America's No. 1 financial conglomerate

Chapter 365 Three Conditions

Top-floor conference room at the Telephone & Telegraph Corporation headquarters in Manhattan, New York.

Outside the floor-to-ceiling windows are rows of skyscrapers, but inside, the atmosphere is as oppressive as a bear market on Wall Street.

In the CEO's office lounge area, several executives in suits had tense faces, their eyes fixed on the young man sitting opposite them, as if scrutinizing an antelope that had suddenly wandered into a pack of wolves.

"Ernst, what exactly do you mean?"

Before Michael could speak, Vice President Lalites broke the silence, his voice like a steel needle soaked in ice water, each word carrying a sharp, questioning edge.

He even leaned forward deliberately, his tie gleaming coldly under the light, looking like a vulture ready to pounce on its prey at any moment.

Ernst was not affected by the oppressive feeling coming from the other party. He did not respond immediately, but simply raised his eyes slightly, his gaze bypassing Lelites and landing on CEO Michael Armstrong.

His gaze was as calm as a bottomless lake, showing neither panic nor sharp confrontation.

This CEO, who has only been in office for a little over a year, is clearly capable of keeping these executives in check. With a wave of his hand, the other party withdrew their imposing manner.

However, he was also curious about what Ernst meant. Was he planning to enter the telecommunications industry?

The thought had barely crossed his mind when a chill ran down his spine.

In the American business world, Ernst's name is practically synonymous with miracles; since his debut, he has never been known to suffer a loss.

If such an extraordinary individual were to actually enter the telecommunications industry, it would be an absolute disaster for Telephone & Telegraph Corporation and other telecommunications giants.

The telecommunications industry is so murky it can drown you; land disputes, technological barriers, policy approvals—every step is fraught with pitfalls.

Ernst is too unpredictable; his greatest skill is finding a way out where others think it's impossible.

Michael felt a throbbing pain in his temples at the thought, as if he could already see the other party leading mainland China Telecom to unleash a bloodbath in the telecommunications industry.

Ernst leaned back on the large leather sofa.

He crossed his arms in front of his lower abdomen and casually crossed his legs, his relaxed demeanor completely out of place with the tense atmosphere in the conference room.

"Don't misunderstand," Ernst's voice wasn't loud, but it had a peculiar penetrating power, clearly reaching everyone's ears. "In fact, I have no intention of entering the telecommunications industry, much less of a desire to compete with Telephone & Telegraph Corporation and other telecommunications giants for market share."

The executives in the conference room were stunned, their brows furrowed and their eyes filled with doubt.

If they don't want to compete for market share, then why establish a mainland telecommunications company?

Are they just bored and want to add some fun to the telecommunications industry?

"I'm here today to seek cooperation."

Ernst paused, a meaningful smile playing on his lips. "To put it bluntly, we're here to deliver money to the Telephone and Telegraph Corporation."

"Give me money?"

The meeting room erupted instantly. Lelitez couldn't help but sneer, his expression seeming to say: Are you kidding me?

He had been navigating the business world for decades, and he had only ever seen people clamoring for money, never anyone willingly offering it to him.

Michael, on the other hand, showed less doubt on his face, replaced by a look of keen interest and inquiry.

"Oh? Then tell me, how exactly are you going to send the money?"

Ernst didn't rush to answer, but Ivan immediately understood. He quickly opened his briefcase and took out a document that still smelled of ink—the contract agreement he had just drafted with Lehman Brothers.

He drank his coffee in a very relaxed manner, his eyes slightly narrowed, as if he were savoring the rich aroma of the coffee.

Michael glanced at Ernst, his gaze settling on the document.

He reached for the document, tapped his fingers lightly on the cover, and then opened it to read it carefully.

Since it was a preliminary contract, the content wasn't too complicated, and Michael read it very quickly, finishing it in just a few minutes.

His expression gradually became more complicated, changing from calm at first. After reading it, he handed the document to Lelitez next to him, indicating that the others should also take a look.

Lelitez took the document, eagerly flipping through it. His eyes brightened as he read, and his previously tense face gradually relaxed.

After everyone had finished reading the documents, Michael noticed that Ernst's coffee cup was almost empty.

He immediately looked up and called out towards the door.

Soon, a female secretary dressed in a business suit and with impeccable makeup entered and respectfully asked, "Mr. Armstrong, what can I do for you?"

"Get Mr. Ernst a new cup of coffee," Michael added before the man turned away, "brew it myself using my treasured jar of Colombian coffee beans."

The secretary was taken aback for a moment, then quickly realized what she meant and nodded hurriedly, "Okay, I'll go right away."

Like Robert Iger, Michael also enjoys studying coffee, and the fact that he's now using his own collection to entertain Ernst is enough to show that the contract has already won Michael over.

The executives were perfectly aware of the value of this contract; they knew it better than anyone else.

If China Telecom can actually build this dedicated line, it would be a cash cow that consistently produces golden eggs every year.

This line primarily serves Wall Street financial firms, who would be willing to pay a hefty price for the right to use it in order to transmit transaction data more quickly.

Michael spoke again, his eyes fixed on Ernst, his tone urgent, "How many seats can this dedicated line offer at most?"

Ernst put down his coffee cup and said in a relaxed tone, "Around 200, of course, the exact number will depend on the actual situation at the time."

These words were like a shot in the arm, instantly brightening the eyes of several senior executives at Telephone & Telegraph Corporation.

Lelitez's initially skeptical gaze had now turned into undisguised excitement.

The numbers in the contract were a huge shock to him; $300 million a year for a single seat was something no telecommunications company would dare to imagine.

The senior executive in charge of finance was stunned, and he quickly did some mental calculations.

According to the contract signed with Lehman Brothers, each seat would receive a usage fee of $300 million per year, and 200 seats would bring in at least $6 million in revenue per year. Moreover, in the early stages, this was almost pure profit, because the maintenance costs of the lines had already been factored into the initial investment.

The telecommunications industry is typically characterized by large upfront investments and long payback periods. It can take several years from planning to completion of a single line, requiring investments of hundreds of millions or even billions of dollars, and often takes more than ten years to recoup the investment.

Add to that the bank interest generated by the project loan, and a payback period of twenty years is not out of the question.

The Ke Ernst project could generate revenue immediately once the line was opened, and it would take only a short time to recoup the investment. This was an unprecedented miracle in the history of the telecommunications industry.

"How do you plan to cooperate?" Michael's breathing became more rapid, and he could feel his heart pounding.

This project is not only highly profitable, but also perfectly aligned with the Telephone and Telegraph Group's business expansion strategy.

Michael knew very well that since Ernst had come to him seeking cooperation, it meant that the plan could not be done without the support of the Telephone and Telegraph Corporation.

"I can offer Telephone & Telegraph Corporation a 49% stake as a condition of cooperation."

"49%?" Before Michael could speak, Lelitez couldn't help but frown and say, "Isn't that too little? You know, we—"

"51%." Michael suddenly spoke, interrupting Lelitez, his tone carrying an undeniable forcefulness: "Otherwise, there's no point in talking."

The conference room fell silent instantly, all eyes fixed on Michael and Ernst, the air seeming to freeze.

Michael stared at Ernst, his eyes full of confidence. He had calculated that Ernst couldn't do without the Telephone & Telegraph Corporation.

As stated in the contract, the line was to be operational by the end of the year, a task that the Telephone and Telegraph Corporation considered virtually impossible.

Not to mention the tight schedule for laying the lines, the equipment procurement and technical debugging alone will take two months.

Otherwise, Ernst wouldn't have been so generous as to show them the contract directly; it was because he couldn't do it himself and had to rely on the resources of the Telegraph and Telephone Group.

"While I don't know how you plan to get the line up and running by the end of the year," Michael continued, a hint of provocation in his voice, "I know very well that this is inseparable from the Telephone and Telegraph Corporation's efforts. Without us, even the best plans your Continental Telecom has will remain just empty words."

Ernst's smile faded slightly as he looked at Michael. "You should know that there are many more telecommunications giants in America than just Telephone & Telegraph Corporation."

These words were like a nail, instantly hammered into Michael's heart.

He narrowed his eyes slightly, his gaze scrutinizing as he tried to determine whether Ernst was bluffing or if he truly had other alternatives.

Michael was silent for a few seconds, then said to Ernst, "We need to discuss this. Give us some time, and please go to the lounge to rest."

"No problem," Ernst replied casually, as if he was confident no matter what decision the other party made.

When he and Ivan were invited to the lounge, and Michael's secretary had coffee brought in and closed the door, Ernst's confident and composed expression collapsed instantly, like a punctured balloon.

He let out a long sigh, his previous elegance and relaxation vanishing without a trace, replaced by a hint of weariness.

"These old fogies, they're all incredibly shrewd," Ernst said, rubbing his temples with a hint of helplessness in his voice.

Michael's so-called negotiations were not about discussing cooperation details at all, but rather about taking the opportunity to gather information about him and try to find flaws in his plans.

More importantly, the other party was bluffing him.

Just now in the conference room, if he had shown even the slightest bit of nervousness, Michael would have definitely gone further, not only insisting on 51% of the shares, but possibly even proposing more demanding conditions.

The current situation is like he's been dealt a hand at a poker table that's not too bad but not great either. He can only grit his teeth and keep going, hoping that his opponent's hand is even worse than his.

Less than half an hour later, there was a knock on the door of the lounge.

The secretary said respectfully, "Mr. Garfield, Mr. Armstrong requests your presence."

Ernst straightened his suit, put on his composed expression again, and walked into the conference room with Ivan.

As soon as he entered, he saw that Michael and several executives all had smiles on their faces, smiles full of confidence that they were determined to win. Ernst's heart skipped a beat, and he instantly understood that the other party must have found out about him.

After everyone sat down again, Michael spoke first, his voice cheerful yet somewhat deliberately clear: "Ernst, after our discussion, we agree to cooperate in principle. However, regarding the shareholding—"

Ernst sneered inwardly—as expected, the other party was about to start making demands.

He knew very well that the other party must know about Bill and why he was in a hurry to get the line going.

Combined with his earlier statement that he had no intention of entering the telecommunications industry, everything became clear.

The current situation is that he needs the Telephone & Telegraph Group more than the other party needs him, because he is anxious to break the deadlock.

Moreover, the other party must have realized that he could not possibly seek cooperation with other telecommunications giants.

Because once he contacts other companies, the news will quickly reach Wall Street, and other telecom giants will be unlikely to allow his private line to be completed before the end of the year.

Ernst looked grim, as if someone had caught him red-handed, but he still stubbornly said, "49% of the shares."

The smiles on Michael's and several other executives' faces froze instantly, realizing they had no intention of cooperating.

Michael was about to retort forcefully when Ernst changed the subject, "However, we can add one condition."

Two years later, if Telephone & Telegraph Corporation is willing to acquire China Telecom, I can sell all my company shares and make it a wholly-owned subsidiary of yours.

"A wholly-owned subsidiary?" Michael and the others looked even more surprised, but they quickly understood.

In their view, Ernst was planning to cash out and leave in two years.

The contract for this line is for five years. Two years later, all the slots on this line will definitely be sold out, and other telecom companies will follow suit and lay similar lines.

When the contract is signed again in five years, the price of the dedicated line will definitely be significantly reduced. Leaving the market in two years is a good time, and it also aligns with his statement that he doesn't want to enter the telecommunications industry.

However, for Telephone and Telegraph Corporation, if it could acquire China Telecom in its entirety, although it would require paying an acquisition fee, it would gain full ownership of the lines, and the long-term benefits would be considerable.

The most crucial point is that this aligns with the group's business expansion strategy, so this deal is a win-win situation no matter how you look at it.

A hint of satisfaction flashed in Michael's eyes. "And the price? What valuation do you plan to give China Telecom?"

This is the last crucial issue; once the price is right, the cooperation between the two parties can be officially finalized.

They had all heard how Ernst ripped off Wall Street and were mentally prepared, but what he said next shocked everyone so much that they picked their ears in disbelief.

"Not a penny needed, it's free."

Ok?

Not to mention Michael and the others, even Ivan couldn't help but widen his eyes and secretly nudged Ernst with his elbow, as if to confirm whether he had said something wrong.

Just a moment ago they were acting like they only cared about profit, but now they're giving away such a huge benefit for free.

Before Michael could ask, Ernst continued, "However, I have three conditions."

"Go ahead and speak," Michael said, indicating that he should hurry up and say it.

"First, the Telephone and Telegraph Corporation cannot interfere with the operation of mainland telecommunications within the next two years."

"No problem." It doesn't matter. This project was originally Ernst's idea, and following his plan is the best option.

Moreover, he already knew the other party's purpose in laying this line—that they definitely wanted to control the decision-making power—so Michael agreed very readily.

"Second," Ernst held up two fingers, "is that the Telephone and Telegraph Corporation must guarantee its full support for this project, from personnel to equipment, including Lucent Technologies and suppliers of communication-related materials."

This is the main reason why Ernst approached the Telephone and Telegraph Corporation. The telecommunications giant's advantages were so great that only it could complete the project within six months; no other telecommunications company could do it.

The first issue is the line. The Telephone and Telegraph Corporation did own the line from New York to Chicago, but it was made of copper cable.

But this solved the biggest problem in laying this line for mainland China Telecom, which was land disputes.

Laying this line won't take long. As long as there are enough people and equipment, it can be completed in three or four months or even faster. The main time spent is on land acquisition, equipment, and procedures.

However, this problem does not exist when cooperating with the Telephone and Telegraph Corporation; the cables can be laid directly on the existing copper cable routes.

Ernst plans to use fiber optic cables, which are inherently thin and can be installed as dedicated lines, rather than the large-scale home broadband lines used in homes, making them very convenient to lay out.

Then there's Lucent. Whether you want to admit it or not, Lucent's technological leadership in communication equipment is unparalleled.

Corning is indeed the leading manufacturer of optical fiber, but it relies on Lucent for other related telecommunications equipment.

Another example is the relationship between Lucent and Corning, which is similar to that between Microsoft and Intel; they are almost inseparable.

To expedite the order and get these two companies to prioritize Ernst, the Telegraph and Telegraph Group had to intervene.

"Of course, now that we've become partners, everyone hopes this route can be operational by the end of the year."

Michael didn't expect this condition, and he agreed to it.

As for the third one...

Ernst paused, his gaze fixed on Michael's face. "I want to use these 49% of the shares to exchange for ownership of Bell Labs."

"Hmm?" All I can say is that every decision Ernst made today was beyond Michael's expectations.

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