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MobilCom slashes 1,850 jobs
HAMBURG, Germany -- Telecoms group MobilCom, which is facing the threat of insolvency, said on Friday it is cutting one-third of its workforce as part a restructuring plan and freezing the rollout of its new generation mobile network. MobilCom, said it would shed 1,850 full time jobs from its 5,000-strong workforce in a move that is expected to save about 130 million euros ($127.2 million) a year. "A short term operational aim is to return the service provider business to profitability in the first half of 2003,'' the group said in a statement. MobilCom also said it creditor banks had agreed to extend the deadline on a 4.7 billion euro loan by one month until the end of October. The restructuring efforts come after France Telecom, the German group's partner, pulled its funding earlier this month amid rising debt and disputes between the two companies over strategy. MobilCom was saved from insolvency when the German government put together a 400 million euro ($392.9 million) loan package from state banks. The group, which has more than 5,000 employees, is about 6 billion euros ($5.9 billion) in debt. France Telecom paid 3.7 billion euros in 2000 for a 28.5 percent stake in MobilCom in an effort to break into the German telecom market, the largest in Europe. Their agreement called upon France Telecom to provide funding for MobilCom's purchase of third-generation mobile phone licences and network construction. However, after the telecom bubble burst, MobilCom was left with a debt of 6 billion euros due to a delay in 3G mobile phone development and a slump in the market. France Telecom, which has amassed debt of 69.7 billion euros, posted a 12.2 billion euro first-half loss on Friday -- one day after the resignation of its chief executive Michel Bon. MolbilCom (AMOB) shares, which have lost more than 90 percent of their value, were up 2.4 percent to 2.15 euros in late Frankfurt trading on Friday. France Telecom (PFTE) fell 1.4 percent to 7.89 euros.
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