Shares in Fibernet Group PLC (LSE:FIB) took a battering today, falling 15 percent to £8.67 (US$12.13) in spite of the company announcing a threefold increase in revenues and swing into profit (see Fibernet: Results, Rights Issue).

The slide was in response to Fibernet’s deeply discounted rights issue, announced on Wednesday. It’s offering 4 shares for every 15 held by shareholders, at a price of £6.00 ($8.40). At the time the price was set, it was less than half Fibernet’s share price.

Fibernet reckons that a rights issue is the best way for it to raise the £77 million ($1.08 billion) that it needs to build its network in France and introduce new services in the U.K. It reflects “a shaky environment for raising money” for all telecom operators, says Milan Radia, an analyst with UBS Warburg.

“People are giving [Fibernet] a bit of a smacking today because of the rights issue," says Radia. But he reckons Fibernet’s share price will bounce back.

"I would treat this very much as a strong buying opportunity,” says Radia. Fibernet is fundamentally strong, he adds. It’s already been highly successful in delivering high-value data services to corporates in the U.K., and now it’s planning on replicating that success in France and Germany.

-- Peter Heywood, international editor, Light Reading http://www.lightreading.com