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Fritz celebrates as shares in Telekom soar

Champagne corks popped, 100 young men in striped shirts surged forward, and the number everyone in Germany had been guessing at for the past six months flashed up on the screen of Frankfurt's stock exchange. At DM33.20 (pounds 13.25) a share, Europe's biggest flotation had got off to a good start.

"A wonderful day for Telekom, for the stock exchange and for German finance," oozed Hilmar Kopper, the head of Deutsche Bank, which led the consortium preparing the state-owned telephone monopoly's partial privatisation. Theo Waigel, the finance minister, was also grinning from ear to ear as he waded into the melee, lapping up this success.

Nearly 2 million Germans who were persuaded to have a flutter on Deutsche Telekom also had a lot to celebrate. By registering with the telephone monopoly's information forum, they had been able to buy up to 300 shares for DM28 each, and yesterday could collect a DM1,600 profit on their investment.

But the hoped-for bonanza did not quite materialise. Too many ordinary Germans had suspended their distrust of the stock exchange and signed up for Deutsche Telekom. Shares had been five times over-subscribed, and had to be rationed.

But the gains should be large enough to lay to rest the ghosts of the past, and persuade Germans that stocks were not just the playthings of irresponsible gamblers and speculators. Ever since the crash of 1929, which wiped out the middle class, shares have been about as respectable as betting slips.

If Fritz - Sid's German equivalent - comes away happy from his first foray into the Borse, the frozen Frankfurt market, where most shares are held by institutions and never traded, might be dragged into the second half of the century.

"This moment is a milestone in the development of the market," said Werner Seifert, chairman of Germany's stock exchanges.

"This is a decisive contribution to strengthening the equity culture among private investors in Germany.''

Some DM100m had been spent to put them into the mood - the largest advertising campaign for the largest share issue, which netted DM20bn for the company in exchange for 26 per cent of its holding.

Even the austere Frankfurt stock exchange had had a face-lift for the day, enveloped in Telekom's trademark pink bunting.

Fireworks launched the issue in New York, where the shares traded briskly on their first day, and there will be even more razzmatazz when Tokyo gets the chance today to add Telekom to its stock. Two-thirds of the shares were allocated to the German market, and the rest sold abroad.

On the first day of trading, about 30 million shares changed hands, suggesting that quite a few punters had no long-term ambitions to participate in the share-owning democracy. Many investment analysts are worried about the long-term outlook for Deutsche Telekom, and had advised shareholders to dump their stock at the first opportunity.

Amid all the euphoria, the Association of Small Investors even issued a warning that the share price would eventually collapse, because it takes no account of the company's massive debt of DM100bn, its ossified work force and its inability to compete in a market that will be thrown open in 1998. After the advertising blitz, the loudest message now ringing in investors' ears is: "Get out while the going is good."