America's No. 1 financial conglomerate

Chapter 539 Because he is Ernst

WorldCom has its own agenda, and Wall Street in New York is also watching this matter closely.

Since the CNN news broke, Goldman Sachs has had people investigate China Telecom.

"Sir, this is the information we have verified through multiple channels." The secretary gently pushed open the office door, holding a thick investigation report in her hands.

Paulson, who had been looking out the window, slowly turned around, his deep gaze falling on his secretary, signaling him to continue his report.

"According to information obtained from the Telephone and Telegraph Corporation, China Telecom is indeed pushing forward with this high-speed line from Chicago to New York, and it could be fully completed as early as the end of this month."

Paulson's previously relaxed brows suddenly furrowed, his expression hardening. He raised his hand to interrupt him, "Is it really as CNN reported, that there are only two hundred seats?"

In an era where the outcome of financial data transmission is determined in milliseconds, every decision-maker on Wall Street knows perfectly well what a dedicated high-speed line means.

The scarcity of two hundred seats is enough to drive any financial institution crazy and reshape the competitive landscape of the existing futures market.

The secretary shook her head slightly and replied truthfully, "We don't know, but both Telephone & Telegraph Corporation and WorldCom have given us the same answer."

"This statement comes from Ernst. Although the Telephone and Telegraph Corporation had seen the contract signed between Continental Telecom and Lehman Brothers, the contract only listed the transaction amount, while key terms such as the number of seats and the term of use were omitted."

"Three million dollars a year for each seat, with a minimum contract term of five years, and only two hundred seats available. This is all according to Ernst's description." "What about Lehman Brothers? Any news?" Paulson wasn't entirely satisfied with the answer. Although it was basically certain, he didn't want any surprises.

The secretary hesitated for a moment, but still voiced her thoughts: "I think there's something wrong with this."

Paulson looked at him. "You mean pay the full amount?"

The secretary nodded. "Lehman Brothers paid the full amount for five years in one go based solely on a business plan? That doesn't make any business sense."

"Based on the information we have now, the total rent for the thirty seats over five years is exactly $4.5 million, which seems to match. However, Lehman Brothers has always been cautious in its operations, and it seems that risk control has suddenly disappeared in a project involving such a huge capital expenditure."

"Doesn't this sound a bit far-fetched? It doesn't conform to the industry's common payment practices either."

"You mean Lehman Brothers gained more?" A thoughtful look flashed in Paulson's eyes, but he quickly became resolute.

"That's right. I speculate that there may be undisclosed additional terms behind this deal, or that Lehman Brothers actually obtained far more than thirty seats, or that the contract term is not five years but longer, or even that the $4.5 million is not simply rent, but includes other forms of cooperation such as loans and equity pledges."

"Impossible?" Paulson shook his head, denying the conjecture.

More seats?

Ernst's strategy was clearly aimed at controlling the lifeline of Wall Street. The allocation of 200 seats inherently carries a sense of scarcity and competition; giving Lehman Brothers 30 was already the limit, and it's impossible to increase the number further. A longer contract term?

Starting with five years is already outrageous enough; only a fool would extend the timeframe.

Goldman Sachs' research team had already calculated that a new generation of high-speed transmission technology would inevitably achieve a breakthrough within the next five years. At that time, mainland China's dedicated lines would face the risk of being phased out. Lehman Brothers could not sign long-term contracts of more than five years and bear the losses of technological iteration for nothing.

Loans or equity pledges?

This doesn't make sense either, because if it were true, there would be no need to deliberately conceal it.

"But that doesn't make business sense," the secretary said, still fixated on the issue.

Paulson suddenly laughed. "What if that person was Ernst?"

Then he revealed a very confident expression: "Then everything can be explained."

He was a man who never played by the rules; every move he made seemed to conceal a deeper calculation.

Of course, these are all just his guesses.

However, the most important thing now is to prevent the opening of this dedicated line.

"China Telecom has not yet obtained a cross-border data transmission license from the U.S. Federal Communications Commission, which is their fatal weakness. We can make a move on this." The secretary understood what he meant, nodded, and left.

At the same time, in the Citigroup building, three blocks away from Goldman Sachs headquarters, a similar discussion was taking place regarding mainland China's dedicated telecommunications lines.

Inside the CE office, Sandy Weir sat behind a large desk, slowly flipping through a detailed document about Continental Telecom.

Sitting opposite him was his most capable assistant, Jamie Damon.

"I think this is an opportunity for us," Sandy Weir said after reviewing the documents in his hand, his tone questioning.

"You mean you want to use the China Telecom deal to get involved in the electronic payment dispute and drive John Reed out of Citibank?" Jamie Damon immediately understood his thoughts and the unspoken meaning behind his words.

Since the merger of Citibank and Travelers Group to form the new Citigroup, the drawbacks of the dual CE system have gradually become apparent.

Sandy Weir and John Reed's business philosophies were like two parallel lines that would never intersect, or even go in opposite directions, leading to the formation of two opposing camps within the group and increasingly sharp conflicts.

John Reed represents the conservative approach, preferring to achieve long-term corporate growth through internal technological innovation and business optimization, pursuing a steady and pragmatic approach, and emphasizing absolute control over core businesses.

Sandy Weir, on the other hand, was a fervent believer in mergers and acquisitions, believing that scale was king and that rapid expansion was the best way to maximize profits.

In his view, control is not important; as long as the investment brings substantial returns, it is the right decision.

Take electronic payments, for example. This is no longer just an investment; it's an industry closely related to financial business, and could even be considered an internal matter for Citibank. That's why John Reed invested in Bill, because he knew very well that Citibank had no real control over PayPal.

No matter how intense the internal power struggle is, at least the starting point is high, and then things can be tackled gradually.

However, according to Sandy Weir's philosophy, he values ​​which electronic payment software can dominate the market and which software can bring more returns to Citibank.

It doesn't matter if you don't have influence, as long as you get a return on your investment.

Sandy Weir did not answer directly, but instead gave a meaningful smile.

"John Reed's conservative strategy is outdated. Citigroup needs rapid expansion, not stagnation. Continental Telecom's leased line project gave us a chance to break the deadlock."

"China Telecom is currently in a precarious situation, with most Wall Street institutions eyeing it and trying to prevent the opening of dedicated lines. I think we can do the opposite, proactively extend an olive branch to China Telecom, acquire a portion of the seats at a high price, and publicly express our support for them."

"Then we used this incident as a bridge to connect with Ernst, making it easier to acquire a stake in PayPal later."

It has to be said that John Reed was incredibly lucky to have met Ernst, this oddball.

John Reid gained considerable support from the board simply by investing in Google.

Conservative estimates suggest that even if Google's IPO further dilutes Citigroup's stake, Citigroup will still hold more than 4% of Google's shares.

A behemoth worth over $400 billion, a return on investment of $16 billion, all in less than two years. It's safe to say that all the Wall Street firms that participated in Google's financing benefited from Google's IPO.

Even if they face being fired, this return alone can keep them afloat for another two years.

Therefore, Citibank has always been liaising with John Reid through Ernst, and Sandy Weir needs to get in touch with him.

"Once we successfully acquire a stake in PayPal, we will dominate the electronic payments sector, and John Reed's decision to invest in Bill will prove to be a mistake." Sandy Weir's eyes gleamed with ambition. "At that point, the board will naturally realize that Citigroup needs market leaders, not conservatives who stick to the old ways."

"But there's a prerequisite: that China Telecom wins." Jamie Damon's expression was complicated.

Although the information they received was limited, it was enough for them.

With a little speculation, we can see where the main problem lies.

He knew that Wall Street would never allow Continental Telecom to operate, and that John Reed's faction had already put pressure on Telephone and Telegraph Corporation.

This is a reshuffling of a trillion-dollar market, affecting the interests of too many people.

Those who manage to secure a seat will naturally strive to go even further and take over the shares previously held by others.

The problem is, who can guarantee that they will be the lucky one?

Even the giants of Wall Street couldn't guarantee it. Because that person was Ernst.

A madman who doesn't care about offending Wall Street giants.

If it were anyone else, Jamie Dimon wouldn't have been optimistic about China Telecom at all, and wouldn't have believed that its dedicated lines could be successfully established and operated.

But that's Ernst, a guy who has never failed since he entered the business world.

Who knows if he might come up with some brilliant idea to turn the tide?

Despite the difficulty, Jamie Damon is willing to give China Telecom a 20% chance of winning because of the name.

"I believe him," Sandy Weir said.

"What's the reason?" Jamie Damon hadn't expected his old partner to be so certain.

Sandy Weir turned halfway and looked out at the towering skyscrapers. "Even if China Telecom gets the license and the dedicated lines are fully operational, Wall Street still has ways to cause trouble for China Telecom if it really wants to."

Jamie Dimon nodded; he was certain of that, but Wall Street would have to pay a huge price for it.

"I don't believe Ernst didn't think of this, or that he didn't have a backup plan."

Sandy Weir saw this potential, which is why he bet on Ernst's side. Richard Fuld saw the same thing.

His secretary has been showing concern about the matter ever since it happened.

Richard didn't even make a single phone call to Ernst, acting as if he were completely unconcerned.

Because he believed Ernst must have a backup plan.