Deutsche Telekom shares fell on the Frankfurt market following the telecom group's global share offering which was 3 1/2 times over-subscribed by retail investors.

Priced at the weekend at €66.50 (£52.37), a small discount to Friday's €67 close, the shares fell 3.35 per cent in early trading and closed at €65.81 (£51.83).

But new retail investors have not lost out so far because the value of their shares are still ahead of the offer price. And the large number of the new retail investors who qualified for the €3 early application discount and got their shares at €63.50 (£50), are looking at a paper profit of €2.31 (£1.82) per share.

Some 5,500 Irish retail investors applied for more than €100 million (£78 million) worth of shares in the latest DT offering of 230 million shares. On average Irish retail investors sought €20,000 (£15,700) worth of shares each.

Each retail investor is to get a minimum allocation of 25 shares. This will cost £1,250 for investors who applied for the shares before June 9th and qualified for the €3 discount on the €66.50 offer price. Investors who applied after June 9th will pay £1,309 for their 25 share allocation.

But the allocations have been scaled back because of the over-subscription. Retail investors who applied for more than the minimum amount will get the 25 shares plus 20 per cent of their application over this amount. For example an investor who sought 200 shares will get 25 shares plus 35 shares, a total of 60 shares at a cost of €3,810 (£3,001).

NCB, the Irish broker to the offer, said a number of the 2,500 Irish retail investors who bought shares in DT's 1999 share offer applied for more shares in the latest offer.

Some analysts suggested that the share price fall in heavy trading volume yesterday was overdone and did not reflect "a fundamental trend". They said the price fall reflected the big increase in the volume of shares on the market and the increase in the number of retail investors holding DT shares.

But some analysts have expressed reservations about the growth potential for the shares against a background of increasing price competition in its fixed-network business, possible weaknesses in its international expansion strategy and the spiralling costs of buying the new generation mobile phone licences.

Since early March Deutsche Telekom shares have fallen by about 50 per cent as investors became nervous about the high valuations on telecoms and technology stocks and at the spiralling costs of new third generation mobile licences. In the first quarter DT profits fell by 6.5 per cent.

The latest share offering - DT's third - was 3.5-times oversubscribed by retail investors at whom it was targeted. With 200 million shares on offer initially, investors applied for 700 million shares. Retail investors got 70 per cent of the 200 million shares on offer in the first share offering aimed at retail investors across 18 different countries. The offer involved a €25 million (£19.7 million) global marketing campaign. Of the 2.8 million people who subscribed for shares, some 900,000 were not German.

An additional 30 million shares can still be issued in a so-called "greenshoe" or over-allotment option to meet excess demand.

If the greenshoe option is also exercised, the issue will raise some €15 billion (£11.8 billion) for the German government whose stake in DT will fall to 56.5 percent. The shares offered came from a 21.6-per cent stake in Deutsche Telekom held in trust for the German government by the state-owned reconstruction bank, KfW.