After over a month of negotiations, the consortium formed by O2 Telecom and Caesars Capital finally reached an agreement with Deutsche Telekom on the acquisition price of T-Mobile USA.
On October 25th, the two parties announced that Deutsche Telekom's board of directors had approved O2 Telecom's offer to acquire its subsidiary, T-Mobile USA, for $28 billion in cash.
This acquisition price represented a premium of over 10% compared to T-Mobile's current market capitalization, and since it was a cash acquisition, it satisfied Deutsche Telekom.
After all, T-Mobile's stock price had risen since the initial negotiations, but with the collective decline in the stock prices of many telecom companies, T-Mobile's stock price also began to fall, ultimately convincing Deutsche Telekom to sell T-Mobile USA.
At least with this cash, Deutsche Telekom could mitigate its current financial crisis.
Following the agreement, T-Mobile USA began the delisting process.
Ultimately, O2 Telecom will merge with T-Mobile USA to form O2 USA, the American subsidiary of O2 Telecom.
Caesars will provide financing for O2's acquisition, purchasing $20 billion in convertible bonds. Standard Chartered will also provide an $8 billion loan.
Currently, affected by the subprime mortgage crisis, the entire telecom sector is experiencing a continuous decline in stock prices, and O2 is no exception.
However, O2's stock price has performed slightly better than other telecom operators—for example, Vodafone's stock price has fallen 30% from its peak last year.
Caesars' goal is clear: to wait for the stock market to reach a low point by the end of this year or early next year, then initiate a debt-for-equity swap, thereby "bottom-fishing" and expanding its stake in O2.
"Every telecom company is having a tough time right now,"
O2 CEO Barry Trelles told Barron's.
"Many telecom operators have recently implemented layoffs."
In the deepening crisis, telecom operators are not immune.
American operators, at the center of the storm, have been particularly affected.
For example, AT&T announced a 12,000-person layoff plan in the third quarter of this year, Sprint canceled its plan to sell Nextel, and Verizon's acquisition of Alltel is facing funding difficulties.
Meanwhile, T-Mobile USA was directly acquired by O2 Telecom.
A representative from South Korea's SK Telecom revealed that due to the deteriorating business environment, it has abandoned its plans to cooperate with Sprint, the third-largest mobile operator in the United States.
In Europe, global telecom giant Vodafone also recently announced that it would use cost control and layoffs to survive the economic downturn.
France Telecom and Deutsche Telekom were also affected by the subprime mortgage crisis, with Deutsche Telekom even under pressure to sell T-Mobile USA.
"However, compared to telecom operators, device manufacturers have been more affected, especially Apple and Honor Electronics, and their related Android phone sales have exploded."
As Barry Trelles noted, the two most shining stars in the mobile phone industry over the past two years have been Apple and Honor Electronics
, the newcomers who have pioneered touchscreen smartphones. Both the iPhone 3G and the Mate 2 have far surpassed the performance of their predecessors last year.
The sales of these two phones have already exceeded 10 million units, and they have undoubtedly eaten into the sales market share of other traditional mobile phone manufacturers.
Therefore, during the subprime mortgage crisis, those other former mobile phone manufacturers were in a very difficult situation... According to Nokia's third-quarter 2008 financial report, its net profit fell 30%, marking two consecutive quarters of year-on-year declines. The company recently decided to lay off 600 employees and cease supplying mobile phones to major Japanese operators.
Sony Ericsson reported its first net loss in nearly five years, totaling €25 million, and will lay off 2,000 employees.
Motorola suffered a loss of $840 million and laid off 3,000 employees, two-thirds of whom were in its mobile phone division.
BlackBerry, a favorite of Wall Street during the 9/11 attacks, saw its stock price plummet from $150 to $60 in just four months.
According to a recent research report from Credit Suisse, due to global economic uncertainty, the mobile phone industry's outlook for 2009 is not optimistic. Amidst weakening demand and increasing pressure on the supply side of the supply chain, industry-wide revenue is expected to experience its first negative growth in eight years, with mobile phone sales in 2009 potentially falling by 4% to 27% compared to 2008.
Market research firm iSuppli recently stated that due to the impact of the economic crisis, consumers are taking longer to replace their phones, leading to a continued decline in the global mobile phone market in 2009.
iSuppli has lowered its global mobile phone market forecast, estimating that mobile phone shipments in 2009 will reach 1.22 billion units, a 6 percentage point decrease from its 2008 forecast.
Affected by the economic environment, some equipment manufacturers reported poor performance in the third quarter of 2008. Cisco, Nokia Siemens, Nortel, Texas Instruments, Samsung, NEC, and Motorola all reported losses and lowered their fourth-quarter forecasts.
The situation is dire for the chip, storage, and system equipment sectors. Due to increasing revenue pressure, some equipment manufacturers have begun adjusting, narrowing their business scope and strictly controlling costs to help them weather the downturn.
Due to preconceived notions, even though brands like Samsung, Motorola, and Sony Ericsson have launched Android-based phones, their sales have been unable to compete with Apple and the Honor Mate series.
It can only be said to have slightly reversed its decline.
...
"If we acquire Motorola, is there any hope?"
Baron asked after hearing Ivanta's idea on the phone.
"Why?"
"We need more patents, and Motorola has over 17,000 mobile phone-related patents and 7,500 patent applications. Acquiring these patents will protect our Android team from patent lawsuits..."
Ivanta's words were audibly cautious.
"You should know that Google's secretly developed mobile operating system is likely to be released soon!"
Yes, it was Baron who revealed this news to Ivanta, and he only learned about it when Google began to frequently contact certain mobile phone manufacturers.
According to Baron's further research, Google began its efforts over a year ago, probably after Android officially announced the Android mobile operating system.
They probably didn't imagine at the time that the small company they had hoped to acquire but failed would eventually develop a mobile operating system that could rival Apple's iOS.
Unwilling to lose access to the internet for smartphones, Google decided to secretly launch its own mobile operating system project.