Investors continued to pile on the agony today for French mobile telephone group Orange, slicing 6.3% off its share value and another 8.5% off its parent, France Telecom.
Just one day after its miserable debut yesterday, Orange shares slumped 0.59 euros, or 6.3%, to finish at 8.81 euros on the Paris stock exchange. Orange had listed at 9.50 euros.
Its parent France Telecom fared even worse, dropping 6.7 euros, or 8.5%, to close at 72 euros. It has fallen a total 12 euros, or 14.3%, in just two days.
France Telecom had already been forced to steeply discount the issue price before the shares started trading in the face of reluctance from wary institutions. Orange shares were offered to the public at 9.50 euros each. Institutional investors had paid 10 euros a share.
The issue price set for the Orange shares had valued the whole company at 46.25 to 48.7 billion euros. That compared to the 150 billion euro valuation that France Telecom set when it bought Orange from British operator Vodafone for £31 billion last year.
Since the Orange purchase last May, financial realism has injected fear into the markets, with earnings forecasts downgraded amid rising debt levels as well as massive investment needed for new mobile phone networks.
France Telecom needed to squeeze as much money as possible out of the Orange flotation to reduce its debt mountain of 60 billion euros, built up from buying Orange and from bidding for costly next-generation mobile licences.
