$49 billion is Slim’s pickings in Mexico
Telecom mogul Carlos Slim Helu has built a corporate empire so vast that it’s nearly impossible for most Mexicans to go a day without slipping a few pesos into his pocket.
Those pesos add up. On Thursday, Forbes magazine estimated his net worth at $49 billion.
That represented a stunning $19-billion increase from 2006, the biggest one-year jump in a decade for anyone on the magazine’s annual list of the world’s richest people.
Microsoft Corp. co-founder Bill Gates’ $56 billion helped him retain the top spot. Investor Warren Buffett was again runner-up with $52 billion.
But with those tycoon-philanthropists increasingly focused on giving away their fortunes, the 67-year-old Slim appears destined to surpass them both. Although his third-place ranking didn’t change from 2006, he increased his wealth by 63%. That’s a growth rate of $2.2 million an hour.
When Mexicans talk on the phone or use the Internet, they’re almost certainly doing it through a company controlled by Slim, who in 1990 bought control of the old state-owned telephone company Telefonos de Mexico, or Telmex, and turned it into a cash machine. Profits from that near-monopoly have bankrolled Slim’s telecom acquisitions around the region, propelling his America Movil wireless spinoff into the largest provider of cellphone service in Latin America.
Mexicans buy cigarettes from Slim’s tobacco company, apply for mortgages at his bank and purchase policies at his insurance firm. Shoppers patronize his department stores, eat at his restaurants and browse for CDs at his music outlets.
Travelers fly his discount airline. Industrialists buy his auto parts, electronics, steel and ceramic tile. The government hires his infrastructure firm to build highways, water treatment plants and oil platforms. More than 250,000 Mexican employees draw paychecks from his companies.
“It’s virtually cradle to grave. It’s Slimlandia,” said George Grayson, a Mexico expert at the College of William and Mary in Virginia. “You are engulfed by Slim in Mexico.”
The portly Slim has more than tripled his fortune since Forbes published its 2004 list, thanks to a string of acquisitions and the ballooning value of his telecom holdings. His current net worth is equivalent to nearly 6% of his nation’s gross domestic product, a feat unmatched even by America’s robber barons at the height of their influence.
News of the spectacular increase in his wealth elicited cheers and jeers in Mexico, where Slim is a polarizing figure. And it comes at a sensitive time for the nation. President Felipe Calderon is under pressure to confront business oligarchs blamed for squelching competition, exacerbating income inequality and retarding Mexico’s economic growth.
“I have tremendous respect and affection for him personally,” former Mexican Foreign Minister Jorge Castaneda said of Slim. But Castaneda, who has publicly advocated dismantling Telmex, which controls 94% of Mexico’s land lines, added, “The problem is that this is a country where we don’t have either the regulatory capacity or the political will to break up monopolies.”
To some Mexicans, the son of a Lebanese immigrant shopkeeper represents the triumph of hustle over heredity in a nation where a few dozen families have held sway for generations. Slim isn’t flamboyant or ostentatious. He has given foreign competitors fits. His ranking among the world’s business elite invokes pride in a country that often suffers from a sense of underachievement.
“I’m rooting for him to take first place” on the Forbes list, said Teresa Sotelo, 50, an accountant in the capital. “He’s Mexican. We always have to root for our countrymen.”
For others, Slim is the outsider who has become the consummate insider, a prime example of the crony capitalism that has benefited the few at the expanse of the many. Nearly everyone gives Slim credit for being a savvy businessman. He made his first investments as a child and has coolly snapped up assets at bargain prices during periods of economic turmoil.
But critics say his purchase of Telmex was a sweetheart deal that merely replaced a public monopoly with a private one. Studies have shown that Mexicans pay some of the highest telecom rates in the world, which is undermining the nation’s competitiveness.
Rivals say Telmex has thrown up numerous roadblocks, including high connection fees that have blocked their market access. Regulators have had little success in leveling the playing field. Slim’s companies routinely use Mexico’s lumbering court system to stave off authorities’ rulings against them for years.
And it’s not just telecom that’s locked up tight. Of the 10 Mexican billionaires listed on the latest Forbes list, seven made their fortunes in industries where there is little competition in Mexico.
They include broadcasting magnates Ricardo Salinas Pliego (No. 172, $4.6 billion), chairman of TV Azteca, and Emilio Azcarraga Jean (No. 459, $2.1 billion), chairman and chief executive of Grupo Televisa. Their two companies control 94% of the nation’s television stations and virtually all of the industry’s advertising revenue, making Mexico the most closed TV market in Latin America outside Cuba.
The broadcasters sparked public outrage in the spring by pushing through legislation that critics say gave them free digital spectrum and made it tougher for new players to enter the market.
The companies appeared to preempt another potential competitor in December. TV Azteca and Televisa aired multipart news features criticizing a company owned by Isaac Saba, a Mexican entrepreneur who was seeking permission to start a third television network in partnership with U.S. Spanish-language broadcaster Telemundo.
Critics pounced on the flap as a prime example of why Mexico needs to pry open its television market and other key sectors to competition. Economists, regulators and world development agencies have all weighed in with similar conclusions -- that oligopolies are saddling Mexican consumers and businesses with high prices and holding back economic growth. But the conservative, pro-business Calderon has shown little appetite for taking on any of Mexico’s entrenched corporate titans.
Still, the drumbeat of criticism may be forcing Mexico’s monopolists to try to soften their image. Slim, who has ceded most of the day-to-day control of his empire to his sons, recently said he planned to devote most of his time to philanthropy. In an interview with Business Week magazine this month, Slim said he doubled the endowment of his family’s Carso Foundation to $2.5 billion last year. His company’s Telmex Foundation has a $1.2-billion endowment.
Although that might be chump change to Gates and Buffett, who have already committed more than $30 billion each, it’s a big deal in a nation with a weak tradition of charitable giving among the business elite.
But some experts say a kinder, gentler Slim won’t make the job of Mexico’s antitrust authorities any easier.
“Carlos Slim may start giving away money hand over fist,” said Pamela Starr, Latin America analyst with the Washington-based Eurasia Group. “But that doesn’t mean he won’t try to protect his monopoly as long as he can.”
Times staff writer Carlos Martinez contributed to this report.
(BEGIN TEXT OF INFOBOX)
U.S., $56 billion, Microsoft
U.S., $52 billion,
Carlos Slim Helu
Mexico, $49 billion, telecom
Ingvar Kamprad and family
Sweden, $33 billion, Ikea
India, $32 billion, steel
U.S., $26.5 billion, casinos, hotels
France, $26 billion, luxury goods
Spain, $24 billion, apparel
Hong Kong, $23 billion,
David Thomson and family
Canada, $22 billion, inheritance
Source: Forbes magazine
Carlos Slim Helu
Parents: Julian Slim Haddad and Linda Helu (Lebanese immigrants)
Marital Status: Widower (wife died in 1999); six children
Education: Civil engineering degree from the Mexican National Autonomous University, 1962
Position: Honorary president of Telefonos de Mexico (Telmex), Grupo Financiero Inbursa (banking and insurance), America Movil (cellular service), Grupo Carso and Carso Global Telecom.
How he got started
Inherited his first real estate properties. During Mexico’s economic crisis in the 1980s, Slim bought almost-bankrupt companies and led them to profitability. During this time, he bought cigarette maker Cigatam and the Sanborns restaurant chain. In 1990, when Telmex was privatized, Slim bought a majority share. He appeared in Forbes magazine’s billionaires list for the first time in 1991 with $1.7 billion.
Major companies he owns:
America Movil: Wireless telephone service -- 43.2 million clients and revenue in Mexico of $9.95 billion in 2006
Telmex: Fixed-line telephone service -- 18.3 million phone lines and revenue in Mexico of $11.7 billion in 2006
Prodigy: Internet access -- 2.6 million clients in Mexico in 2006
Sanborns: Department stores and restaurants -- 18,500 employees
Cigatam: Marketer of Marlboro and Benson & Hedges cigarettes
Sears, Roebuck de Mexico: 56 stores
Volaris: Airline -- 46 to 48 daily flights
Grupo Financiero Inbursa: Banking and insurance -- $314.2 million in profit in 2006
MixUp: CD retailer -- 60 stores
Times research by Carlos Martinez