Shares in Ionica, which was floated on the stock market in July at 390p, collapsed by more than pounds 1 yesterday to close at 156.5p, wiping pounds 170m from its market value.
The plunge followed a warning from the company that subscriber growth had come to a halt because of computer software problems in its "wireless" telephone network.
Since Ionica's pounds 640m flotation four months ago, the value of the business has shrunk by 60 per cent and the shares are now barely trading above what analysts estimate to be its net asset value.
The cause of yesterday's dramatic decline was a warning from the company that delays in the installation of computer software into its network of base stations meant that its ability to sign up new customers would be severely constrained until next May. But analysts were even more unnerved by the high churn rate of customers quitting the network, which operates by using fixed radio technology rather than underground cables and overhead wires.
The City also took fright at the slowness with which Ionica is managing to install its nation-wide network of 3,500 base stations that will eventually cover 18 million homes.
In the past three months customer numbers have grown by only 7,000 to just over 31,000 while coverage has increased to 1.65 million homes. Operating losses rose to pounds 34m.
Ionica yesterday appointed a new chief operating officer, Mike Biden, and two other senior executives. Mr Biden was formerly in charge of sales and marketing for BT's residential telephone business. But the City remained unimpressed. "This is a woeful tale of management inadequacy and incompetence," one analyst said.
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