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Eric opened the material Chris handed over and read it.
Compared with the giant AT-T in the telecommunications industry with a market value of more than 80 billion and annual profits of more than 4 billion at this time, the situation of the other two large telecommunications companies Verizon and Sprint trying to enter the mobile communication market is far worse.
Verizon's predecessor was Bell Atlantic, which was dismembered from the original AT-T in the telecommunications monopoly case in 1984. After ten years of development and integration, Verizon's current market value is 23 billion, but Verizon has been in a downturn in performance in recent years State, last year it lost 700 million 54 million US dollars.
In comparison, the market value of Sprint, which is not from the Bell family, is only 10.5 billion US dollars. However, Sprint's operating conditions are far better than Verizon. In 1994, the annual profit reached 880 million. Perhaps it is also stimulated by this good performance. , Sprint is ambitious to deploy a wireless communication network nationwide, so it frantically sold A and B segment licenses during the auction process, and finally obtained a wireless spectrum license that even exceeded the sum of the two major telecom giants AT-T and Verizon Therefore, Sprint will bear as much as 1.5 billion U.S. dollars in spectrum authorization fees. This expenditure alone is equivalent to the company's net profit for two years under the current good operating conditions of Sprint.
After reading the information, Eric almost understood why Chris said that it is not impossible to pull Verizon and Sprint into the CDMA camp.
Although these two companies are giants in the US telecommunications industry, they are far from being comparable to their big brother AT-T.
Due to several mergers and acquisitions in recent years, Verizon has accumulated a huge debt of 8.9 billion US dollars, which is equivalent to 38% of the company's market value. This is also the main reason for Verizon's continuous losses in recent years. It has increased its debt expenditure by about US$600 million, and it wants to complete the construction and successful operation of the mobile communication network, and its debt ratio is likely to exceed 50% in the next few years.
And Sprint's situation is not necessarily so good, although its original operating conditions are very good, but this company's expansion in the field of mobile communications is too large. The $1.5 billion spectrum license expenditure and the huge amount of money required for the construction of a nationwide mobile communication network in the next few years may even make it go down the old road of Verizon's continuous loss for a long time in the future.
The wealthy AT-T can make the decision to choose GSM technology as its mobile communication network standard without hesitation, regardless of factors such as the possibility that GSM may be eliminated by the more advanced third-generation communication technology in the future. But Verizon and Sprint, whose financial situation is very tight, need to carefully consider the cost factor of the technical standard they choose next in the process of communication network construction. Although CDMA technology has not yet been commercially available. However, many experimental evidences prove that CDMA has huge advantages over second-generation digital communication technologies such as GSM in terms of spectrum capacity and network construction costs.
Chris patiently waited for Eric to finish reading the information, and said: "In addition to the factors of CDMA itself, if Firefly expresses its interest in the telecom industry and publicly spends on Qualcomm, it is very likely that Verizon and Sprint will lean towards CDMA. Because with the further expansion of the debt burden of the two companies, whether it is debt financing or equity financing, it will be more difficult for them to obtain funds, but Firefly has the huge funds they are desperately looking for, even if we do not If they do not provide direct financial support to these two companies, they will also tend to carry out technical cooperation with Qualcomm, which has the powerful backing of Firefly.”
Eric nodded, leaning on the sofa, rubbing his fingers lightly on the documents in his hands, but he had some other thoughts in his mind.
No matter in any country, the telecommunications industry is monopolized by some giants, if not for the famous telecommunications anti-monopoly case in 1984. AT-T has developed to the present, and it will definitely be the company with the highest market value in the United States. Even if it was split off seven subsidiaries, AT-T, with a market value of more than 80 billion US dollars at this time, is still among the top five corporate giants in the United States. The market value of General Electric, which ranks first, is only more than 90 billion US dollars.
Although in the United States, AT-T's monopoly did not happen with administrative support, and even if AT-T wants to expand further, it will be restricted by the anti-monopoly department of the federal government, but even after a large-scale demolition Points, AT-T's real monopoly status is also difficult to be broken. Because after more than 100 years of development, AT-T has a complete national fixed-line communication network. This network not only costs a lot, but also cannot be easily built in three to five years. Many emerging companies want to develop their own telecommunications business, and most of the time they even need to lease communication lines from AT-T. In this case, it is basically impossible for latecomers to catch up with or even surpass AT-T.
But something that has looked like a long shot in the past few decades. With the arrival of the wave of new technology, there have been two important opportunities to break the industry structure, the rise of the mobile communication industry and the network broadband industry. These two industries are currently in their infancy. Except for Eric, a traveler, no one knows what kind of scale these two industries will develop in the future, but Eric knows very well that twenty years later However, any of the two major industries of mobile communication and network broadband will far surpass the fixed telephone business that AT-T relies on to maintain its monopoly position at this time. Even before Eric is reborn, many families have no longer Fixed telephones are installed, but mobile phones and broadband have gradually become necessities in people's lives.
Although the recent segment C license auction was delayed due to the absurd lawsuit, it indicates that latecomers want to enter the telecommunications industry, and there are still many industry barriers, whether explicit or hidden. But these barriers are nothing to Eric, who already has a huge amount of capital in his hands. To use some online game terms in later generations, he doesn't have to start from scratch like those Xinshoucun trumpets, but can spend money to buy them. A good high-level account directly enjoys the fun of the game, and at this time he has two good 'game accounts' in his hand.
Eric still knows a little about the future development prospects of these two companies. Verizon, Sprint and AT-T will be the three giants of the US telecommunications industry in the future. He guessed that the future situation should be that the three companies, especially Verizon and Sprint is now sparing no effort in the layout of mobile communications. At this time, some other telecommunications companies in the United States that are comparable to Verizon and Sprint, such as BellSouth and Northern Telecom, should also be due to missing this important industrial change. The market is eliminated or absorbed by other enterprises.
Moreover, because the payment of spectrum license authorization fees and the construction of a nationwide mobile communication network require huge funds, now is also the best time to invest in these two companies. Eric knows that this should also be the last moment. Maybe he missed it. It is very difficult to have another chance, because of the arrival of the new wave of technology, when the Nasdaq index starts to soar wildly in the next few years, whether it is Verizon or Sprint, they only need to issue a small amount of shares to the circulation market to raise enough development Therefore, it is impossible to introduce major shareholders such as Firefly, which changes the company's equity structure, and even if they are willing, Firefly will not be able to provide enough funds when the market value of the two companies soars.
Seeing Eric suddenly lost in thought, Chris waited patiently for a while before asking, "Eric, what are you thinking?"
Eric came back to his senses, raised the information in his hand, and asked bluntly: "Chris, which of the two companies, Verizon or Sprint, do you think is more likely to accept our investment?"
Chris raised his eyebrows. Just as he was about to speak, the communicator near the two beeped a few times. Eric got up and pressed the call button to answer, and the voice of the manor guard came from inside: "William Mr. Si, Mr. Jacob and Mr. Salmasi have arrived." (To be continued.)