Orange flotation goes pear-shaped

Shares in mobile phone company Orange opened below their E10 (£6.40) offer price as the company made its stock market debut in Paris and London.

The mobile sector is badly out of favour with the markets at present and the E10 (£6.40) price for institutions was near the bottom of the offer range, valuing the company at around E48bn (£30.50bn). France Telecom bought Orange for E40bn (£25bn) in May last year. At the time of going to press, Orange shares were still worth more than the E9.5 (£6) price for institutional investors. Alex Scott, investment analyst at Barclays Stockbrokers, said: "This was always going to be a large risk/reward scenario. It is not surprising to see investors looking at the risk side of that equation. "Orange has strong market growth in the UK and a strong market position in France but is only in profit in two out of its 15 countries, and it is targeting 50 countries. This flotation is a bet on the success of those start-up businesses." He added: "We're not surprised at how this went. This share has to be a long term bet." In a conference call, a spokesman for Orange told reporters "Orange will continue to deliver as a business. As people see our businesses perform ahead of expectations people will start to buy into the vision that we have always presented. I can't say when that will be." At 15:25(GMT) the shares were trading for 622p in London, having fallen as low as 620p. Shares in Orange's parent company France Telecom fell to a 16-month low.