Orange float begins on Monday

ARROWS sponsor Orange is not worth as much as parent company France Telecom had hoped. The French telecommunications giant bought Orange a year ago for $51bn. It has since merged the British mobile phone company with all of its other mobile phone operations and is now offering around 20% of the company on the Paris stock exchange: with the sale of shares expected to raise around $5bn and a bond issue - effectively a loan for the company from investors which can later he exchanged for shares - which will raise $3bn.

It will mean that around 20% of the company will be sold and it does not a genius to work out that the sales value the firm at only $40bn. The offering is, in fact, worth about half of what France Telecom has wanted to get for Orange the drop being the result of the huge borrowing necessary in the last few months to secure third generation mobile phone licences.

This has affected investor confidence in the telecommunications sector. For the moment at least Orange continues to pour money into Formula 1 but it remains to be seen whether the program is deemed to be successful when it comes to renewing the deal at the end of 2002.

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