Telekom puts 690m shares on market
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Your support makes all the difference.Overwhelmed by a torrent of orders, the German telephone monopoly Deutsche Telekom announced yesterday that it was putting another 115 million shares on the market next week, raising the total to 690 million and boosting the amount of money raised by 20 per cent to as much as DM20.7bn (pounds 8.4bn).
The company had planned to release 500 million shares, and reserved the option of a further 75 million "Greenshoe" shares for Europe's biggest privatisation. Despite the fact that the asking price will be at the top of its original range of DM 20-30, the shares have been heavily oversubscribed, by as much as six-fold, according to some reports. Subscriptions for individuals closed last Wednesday; institutions have until Thursday to register, and trading on the world's main financial markets begins on Monday.
"The initial placement of Deutsche Telekom will become a milestone for German stock markets," said Ron Sommer, the company's chairman. "I am convinced that the offering will be a huge success."
Not since the partial privatisation of Volkswagen three decades ago has a flotation attracted so much interest. Some 3 million Germans have registered, doubling the German share-holding population.
The success has been largely due to a slick advertising campaign that set out to dispel Germans' innate fears of the vagaries of the Borse. There were also plenty of sweeteners in the offer: a 60-pfennig dividend per share at the end of this year, a pledge to double that next year, and guaranteed loyalty shares for every 10 that Germans hold on to for three years. There is also a discount of 50 pfennigs for anybody buying up to 300 shares in this round.
Whether ordinary Germans will keep their shares beyond 1998 is doubtful. That date marks the start of the Big Bang in Europe's telecommunications market, when even Deutsche Telekom, one of the world's least efficient and most expensive companies, will have to start competing with foreign rivals on a level playing field.
Shares dipped sharply on the grey market after yesterday's announcement, but they are still trading 10 per cent above the price investors have to pay.
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