Germany 'to cut' ISP float price

T-Online has over four million subscribers

German telecoms giant Deutsche Telekom is to sell shares in its internet subsidiary at a cheaper than expected price, according to a report in the Financial Times.

The decision is believed to have been prompted by the recent plunge in the share price of many internet and technology companies.

Deutsche Telekom's T-Online is Germany's leading internet service provider and, when floated, is expected to be Europe's biggest internet company.

Deutsche Telekom is expected to announce on Monday that the shares will cost between 30 and 40 euros, compared with the previously suggested range of 35 to 50.

Bankers' warning

Bankers have warned the telecoms operator that investors are unwilling to pay much more than 40 euros per share.

The flotation cut-back follows a series of disappointing share offerings in internet companies.

The most recent internet share flop was World Online, the Dutch-based internet service provider which floated on the Amsterdam stock market on 17 March for 43 euros per share.

World Online shares have plunged 44% since then, and the shares are now worth just 24 euros. The value of the firm has plunged from $12bn to $5bn in a week.

In the UK, shares in the latest internet float, Lastminute.com, dropped below their offer price, leaving thousands of small investors out of pocket.

Also, the value of the UK's largest internet company, Freeserve, has been cut in half in the past month, from $15bn to $8bn, after rivals threatened to undercut its charging system.

In Germany, Lycos Europe fell below its offer price after floating on the Neuer Markt.