MobilCom bet everything on a €50B license gamble — and wrote off €9.9B in one year

MobilCom was founded by Gerhard Schmid in 1991 as a mobile phone service provider. It grew rapidly and became one of Germany's largest mobile virtual network operators, listed on the Neuer Markt (Germany's tech stock exchange) and valued at billions of Deutschmarks at its peak. The company also acquired a majority stake in freenet.de, an internet service provider.

In 2000, MobilCom participated in the German UMTS (3G) license auction. The auction raised €50.8 billion for six licenses. MobilCom's license cost, combined with the network build-out expenses, was catastrophic for a company without the balance sheet of a Deutsche Telekom or Vodafone. The debt from the UMTS gamble pushed the company to the brink of insolvency.

By 2002, MobilCom was forced to write off €9.9 billion in assets. France Télécom, which held a 28.5% stake, agreed to take over €7.1 billion of the UMTS-related debt, but the company still reported a net loss of €3.4 billion. The stock collapsed to penny-stock status in September 2002. In early 2003, 2,000 jobs were cut and the UMTS network assets were sold to E-Plus. MobilCom abandoned its own 3G network ambitions entirely.

The company survived as a shell of its former self. In March 2007, MobilCom merged with its subsidiary freenet.de AG to form Freenet AG. The MobilCom brand name was phased out. The company that had briefly been one of Germany's most valuable telecom stocks ended as a footnote in the story of the 2000 telecom bubble.