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The BBC's Keren Haynes
"Telecoms stocks have fallen out of favour"
 real 56k

Hans Snook, CEO Orange
"This is a very, very, strategic opportunity for Orange" "
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Monday, 22 January, 2001, 12:29 GMT
Orange's cut price share sale
Hans Snook talks on a mobile phone
Will Orange prosper without Hans Snook as chief?
Mobile phone firm Orange is to be valued at up to 64.8bn euros (41bn) when owner France Telecom floats it on the Paris and London stock markets next month.

The price tag put on the business is much lower than expected, even with the recent stock market volatility taken into account.

In an effort to ensure the sale of the 13% stake in the firm is a success, private investors are being offered cut-price shares.

France Telecom announced on Monday that Orange shares will cost between 11.5 and 13.5 euros when they debut on the stock market, valuing the whole of Orange at 55.2-64.8 billion euros.

New Orange
Orange, acquired from Vodafone
Itineris, France's largest mobile phone operator
France Telecom's other wirefree businesses

The firm being floated, which includes most of France Telecom's other mobile assets as well as the Orange business it bought for 25bn (39bn euros) last year, had previously been given an estimated value of 150bn euros (95bn).

Enticing the public

The strategy of offering discounts to individuals buying shares, while considered unusual practice today, mirrors the approach followed by the UK government in the 1980s to encourage the public to buy shares in privatised enterprises such as British Gas.

The plan, said to be getting the backing of a 20m advertising campaign, will allow Orange to cash in on its high public profile, and support its flotation at a time when analysts are concerned about the valuation of telecoms firms.

More than 600,000 Britons have pre-registered for Orange shares, with demand from French investors set to be even higher, Orange said.

City caution

But City institutions remain cautious about the valuation of the firm, hitting hopes of a mad dash for Orange shares.

City analysts have become concerned about the levels of debt telecoms firms have run up buying licences for future generation mobile phones.

And the prospectus for the firm, which is also to be unveiled on Monday, was also reported to be likely to highlight growing concerns over the health risks of using mobile phones, warning that some firms face legal actions over alleged harm caused by radiation from handsets.

Other worries have centred around the resignation of Hans Snook, Orange's founder, as the firm's chief executive.

While he will remain a consultant, one shareholder is quoted in the Mail on Sunday as saying that Orange without Mr Snook is like "the Starship Enterprise without Kirk, Spock or Bones".

Setting a trend

France Telecom could later increase the flotation to 15% of its holding in Orange, which was bought from Vodafone who owned it after buying German rival Mannesmann.

Orange will be listed on both London and Paris stock markets.

The flotation will be keenly watched by BT, Deutsche Telekom, and KPN Telecom, which are all believed to be considering the sale of their mobile phone interests.

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See also:

22 Jan 01 | Business
Orange's public sector risk
08 Jan 01 | Business
Orange float gets go-ahead
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05 Jan 01 | Business
Mobile groups to pay hefty price
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Nokia increases market share
08 Jan 01 | Business
Orange's bright future
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