EUROPEAN COMMISSION TO INVESTIGATE MOBILCOM RESCUE BY GERMAN GOVT.
Despite German govt.’s reassurance to European Commission (EC) that it wouldn’t provide financial aid to MobilCom until it received EC’s approval, MobilCom spokesman Matthias Quaritsch said company received its first 50-million euro loan from state-backed KFW bank last week. “If [the government] had waited for the European Commission approval, it would have been too late. The company would be gone,” Quaritsch said. He said procedure of EC approval “may take up to 18 months, so the government took a direct way.” However, EC spokeswoman Amelia Torres said “when it comes to rescue aid, the Commission proceeds it as quickly as possible, and a decision can be taken within weeks.”
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“The European Commission hasn’t approved the 50 million euro loan,” Torres said. She said EC gave German govt. 20 business days to provide information on what had been done. “However, we still have no information,” Torres said. She said EC received reassurance from German govt. that loan hadn’t been made, but “the reality is that money is often paid before the Commission’s approval.” She said Commission would continue to study loan and if it’s found illegal, it will have to be repaid to state with interest.
MobilCom expects to receive total of 400 million euros from German govt. upon EC’s approval, Quaritsch said. He said company also was in process of negotiating possible continuation of partnership with France Telecom: “We have a contract that France Telecom wants to get rid of. However, we need this contract because it’s going to decide the future of the company.”
Under terms of contract, France Telecom agreed to pay 8.4 billion euros to allow MobilCom to purchase 3G license and up to 10 billion euros to start 3rd-generation mobile phone operations. By signing contract, France Telecom became part of German market, which has 56 million mobile phone users. Quaritsch said France Telecom paid MobilCom 3.8 billion euros when it purchased 28% of company in 2000. However, MobilCom had to take 4.6 billion euros in bank loan to complete acquisition of license. “France Telecom agreed to pay our debts to the banks with convertible bonds,” Quaritsch said. “However, we need more money [from them].”
To be approved by Commission, rescue aid must: (1) Consist of liquidity help in form of loan guarantees or loans bearing normal commercial interest rates. (2) Be restricted to amount needed to keep company in business. (3) Be made only for time needed to devise necessary and feasible recovery plan. (4) Be warranted on ground of serious social difficulties and have no undue adverse effects on industrial situation in other member states. (5) Be one-off holding operation. (6) Need not be granted in single payment. Spokeswoman for EC Comr. Mario Monti, who is to decide case, said it was unlikely that EC wouldn’t approve German govt. loan.