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EU demands notification on MobilCom bailout

The German government must notify the European Commission of any plans to bail out cash-strapped mobile phone operator MobilCom, according to a Commission spokeswoman, after the company's French backer France Telecom decided last week to abandon it.

The German government promised to provide state guarantees for loans worth €400m (£252m) from partly state-owned German banks, in order to secure a future for Germany's fifth largest mobile operator.

European Commission spokeswoman Amelia Torres said the German plan amounts to rescue aid and the European Union's competition office must be notified to ensure that the attempted rescue does not hurt competition.

Torres said the main conditions the Commission would insist on before approving the rescue are that the terms of any loans to MobilCom be granted "with an interest rate at least comparable with rates charged to healthy companies".

She added that the government could only guarantee loans big enough to cover MobilCom's short-term liabilities, such as salaries and day-to-day operating costs. The rescue bid must include a restructuring plan within six months of the rescue being approved by the Commission.

Germany has not yet notified the Commission of its plans for MobilCom.

The rescue package, announced by German economy minister Werner Mueller, includes €320m (£201m) in loans from the Kreditanstalt fuer Wiederaufbau, a government-controlled bank. Around €50m (£31m) of this is to be made available to the firm immediately. The rest will be made available through the Schleswig-Holstein Landesbank.

The German government's attempt to save MobilCom, and the jobs of around 5,500 employees, comes days ahead of national elections.

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