Telecoms slip a notch at leadership shakeout

The telecommunications sector was weak following further disruption at Finland's Sonera and a negative start on the Nasdaq.

Sonera was Europe's worst-performing large cap telecom company, falling 7 per cent to #9.98, as the market digested the departure of Kaj-Erik Relander, the chief executive. Last Friday Harri Hollmen, the executive vice-president also resigned. Commerzbank cut its rating on Sonera from "buy" to "hold".

Sonera, which is 53 per cent owned by the Finnish government, is in merger talks with Sweden's Telia, which fell 1.9 per cent yesterday to SKr52.50.

Another telecom in difficulties, the heavily-indebted KPN, lost 3.8 per cent to #7.08. KPNQwest, jointly owned by KPN and Qwest Communications of the US, did even worse, falling 9.6 per cent to #11.15 as it announced a new chief financial officer in Jeffrey Von Deylen.

Deutsche Telekom bucked the trend, rising 1 per cent to #23.86 on news that it is looking to expand in Asia. Tracking funds also bought stock ahead of its weighting boost in the Dax index, due next Monday.

Technology companies were also down. Philips fell 5.4 per cent to #32.65 and Nokia 3.8 per cent to #34.23. The IT services group Cap Gemini Ernst & Young fell 4.2 per cent to #132.70 ahead of an analyst meeting today.

Siemens fell 2.4 per cent to #83.40 following a report in Financial Times Deutschland that Siemens does not expect an improvement in profit margins on mobile handset sales until its business year starting at the end of October.