Sale of Telecom shares set to rise

Sales of Telecom Eireann shares will grow over the coming days, analysts predicted yesterday, as private clients received their share certificates and decided on a course of action.

Mr Paul McGowan, joint managing director, of stockbroker, Dolmen Butler Briscoe, said that calls did not begin yesterday - the first day that private clients had their certificates - until 11 a.m., but there had been slow but steady sales throughout the day. The share price dipped four cents in the afternoon in expectation of an increase in share sales by the public to close at €4.66 (£3.67).

Mr McGowan added that many people would not have seen their certificates until yesterday evening and healthy trading was expected today. In London, 8.7 million shares traded yesterday, partly reflecting the Dublin trading. In New York, about half a million shares traded, and the ADR price, representing four shares, was down 0.3 per cent to $19.4375 (€19.02). Other analysts said that the conditional selling earlier in the week - much of which came from investors who had borrowed money to buy shares and would already have relationships with stockbrokers - had taken the wind out of the expected rush in sales.

Demand among institutions, however, remains good as they continue to build up their portfolios and they are expected "to soak up any liquidity in the market". But there is a sentiment emerging that many will not buy for the moment above €4.70 (£3.70), and instead would move towards European companies that Telecom Eireann is matched against.

The stock was well supported within a narrow price range of six cents yesterday. "Tomorrow [Friday] and Monday are key days," one dealer said.

One analyst pointed out that there was a paradox at work, with private clients facing a decision to sell quickly, but knowing that historically equities were a good long-term investment, outperforming other asset classes in the medium term.

Analysts are generally optimistic about how the stock will perform in the longer term, saying that it is linked with the economy's success and pointing to the record of other state telecommunications companies in Europe which have made the transition to a competitive market.

Many investors face a comfortable choice of making a gain of about 20 per cent for a two-week investment, or holding on and gaining an extra 4 per cent allocation of shares after a year, along with a dividend.