France Telecom could increase its debt by up to E6 billion if it cannot settle an investment row with its German affiliate MobilCom. France Telecom is demanding that MobilCom cuts its spending due to the company’s heavy debts. France Telecom is already struggling with its own E65 billion debt.
If talks fail, France Telecom might have to take control and consolidate MobilCom’s debt. MobilCom founder Gerhard Schmid has an option to sell his 40% sake in the company to France Telecom. He could exercise this option if the disagreement is not resolved.
MobilCom is Germany’s fifth largest mobile operator; it paid around E8.4 billion for a German 3G license in 2000. France Telecom’s mobile subsidiary Orange owns 28.5% of the company.