The German government has agreed to inject €400 million into troubled telephone operator MobilCom to save it from imminent bankruptcy, Economy Minister Mr Werner Mueller has said.
Mr Mueller told a news conference yesterday that France Telecom, MobilCom's major shareholder and sole source of cash, "still had obligations" to the German operator, despite its announcement on Thursday that it was pulling out of the beleaguered firm.
The government aid would be injected into MobilCom via state-owned development bank KfW and the regional public bank in Schleswig-Holstein, the region where MobilCom's headquarters are located, Mr Mueller said.
MobilCom was fighting to stave off insolvency after its heavily indebted majority state-owned partner France Telecom cut off vital funding last Thursday, precipitating a liquidity crisis.
The government met company officials and the company's founder and other major shareholder, Mr Gerhard Schmid, yesterday.
MobilCom's failure would have threatened 5,500 jobs just a week before a German general election in which unemployment is a key issue.
France Telecom bought 28.5 per cent of Mobilcom in 2000 and signed an agreement under which it would provide funding for MobilCom's expensive new 3G mobile phone technology licence and the building of a network.
But the details of the agreement have not been made public and France Telecom has dismissed the threat of legal challenges to its decision to stop funding MobilCom. - (AFP/Reuters)
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