The Private Investor: 'The future's not Orange; to be frank, it looks bleak for us'

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The Independent Online

I once had cause to ring the mobile phone of the leader of the Ulster Unionist Party, David Trimble, MP and prominent member of the loyal Orange order. I was amused to find that the voicemail message was, "The Orange phone you have rung is not available; please try later".

I don't know whether Mr Trimble still clings to the idea that the future's bright, the future's Orange, but I'm not sure I do. It wasn't so long ago that I, along with a many others, bought shares in the great tangerine dream of unstoppable growth in mobile telephony, when Orange shares were sold by its parent France Telecom in the 2001 float.

Now Orange shareholders are being asked whether they want to swap their Orange shares for France Telecom ones or sell up. Technically, of course, we're not shareholders, merely holders of CDIs, or Crest Depository Interests. Still, I have a few things to say about this.

First, I've been screwed, if you'll pardon the expression. The price we private investors are being offered is at a premium to the Orange share price before the deal was announced, but it is not much more than the shares were offered at two years ago, about 950p each. So we're quits, and ought to feel darn lucky that at least we are getting our money back, unlike investors in so many other branches of the "new economy" (if you can remember that phenomenon).

So what? Well, you can argue that nothing is worth anything other than what the market says it's worth. If someone wants to come along and offer more for Orange shares they're free to do so. Yet there is something wrong here, in the treatment of a multitude of small, minority shareholders by a single powerful ruthless majority shareholder; the two sides have very different market power and there is a case for saying France Telecom is abusing its position.

The second objection concerns the circular from Orange's share registrar, Computershare, and France Telecom. It is less than clear about one's options. It seems very much geared towards acceptance of the French paper, with not much on what you ought to do if you want to sell the shares. It's been remarked on in the press that the phoneline supposed to help shareholders sell was permanently engaged. When I rang the number (0870 703 0045 if you've mislaid it) it was answered promptly and the man on the other end of the line was clear about what shareholders had to do if they wanted to sell. They have to ask for a form for the special postal dealing service. The commission is a reasonable £10 per deal.

The point, though, is that such a form should have been included in the original mailing. It is outrageous that it wasn't because it implies Orange shareholders have no option other than to accept the bullying of France Telecom and accept their shares. It seems sharp practice, and mostly futile, because folk who went to the bother of buying Orange shares would have been, I would have thought, a slightly more experienced type of investor who could spot these sorts of games a mile off.

So should we take the money or accept shares in an appallingly indebted France Telecom? It doesn't sound like a hard choice and I think I have decided to sell up. I'm not quite sure, because I haven't yet found whether France Telecom is quite the basket case I think it is. It certainly seems to rely very heavily on the French government, its majority shareholder for its financial security, such as it is.

So Orange shareholders are, effectively, being asked to swap a position where they are a minority and abused shareholder in one telecoms company for another minority holding, no doubt shortly to be abused, in another telecoms company. It doesn't sound like an attractive offer.

And talking about minority shareholdings, I ought to also make just one point about BSkyB, where anyone whose surname isn't Murdoch is, by definition, a junior partner. There's been a lot of fuss, quite justified, about Rupert Murdoch, the chairman, naming his son James, aged 31, as chief executive, as seems likely. It is simply that we small shareholders knew it was a Murdoch family circus when we bought the shares. We are not shocked by it and, as it happens, Rupert has behaved better than France Telecom. There's a thought.

s.ogrady@independent.co.uk

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