NCB provides assurance on Deutsche Telekom offering

NCB Stockbrokers has reassured potential investors in the Deutsche Telekom (DT) share offering that they will be accepting applications for the minimum allocation of 50 shares.

NCB gave this assurance to The Irish Times after complaints from small investors that NCB had discouraged them from investing in the DT share offering, details of which were announced yesterday.

"We will be accepting applications for the minimum 50 shares," a spokesman for NCB said. NCB and its parent, Ulster Bank, are responsible for the Irish end of the euro zone-wide share offering. NCB will be charging a commission of 1.65 per cent to investors in the share issue.

Deutsche Telekom yesterday outlined the incentives to convince retail investors to buy the new shares it will sell later this month in the first pan-European stock offering. Private investors in all 11 euro countries will be able to buy the new Telekom shares at a discount of €2 (£1.58), about five per cent off the current share price, if they sign up to buy before June 15th.

In addition to the €2 discount on the offer price, bonus shares will be awarded to retail investors who hold shares purchased in the offer for the 14 months ending August 2000. One bonus share will be issued for every ten shares held.

Last week, the former monopoly ensured its new shares would draw strong demand from institutional investors by using a technical manoeuvre to become the heaviest stock in the DAX index. Lifting its DAX weighting to 13 per cent from the current 5.72 per cent forces investment funds to buy more of its shares. The change, which takes effect later this month, prompted a 10 per cent jump in the share price on May 28th.

"I think there will be good demand, but because of the index change alone," said Mr Frank Heise at Union Investmentgesellschaft in Frankfurt. "I'm not really convinced on Telekom's strategy and what they plan to do with this money. That is a bit foggy."

The price of the new shares will be set just below the closing Xetra price from June 24th. The book-building prices, when investment banks bid to buy blocks of shares, runs from June 7th to June 25th. The new shares begin trading on June 28th.

Telekom will offer 250 million shares plus an option on a further 30 million shares, with another 5.9 million shares reserved for employees. Current shareholders would have the right to one share for every 9.8 shares held. The transaction would increase Telekom's capital by about 10 per cent and bring in about 11 billion marks (€5.6 billion) to finance an acquisition spree.

Last week, chief executive Mr Ron Sommer said he was hunting for mobile phone carriers in Europe, Internet companies and computer and information service providers. Telekom has reportedly bid for One2One, the UK mobile group that owners Cable & Wireless plc and MediaOne Group Inc have put up for sale. It could also try to buy a larger stake in Sprint Corp, the US carrier, of which it already owns 10 per cent.