From London to New York, Toronto to Tokyo, brokers are boning up on the details of the largest stock offering the world has seen. In case the hype hasn't hit your neck of the woods, British Telecommunications (BT) is going public. Just over 3 billion shares are being sold as half of the United Kingdom's goverment-owned telephone monopoly goes on the auction block.
British investors are buying up the lion's share of the $5 billion offering for John Bull's equivalent of the old Ma Bell. But investors in Japan, Canada, and the United States will have the opportunity to divvy up some 415 million shares. Stock will be sold in this country on Dec. 3 and trading will begin on the New York Stock Exchange the same day.
This gigantic offering has stirred great investor interest. ''It's like getting in on the origination of AT&T,'' says a vice-president at Kidder, Peabody & Co.
And if one remembers the convoluted calculations and unique twists of Ma Bell's breakup, one gets an inkling of what brokers have been pondering.
In the US, British Telecom stock will take the form of American Depositary Shares (ADS). One ADS will be worth 10 British shares. The price of a share has been fixed at (STR)1.30. So at current exchange rates, a share sells for $1.63.
Sound inexpensive? ''Yes, but one has to remember the pie is being divided up into many pieces - 3 billion,'' notes Peter Stott, vice-president at the First Boston Corporation's international department.
To make the stock even more accessible, British Telecom is being sold on the installment plan. Each share can be bought with a ''down payment'' of 50 pence (now worth about 621/2 cents). After making the first payment, the investor will own the shares and will be entitled to all voting rights and full dividends. But next June a bill will arrive for 40p (about 50 cents). The last payment of 40p is due in April 1986.
US investors can figure the cost of buying British Telecom as follows: Take the 50p down payment, multiply by 10, then multiply again by the current exchange rate. For example, using today's exchange rates, the first payment would be $6.25 (0.50 ((STR)) X 10 X $1.25 - the current pound equivalent) for one ADS, with $5 due next June and another $5 in April 1986.
The catch is that the two final payments are subject to exchange-rate fluctuations. If the dollar weakens, the US investor will pay more than $5. Several economists have predicted that the value of the dollar against European currencies will tumble between 5 and 15 percent next year. On the other hand, the experts' record for calling the turn in the dollar has not been, well, sterling.
British Telecom also has two unique bonuses:
* Next August, based on current exchange rates, US investors will get about a 71-cent dividend. That early payment will give them about a 7 percent annualized yield on the total investment. Since they will have paid for only a portion of that total, the annualized yield on the amount paid in will be about 14 percent.
The yield will fluctuate with changes in the stock price and exchange rates.
* Shareholders who keep their stock until November of 1987 will be rewarded with a stock dividend. For every 10 shares of British Telecom held (or one ADS), up to about $6,000 worth, one more share will be added to sweeten the deal.
As always, potential investors ought not get too caught up in the hype and forget to analyze the merits of the company itself. And there is a political side to this offering.
The opposition Labour Party has vowed, if it returns to power, that it will renationalize British Telecom. Labour Party officials have said they would buy back the shares of British Telecom at the original selling price.
Investors interested in buying into the initial offering (as opposed to buying it on the market on December 3) will have to apply by Nov. 28 to Morgan Stanley & Co. or one of the other underwriters: First Boston Corporation; Goldman, Sachs & Co.; Kidder, Peabody & Co.; Merrill Lynch Capital Markets; Prudential-Bache Securities; Salomon Brothers Inc.
But individual investors should not get their hopes too high. Institutions are expected to buy heavily in the initial offering. If the demand is strong, brokers predict that once trading begins the price of British Telecom stock will climb quickly.