RealTime IT News

Nokia Backs France Telecom Bailout Plan of MobilCom

On Monday, Finnish wireless equipment provider Nokia said it welcomed a bailout pact struck between Germany's MobilCom and France Telecom .

On Friday, France Telecom and Germany's MobilCom AG struck a $7.6 billion conditional deal ending its cooperation to develop a next-generation mobile phone network in Germany.

France Telecom in a statement said the rescue deal for MobilCom was conditional on it reaching an agreement with MobilCom's banks and its two main wireless equipment providers: Nokia and Ericsson .

Back in September, Nokia struck a deal with France Telecom, which owns 29 percent of MobilCom, to restructure its loans to the German operator. Nokia has to write off nearly half of the financing it had given to MobilCom, and said it would not be extending it any more credit.

As part of the deal struck this past Friday, France Telecom will take over MobilCom's bank and supplier loans, and swap them for perpetual bonds redeemable for France Telecom shares, and waive another $1 billion of other loans. After approving the bailout deal, France Telecom is said to be reviewing its plans, and may unload its stake in MobilCom stake, according to the German newspaper Handelsblatt.

France Telecom now faces a huge amount of debt that matures next year, the company's CEO Thierry Breton is expected to announce details of his rescue plan for the troubled French telecom carrier in the first week of December.

MobilCom has been on the verge of collapsing since France Telecom in September decide to halt funding for its 3G next-generation wireless network.