Nortel Networks (NYSE: NT - News) on Friday warned that one of its big US wireless network customers had "shut the door" on capital spending, sending shares in the Canadian telecommunications equipment group plunging.

The shares fell $1.17, or 15 per cent, to $6.47 in early trading on the New York Stock Exchange, the biggest drop since July 2004. The shares had lost 49 per cent this year before on Friday.

"The macro environment in the US and the US carrier spend continues to be challenging," Mike Zafirovski, Nortel's chief executive, told analysts during a conference call to discuss the company's second-quarter loss, which tripled on restructuring charges and currency exchange losses.

Mr Zafirovski said this hurt orders and revenues related to Code Division Multiple Access, the technology used by Nortel's two largest US customers, Verizon Wireless and Sprint Nextel.

Pavi Binning, Nortel's chief financial officer, declined to identify the customer but analysts believe Nortel executives were referring to Sprint Nextel, the struggling third-largest US wireless network operator.

Sprint Nextel, which has been losing subscribers as it grapples with integration, said in May that it cut first-quarter wireless capital investments by 38 per cent.

Nortel, which has been struggling with its own problems following an accounting scandal several years ago, reported a second-quarter loss of $113m, or 23 cents a share, up from $37m, or 7 cents a share, a year earlier.

The latest results included $67m in restructuring charges reflecting Mr Zafirovski's cost-cutting initiatives and a loss of $21m, primarily from mark-to-market losses on interest rate swaps. Excluding expenses related to job cuts, the loss was 11 cents a share.

Revenues increased by a modest 2.3 per cent to $2.62bn, ahead of expectations. More than 40 per cent of Nortel's revenues are derived from wireless network operators that are moving away from CDMA technology found mostly in the US and Canada in favour of GSM-based technology employed more broadly.

Sales in Nortel's carrier-networks unit fell 2 per cent to $1.04bn while orders for phone equipment fell to $2.15bn from $2.68bn a year earlier as CDMA demand in North America slipped. Orders for business communications equipment from Nortel's partnership with LG Electronics also dropped.