T-Online sale pleases investors

Deutsche Telekom yesterday remained cautious about the flotation of its mobile phone business, T-Mobile, despite the successful sale of a stake in its internet operation, T-Online.

The heavily indebted grouped raised €610m (£390m) by selling 100m shares in T-Online. The selling price of €6.10 a share was at the top end of the expected range and the issue was three times' oversubscribed, according to the company. "It was very successful. By noon [the offer] was sold out," said a spokesman.

The company could raise another €120m if it exercises a "green shoe" option to sell another 20m T-Online shares.

Despite the strength of demand for the offering - one of the biggest placements in Germany this year - Deutsche Telekom remained cautious about the prospects of making a serious reduction in its €64bn debt by bringing T-Mobile to the stock market.

"T-Mobile is another size compared to the small stake in T-Online. It is still a question of watching the market; no decision has been taken about T-Mobile," said a spokesman.

News of the sale of the T-Online stake - the equivalent of just under 10% of the company's shares - helped to push Deutsche Telekom shares up by more than 5% to €12.85. T-Online shares rose just over 3% to €6.34.

If the option is exercised it would take the T-Online free float to more than 20%, enough to see it admitted to the German blue chip DAX index.

Although the proceeds from the share sale were relatively modest, analysts said the market was encouraged by the group's determination to stick to its declared aim of selling assets to cut debt.

"Any sign at all that Deutsche can get away with asset disposals, even in dribs and drabs like this, is going to be very positive for the firm," said one industry watcher.

In particular the company wants to raise €6bn from the sale of its cable television assets and real estate.