France Telecom today wiped up to euro 10 billion off the guide price of mobile operator Orange which is to be floated next week.
Dealing a further blow to the capital-hungry telecoms sector, the company said it had cut its guide price range for Orange to euro 9.50-11 per share valuing Orange at between euro 45.6 billion and euro 52.8 billion.
That is well below the euro 55.2 to 64.8 billion range announced previously and a drastic cut from initial hopes for a value of as much as euro 150 billion.
The cut augurs ill for other European telecoms groups like British Telecommunications, Deutsche Telekom and The Netherlands' KPN, which are also hoping to float their mobile phone assets to cut debts.
It comes amid institutional investors' worries about a slowdown in the once-attractive but increasingly indebted telecoms sector and a dip below Orange's indicated range in so-called grey market trading this week.
France Telecom shares had shed 4.72 per cent to euro 84.80 in busy trading this morning.
Banking sources had expected Orange to turn to private retail investors to mop up demand if institutions showed any reluctance. The final price will be announced on Tuesday February 13th and trading in London and Paris will begin the same day.
However, at euro 9.50-11 some institutional investors said they would be buyers and may even take a bigger slice than planned under the previous price range.
Planning to buy Orange stock, many were already off-loading some France Telecom shares so as not to increase their exposure to the group.
Reuters