The German government has put together an EUR 400 million rescue package for the ailing UMTS licensee MobilCom. Last week the future of the German mobile virtual network operator looked bleak as its main investor, France Telecom, opted to withdraw its backing. With elections looming at the end of this week the German chancellor Gerhard Schroeder is keen to prevent a major corporate failure from dominating the national headlines.
As a result, over the weekend the government orchestrated an EUR 320 million loan from the state bank Kreditanstalt fuer Wiederaufbau and a further EUR 80 million from MobilCom’s own state bank Schleswig-Holsteinische Landesbank. With its debts effectively reduced MobilCom is now expected to re-enter negotiations with France Telecom in an effort to get it to continue funding the German company’s operations.