Telekom will try to encourage reluctant visitors

GERMAN telecommunications giant Deutsche Telekom AG yesterday outlined its programme of cheaper shares for private investors, …

GERMAN telecommunications giant Deutsche Telekom AG yesterday outlined its programme of cheaper shares for private investors, aimed at luring sceptical Germans into buying shares when it is privatised in November.

The state owned telecommunications group has come up with a variety of carrots to dangle before the traditionally equity averse German investor.

Telekom said there would be price reductions for private investors, as well as loyalty shares for investors who hold their shares for three years, which would be issued on a ratio of one to 10.

The Telekom sell off will be Germany's biggest ever privatisation and will be one of the largest public offerings ever in Europe.

READ MORE

When it is fully sold off, Deutsche Telekom is expected to account for 4 per cent of the total value of the DAX index of German shares and Telekom expects to gain around 15 billion deutschmarks (£6.5 billion) from the listing.

However, the goodwill of private investors is considered essential if the planned issue is to be a success as the sell off will require increased levels of liquidity.

"Small shareholder consciousness levels are very low in Germany, but Deutsche Telekom seems to be making all the right moves to raise them," said Ms Nicole Cousins, telecommunications analyst with Bank Julius Baer in Frankfurt.