powered by GlobeinvestorGold.com
At the age of 68, Carlos Slim Helu, or just Carlos Slim outside of the Latin family name system, has assets on record of $60-billion (U.S.) and qualifies as the second wealthiest person in the world. A Mexican conglomerate king with vast holdings in Telefonos de Mexico, he has dabbled in U.S. carrier MCI, cigarette maker Altria, computer retailer CompUSA (shuttered last year) and America Movil, the largest cell phone operator in Latin America. He has other interests in construction, companies that provide internet connections, retailing, restaurants and various industrial concerns.
Canadians could compare him to Ted Rogers but there is a difference — it is possible not to do business with Rogers' cell phone network or go to his sports stadium or read his magazines. But Carlos Slim has 75 per cent of the Mexican cell phone market and 90 per cent of the landline business. In Latin America, Carlos Slim is unavoidable, with 100 million cell phone customers in Mexico and other Latin nations, he is a national economy unto himself. For example, his $60-billion wealth is not far from the $61.4-billion (U.S.) gross domestic product of Guatemala
Some Mexicans complain that they cannot get through a day without adding to Carlos Slim's bank account. Ironically, he agrees with them, for though an arch capitalist, in the past he has allied himself with La Jornada, a left-wing Mexican daily newspaper that has called for Mexico to protect its industries from international competition. Paradoxically, Carlos Slim is a very successful international competitor.
Lebanese by background, a Maronite Christian by preference, and a stock investor at the age of 12, he trained as an engineer at the Universidad Nacional Autonoma de Mexico, teaching linear programming and algebra to fellow students. In business, he identified a central economic fact of Mexican telecoms: according to the nation's top government auditor, it costs eight times as much to make an international phone call from Mexico as in the U.S. and twice as much to make cell phone calls. While big companies can negotiate better deals, consumers cannot. Monopoly power and good political connections in Mexico, in the U.S. and around the globe have not hurt the expansion of his empire.
In a financial sense, Carlos Slim is Mexico and Mexico is Carlos Slim. But some economists have raised an interesting question — how is it possible for a country that is 55th in GDP per capita, ranking somewhere between Libya and Equatorial Guinea, to manage to support the biggest personal or family fortune in the world? Political connections alone can't explain the disparity. But business sense can.
Carlos Slim is a dealer. He buys and sells companies the way day traders swap stocks. Said to be unfamiliar with computers, he uses an old notebook with his own version of a manual spreadsheet, calculating baseball batting averages when there is no corporate data to crunch. His goal, it would seem, is to find combinations of profits and
market power. That's what Warren Buffett does in his quest for companies that have long-term or enduring niches in their markets and entrenched ways of adding value.
But in the less than competitive Latin American market, the methodology seems to work
somewhat more efficiently.
Carlos Slim bought the crown jewel of his empire, Telefonos de Mexico, when it was privatized by the government of Mexican president Carlos Salinas de Gortari in 1990. The Carlos Slim business methodology is to get good or great deals, often from friends, in major industries where he is protected from competition. Competition is not the gleam in the eyes of economic planners in Mexico where there is one gas retailer — state owned Pemex and one major television network, Televisa, which, of course, Carlos Slim controls.
Like Warren Buffett, the world's richest man according to the 2008 Forbes Magazine survey, and Bill Gates, now the world's third richest after Carlos Slim, philanthropy has become a passion. He has his own display case for his art, Museo Soumaya in Mexico City, and has donated over $7-billion worth of cash and stocks to fund education and health projects and to rebuild the historic core of Mexico City.
Mexicans are said to have a love-hate relationship with Carlos Slim, proud that he is one of them and angry that they pour so much money into his empire. A recent book
asserts that it is impossible for a person in Mexico to go for one day without putting cash into a Carlos Slim business.
Not every Carlos Slim investment works out. He participated in long distance cable company Global Crossing, which turned into a global bust, and invested in CompUSA which later became insolvent. But his core commitment to telecoms
has boosted him from just a mid-level billionaire to the status of a megabillionaire.
Indeed, depending on the levels of the Mexican Bolsa and the New York Stock Exchange, there are days when Carlos Slim is the richest man in the world. As long as cell phones and landlines generate monopoly profits for him, his status would appear to be assured.
Andrew Allentuck writes about investments for The Globe and Mail, and reviews books on finance for globefund.com and globeinvestor.com. He is also the author of several books.