Deutsche Telekom takes out full-page ads to explain share slump
It's that silly stock exchange, pay them no attention
Deutsche Telekom has taken out full-page ads in German papers today to explain to shareholders how come its shares slumped over 20 per cent last week.
The ads take the form of a letter to shareholders from DT's chairman Ron Sommer. Unsurprisingly, Herr Sommer feels that it's all been a big misunderstanding and that the current share price doesn't take account of DT's "positive development" and its future. He also assured shareholders that the cause of the problem was being swiftly and extensively investigated.
The trouble all stemmed from a major spat with Deutsche Bank last week, which continued through the weekend. The two fell out over a share placement. It's all a bit complicated but basically a huge tranche of shares were put out to the market by Deutsche Bank on behalf of some unnamed individual. The thing is, at the start of September, a large number of people will be freed from a contract and allowed to sell their shares in DT, so the prospect of this unexpected sale caused everyone to panic and the share price slumped.
Deutsche Bank should have known better - or at least warned Deutsche Telekom - so now the two are in a foul mood with each other. "It will certainly affect our cooperation with Deutsche Bank in the future," said Sommer.
Sommer obviously feels hard done by, so he's put out the ads in a bid to calm investors. Investors are unlikely to sell shares at the moment because they reckon that the price is below what they are really worth, as folk are worried about the September date. However, that won't make them feel any less edgy.
Unfortunately (and perversely) for Herr Sommer, DT's share price has fallen another 2 per cent today. Who knows what this means? It'll only be resolved on 1 September. ®