This is an issue that should still be on the agenda for lenders

Alastair Clarke, Bank of England Executive Director

"Several of the larger firms need substantial funds to roll out 3G networks and products, and it may become more difficult to syndicate the required borrowing widely," the review states.

According to BoE Executive Director Alastair Clark, European telecoms firms need another $150m-$200m to finish developing their new generation networks.

"Banks and capital markets may not be overenthusiastic about building up their exposure further," he told the BBC News 24's Business Today programme.

"This is an issue that should still be on the agenda for lenders," he added.

Second warning

This is the second time that the BoE has sounded the alarm over telecoms firms' heavy borrowing.

Last year, the bank warned lenders and investors that financial returns on 3G telecommunication systems were "some way in the future."

European telecoms firms' heavy debts stem largely from the high cost of acquiring the licenses needed to operate new generation mobile telephones.

These licenses were sold at government-run auctions in most European countries, with competing companies rapidly bidding up the final sale price.

Tumbling share prices

UK telecoms giant BT's debts soared to �30bn earlier this year, fuelled also by a round of overseas acquisitions during the late 1990s.

BT's German counterpart Deutsche Telekom had racked up debts of 65.5bn euros (�40bn) in August this year.

Tumbling share prices have since then forced both companies to trim their debts by selling off subsidiaries.