Orange float... sinks
Shares in newly-floated mobile company Orange plunged lower in London Wednesday, bringing further disappointment to those who chose to invest in the company.
Shares hit a low of 556p in morning trading, down from an opening price of 603.5p, although they later rose to 560p -- 12.5 percent less than most investors paid. Other telecom stocks were also down, including companies such as BT who are planning to float their own mobile phone operations.
France Telecom, Orange's owners, floated the company on the London and Paris stock exchanges Tuesday, having sold shares to investors at 10 euros (639.5p) per share. However, the share price immediately fell below this value, despite the offering having been 2.6 times oversubscribed.
Shares in BT were down 4.7 percent on the FTSE, as the market cast doubts on its plans to raise money by offering share in its Wireless division, which includes BTCellnet. BT is hoping to reduce its debt, estimated at around £30bn, by floating off a number of its divisions.
"The market is a bit of a mess and Orange is unsettling the telecoms [sector]," said one senior dealer. "At some point we will spike higher again, but at the moment it's all a bit messy".
Orange's disappointing flotation is thought to be due to concerns over future technologies such as third-generation (3G) networks. Mobile operators have committed billions of pounds winning licences to operate 3G networks. However, many experts believe that too high a price has been paid, and that network operators face years of losses.
Reuters contributed to this report.
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