State Elects to Save MobilCom
Having been thrown out with the bath by France Telecom SA last Friday (see Bon Voyage to Another CEO), the mobile reseller and 3G license-holder was caught and held by the German government, which brokered deals for cash injections from two banks. Phew, that was lucky, eh?
When the French telco announced it was to no longer fund MobilCom, in which it holds a 28.5 percent stake, the German service provider, which has nearly 5 million customers and about 5,500 staff, announced it was preparing for bankruptcy (see FT Dumps MobilCom).
But wait! There's a national election in Germany next Sunday. Wouldn't it be great if the incumbent government were to help out a company deemed by its board to have been shafted by the French? It would seem so. MobilCom executives met with representatives of the national German government and the government of the state of Schleswig-Holstein (where the service provider is based) "to discuss the actual situation of MobilCom and possibilities to save the company," MobilCom spokesperson Mareike Wrage tells Unstrung.
As a result of one meeting hastily arranged and held on a Sunday, "The German bank KfW Group [state-owned] will give MobilCom a credit line of about €320 million and the Schleswig-Holstein Landesbank will give a credit amount of about €80 million. A first amount of €50 million will be transferred to MobilCom immediately." This money guarantees MobilCom's survival, says Wrage.
Well, for up to a year maybe. Past that, the company has the distinct smell of toast (see MobilCom Checks Into 3G's ER ), as there seems little chance of another national election in 2003.
— Ray Le Maistre, European Editor, Unstrung