France Telecom has come to the aid of the embattled German telecoms operator Mobilcom, by agreeing to take on some of its debt burden.

The French operator, which has a minority shareholding in Mobilcom, will take on 7bn euros (�11bn; $7.1bn) of debt from its affiliate.

The move was confirmed by former ThyssenKrupp executive Dieter Vogel, who is acting as a mediator between MobilCom and its estranged shareholder France Telecom.

The crisis surrounding German telecoms operator Mobilcom deepened on Friday, as financial watchdogs revealed a probe into insider dealing.

Germany's financial services regulator, BAFin, said it was investigating share trades in the run-up to the release of company figures showing that Mobilcom had chalked up an annual loss of 205m euros.

Avoiding insolvency

The announcement of the investigation came as a deal to rescue the firm continued to hang in the balance, over a stand-off between leading shareholder Gerhard Schmid and the German government.

But the regulator has declined to reveal further details of the probe, including names of those suspected of insider dealing.

France Telecom will also assume the costs of Mobilcom's third-generation activities, thought to amount to several million euros.

Mobilcom on Friday said it had sufficient funds to stave off insolvency on Friday, and four German banks are ready to lend the company 162m euros.

"There is still enough cash," a Mobilcom spokesman said.

"The red insolvency file will be left on the shelf for today."

'Harsh demands'

The economy ministry said earlier this week that it enlisted the support of German banks and France Telecom, a minority shareholder in Mobilcom, for a bail-out agreement.

Mr Schmid: "Goalposts shifted"

France Telecom owns a 29% stake in Mobilcom and originally pushed Mobilcom into a financial crisis when it pulled its funding in September.

Mr Schmid has so far refused to hand over a Mobilcom stake of almost 50% to an outside trustee nominated by the government, a condition of the rescue package being enforced.

Many observers see a reduction in the influence of Mr Schmid as key to saving the firm from collapse.

But in an open letter on Thursday, Mr Schmid said agreement over the trustee had all but been sealed, only for the government to alter its position.

"In recent days the ministry has strayed ever further away from the agreement reached last week and repeatedly made new and sometimes very harsh demands," he wrote.

"I have never experienced anything like it in all my years as a businessman.

"When a promise has been made, it must be stuck to, especially by a senior government authority."