The bonds, convertible into Deutsche Telekom shares in five years’ time, will cut by around a third state development bank KfW’s current 16.9 percent stake in the company – assuming they are fully exchanged.

The offering will be increased in volume by up to €300 million if there is strong interest. The German state holds a further 14.8 percent Deutsche Telekom.

“We now wanted to send a clear signal to the market that both the German Ministry of Finance and KfW are committed to continue the privatization process of Deutsche Telekom with this instrument,” said KfW treasurer Frank Czichowski.

KfW also announced that investors in an outstanding €5-billion bond maturing in August will receive cash, not Telekom shares, as a result of the recent poor performance of the company’s stock.

Against a background of tough conditions in its home market, Europe’s largest phone company has seen its share price fall 19 percent over the past six months.

The privatization news made Deutsche Telekom the worst performing stock on Frankfurt’s DAX 30 on Tuesday, sending it 2.1 percent lower at €11.69 just after midday.