PARIS—France Telecom and Gerhard Schmid, chief executive of German company MobilCom, entered a conditional agreement, finally resolving the feud between the two groups. Schmid and his associates will sell their shareholdings in MobilCom to a group of financial institutions in a deal that appears to allow France Telecom to avoid taking on more debt.
France Telecom owns a 28.5-percent stake in MobilCom, which holds a third-generation license in Germany. The two parties disagree about 3G rollout plans in the competitive German market and in recent weeks have been involved in a public row regarding the company’s future.
Schmid, MobilCom’s founder with 33 percent of the company, was looking to sell his stake to the French company because of the management disagreement. However, German law would have forced France Telecom to purchase minority shareholders’ stakes in addition to Schmid’s holding, which would have added to France Telecom’s already heavy debt load.
The deal will reportedly allow France Telecom to maintain its current stake in MobilCom and avoid buying additional shares. Six companies in Germany hold 3G licenses, but the market is not expected to support six 3G operators. Therefore, France Telecom is likely to partner with another 3G operator, a strategy that Schmid opposed, because MobilCom does not have a current-generation mobile network in Germany.
MobilCom resells wireless services in the market and won a 3G license in the country in 2000 in an auction that drew a total $45.85 billion for the German government.
