million billing platform.

In the past few months, Telstra has been finalising the creation of a wholly owned Chinese subsidiary Sensis China, headed by Australian Beijing-based executive Robert Rath.

The group includes Telstra's 51 per cent of Soufun, which it bought in 2006 for $251 million and shares in two automotive and IT websites it bought earlier this year.

Staff numbers at Soufun had increased by about 1000 in the past 12 months, Sensis spokeswoman Karina Kessler told The Australian.

She said the group had brought in hundreds of contractors to cope with the company's fast growth and about 100 of those had not been signed on as permanent employees.

In addition, about 20 employees have been made redundant who were working on "peripheral" projects.

Telstra has decided to cancel plans for the float due to poor conditions on global and Chinese markets, Mrs Kessler said.

She said that there were no plans to revive the float at this stage but said "Telstra has no intention of selling down at all.

"The Olympics have had an impact on the local market as construction has halted and the number of cars has been reduced, but we believe it's very temporary," she said. "But, generally, businesses haven't seen a decline."

Telstra last night said its billing migration has not been completed but it would give a detailed update at its full-year financial results next month.

Storm clouds continued to gather over the global telecoms sector this week when shares in UK-based Vodafone fell by 11 per cent after it issued a warning that deteriorating economic conditions would hurt its business.

"In 2008 we expect handset sales to contribute 10 per cent of total mobile growth, any slow down through FY09 would have an impact on industry revenue growth," Citi Australia analyst Tim Smeallie told The Australian. "We're witnessing a shift in spending behaviour in Europe, with a move to SIM-only plans."

These plans meant the consumer did not buy a new phone or receive a subsidy from the carrier and, in return, enjoyed lower calling tariffs than the subsidised plans, meaning the telcos sold fewer mobile phones, which hurt sales revenue.

"In essence the consumer is trading down," he said. "Contrast this with the Australian market where we estimate the handset replacement cycle has fallen to less than 12 months.

"Most recently, the economic downturn in 2001 did not impact the telco operators as the growth in mobile phones counteracted any weakness in fixed line revenues. In 2001 only 62 per cent of the population had a mobile phone; this has now grown to over 100 per cent. In the domestic market, wireless broadband is filling the gap but is an area we're closely monitoring for any signs of weakness during reporting season," he said.

Source:australianit