France Telecom has struck a conditional deal with German mobile operator Mobilcom, a minority-owned subsidiary, to settle a long-running row over strategy.

According to France Telecom's European mobile arm, Orange, Mobilcom's chief executive has agreed to sell his 33% stake in the firm to "various institutions", effectively relinquishing control of the company.

The executive, Gerhard Schmid, had been pressuring France Telecom to buy him out of Mobilcom, because the two sides had fundamental disagreements over the future of the firm.

The current deal seems to be a compromise, allowing Mr Schmid to cash in his stake, without France Telecom being forced to make an expensive bid for the whole of Mobilcom.

More details awaited

"We do not envisage this sale leading to a public offer for Mobilcom," France Telecom said in a brief statement, adding that it would be releasing further details in due course.

The price at which the deal was struck - reported earlier as having been 2.75 Orange shares for every Mobilcom share - was not revealed.

France Telecom also said talks were continuing with other unnamed parties involved in the dispute.