NEW YORK (CNN/Money) - Shares of China Telecom met tepid demand in their debut Thursday, even after the size of the state-owned company's initial public offering was cut twice to entice buyers.

Shares of the company, trading under the ticker symbol "CHA," fell as low as $17.50 on the New York Stock Exchange, down 7.8 percent from their offering price. Underwriters priced 71.79 million shares last week at $18.98 each, raising $1.36 billion.

It was the fifth largest deal of the year and the biggest since CIT Group (CIT: up $1.65 to $19.83, Research, Estimates) raised $4.6 billion in July, according to Thomson Financial. But it also comes amid a sluggish IPO market that few telecommunications companies have dared enter.

China Telecom (CHA: down $1.15 to $17.83, Research, Estimates), which provides wireline telephone, data and Internet services in four regions in China, cut the number of shares by 55 percent over two reductions.

"When you see a major deal cut like that, people see trouble in paradise," said Jeffery Hirschkorn, senior IPO analyst at IPO Monitor.

Richard Peterson, IPO strategist at Thomson Financial, agreed.

"It's hard for companies to recover once they cut their market prices," Peterson said.

A slack year for IPOs is expected to end with two closely watched offerings. The Chicago Mercantile Exchange and Cosí Sandwich Bar are slated to debut before the end of 2002.

China Telecom shares begin trading in Hong Kong on Friday.