German mobile operator MobilCom AG continues to teeter on the verge of bankruptcy, as its founder and former CEO Gerhard Schmid remains at loggerheads with the German government.
Schmid has failed to strike an agreement over the transfer of his family’s 50% stake to an outside trustee, a key part of the rescue plan for the troubled carrier. The dispute centers over who will have control of the trust, as Schmid prefers Joachim Dreyer, the former head of Swisscom’s unit Debitel, but the German Economics Ministry backs the lawyer Reinhard Freiherr von Dalwigk.
A proposed compromise, with the two men jointly running the company has failed to impress Schmid, who was quoted as having extreme reservations, as having two people in charge hardly ever works. The failure to reach agreement has forced MobilCom to state that it will not file for insolvency on Thursday, but a spokesperson declined to say how long the company’s cash will last.
France Telecom owns 28.5% of MobilCom, and has in principal agreed to take responsibility for a large chunk of its 7bn euro ($7bn) debt, but will only give its consent if Schmid has no further say in the company.
MobilCom is Germany’s fifth largest mobile operator, with 5,500 employees and 9 million customers. By all rights, it should have gone to the wall in September, when its major financial backer France Telecom ceased to bankroll the loss-making carrier. However, the German government, fearful of job losses during the recent closely fought German elections, stepped in with a 400m euro ($400m) emergency funding package.