MobilCom Staves off Bankruptcy - for a While

Germany's MobilCom has said that it has received an interim funding program from the German government of US$391 million, supplied a "soft loans" from state owned banks. The move has resulted in a call from the European Union for clarification as it may be considered as state aid, which is tightly regulated in the EU, although the government says that as the funding is not coming directly from government revenues, then it does not count as state aid.

The move will safeguard some 5,500 jobs in the short term, for about six months and at least until after the national elections due later this month. It is not clear yet what long term plans the company has to finance its existing debts and complete the rollout of its 3G network.

Under the deal, agreed over the weekend, the Kreditanstalt fuer Wiederaufbau bank is providing approximately US$311 million, with the remainder from the Schleswig-Holsteinische Landesbank bank. In immediate payment of US$50 million was made to cover immediate costs.

MobilCom's Dr. Thorsten Grenz said that the company is still looking for an amicable solution with France Telecom over the formers decision to stop financing the company, "With the existing co-operation agreement the France T

Posted to the site on 17th September 2002