Last chance to apply for BT3: Applications likely to be scaled down

THIS weekend is the last chance to decide whether to apply for shares in BT3, writes Vivien Goldsmith.

The consensus among stockbrokers is that this is an issue worth pursuing for the income in the early months rather than short-term capital gains.

Simon Joyce of Capel-Cure Myers says the strategy learned from previous privatisations is not to be too greedy.

He believes that those applying for up to 500 shares after registering with the Share Information office will get 200 shares, while those going through share shops applying for up to 800 shares will get 400 shares.

Investors applying via the tender for the minimum 1,000 shares, he believes, will get 800.

Waters Lunniss, the stockbroker, is advising its clients to apply for 500 to 1,000 shares. Richard Larner, managing director, said clients registered with the share shop would probably get all they asked for up to 500 shares, 700 or the full 800 on applications for 800, and 800 to 900 on applications for 1,000.

'People are keen to buy BT for an investment. The income is a great attraction,' he said.

Stockbroker James Capel expects severe scaling back, with about 800 billion shares and 5 million investors registering their interest. It is advising clients not to apply for more than 500 shares, and is warning them to expect to be scaled back.

Fred Carr at WI Carr is a dissident voice. 'We are not wildly enthusiastic about the issue,' he said. 'I would rather be buying Cable and Wireless.'

Henderson Crosthwaite says investors should apply for an absolute maximum of 1,000 shares via the public offer. It is advising anyone who wants a reasonably large holding to apply via the tender offer. Eric Hathorne, research director, said the regulator and competition would damp down the opportunities for capital gains.

Investors will get a first dividend payment in September and another in January before the second call in March. Investors get an annualised gross return of 40 per cent on holding to the first dividend and 19 per cent by holding for the second - or 37 per cent and 18 per cent for tender applications which will pay an extra 10p per share.

The deadline for those who registered via the Share Information Office and those who did not get around to registering at all is Wednesday morning at 10am.

Forms either have to arrive at the Bristol address in the post by that time, or be handed in at one of 25 centres.

Forms can also be handed in to any UK branch of NatWest, Lloyds, Royal Bank of Scotland or Ulster Bank. But the deadline here is 3.30pm on Tuesday.

Those who have registered with a share shop should use the application from the share shop because, in the event of applications being scaled back, they will get priority.

Share shops have set their own deadlines. Most have set it for Monday. Some, such as Leeds and Skipton building societies, have stretched to 10am on Tuesday.

Investors who want to apply for shares via the retail tender stand a better chance of getting a decent allocation. But they sacrifice the three 10p discounts on the three payments.