Business World

Saturday 24 June 2017

Carlos Slim Helu: Slim, lean, mean

Is he a role-model entrepreneur for developing countries or a ruthless crony capitalist?

UNTIL he overtook Microsoft founder Bill Gates to become the richest man in the world, few people outside of Mexico had ever heard of Carlos Slim. This week's announcement from 'Forbes' magazine that Slim now topped its rich list has generated a flurry of the personal publicity that he loathes.

The cutting edge of a new wave of Latin American entrepreneurialism or old-style crony capitalist? Opinions about Carlos Slim have always been sharply divided.

To his supporters, he represents a bright new economic future for a sometimes troubled region. To his detractors, he has ruthlessly exploited political connections to create business monopolies, driving out competition and pushing up prices to the consumer.

Now aged 70, Slim is the son of Lebanese Maronite (Lebanese Catholic) immigrants, who first came to Mexico in 1902.

His father was moderately successful in business. Taking advantage of the turmoil generated by the Mexican Revolution of 1910, he used the profits generated by his dry goods store to pick up property in downtown Mexico City cheaply.

He also brought the first Arabic printing press to Mexico and published a magazine for the Lebanese community.

Civil engineering

Carlos Slim, the youngest of six children was born in 1940, when his father was 52. He studied civil engineering at the National Autonomous University of Mexico.

Slim showed an ability to turn a buck from an early age and was reputedly already worth $40m by the age of 26.

In 1982, he took advantage of one of Mexico's recurring economic crises to purchase a number of companies from the Mexican government and from fleeing overseas investors at fire-sale prices.

However, his big break came in 1990, when the Mexican government privatised Telmex, the country's monopoly telephone operator. He fronted up a consortium, which also included France Telecom and Southwestern Bell, to buy the company.

Even today, 20 years later, nine out of every 10 landlines in Mexico are still provided by Telmex, while Slim's mobile-phone company, America Movil, has an almost 80pc share of the Mexican mobile market.

The monopoly profits earned have financed America Movil's expansion abroad. It now has over 200 million subscribers in Latin America and the Caribbean, where one of its major competitors is Denis O'Brien's Digicel. In January, America Movil announced plans to acquire Telmex, its former parent company.

While his telecommunications interests are his most visible assets, they represent only part of the Slim business empire.

He also controls IDEAL, an infrastructure development company active throughout Latin America. It specialises in developing transportation, oil. gas, power generation and water projects. He also controls Grupo Carso, a Mexican retailing and food-processing group.

Even before this week's announcement from 'Forbes', Slim's enormous wealth, which has been estimated at 2pc of Mexico's GDP, was a source of considerable controversy in his native country, where 17pc of the population live in poverty. So pervasive is his influence in Mexico that one academic has dubbed the country "Slimlandia".

Competitors

Even when one allows for the denigration of his competitors and opponents, what is inescapable is the fact that many of the businesses in which Slim operates, such as telecommunications and infrastructure, depend on favourable decisions by governments for their long-term success.

Despite the fact that his father first went to Mexico 108 years ago, Slim still remains very much part of the tight-knit Lebanese Maronite community in Mexico, rather than integrating into the wider population. Like his father, he too married a fellow Maronite, Soumaya Doumit Gemayel, in 1966.

The couple had three sons and three daughters and remained married until her death in 1999.

Slim has always proclaimed his indifference to media criticism, once declaring that: "When you live for others' opinion you are dead. I don't want to live thinking about how I'll be remembered." But his creeping takeover of the 'New York Times' tells a different story.

In September 2008, he purchased a 6.4pc stake in the New York Times Company, making him the single biggest shareholder outside the controlling Sulzberger family. Then, in January 2009, he lent the heavily-indebted company $250m at a usurious 14pc interest rate.

Last month, he further increased his shareholding in the NYT to 16.4pc. Very few media observers expect Slim's NYT shareholding to stay at its current level for long. If the Sulzbergers are forced to sell, the NYT will almost certainly drop into Slim's lap.

In Mexico, Slim's control over so much advertising spending has generally ensured that most of the local media have kept a respectful distance.

Since his wife's death, Slim has lived alone in the relatively modest six-bedroom house that they shared in Mexico City. Well, not quite alone.

Slim shares the house with one of the world's most outstanding collections of private art, which includes sculptures by Rodin, as well as paintings by Renoir, Van Gogh and Diego Rivera, the outstanding Mexican artist of the 20th century.

Despite it now being one of the biggest conglomerates in the Americas, Slim's empire is still very much a family affair, with his three sons and two sons-in-law active in the business. All of the major decisions are made when the six men have their weekly Monday-evening dinner at Slim's home.

While he controls one of the largest telecommunications groups on the planet, Slim himself is still something of a technophobe. He refuses to use a computer, preferring to write out instructions to his subordinates in longhand.

His only concession to modern technology is the plastic wristwatch he wears that also doubles as a calculator.

He also insists that all proposals submitted to him for decision are no more than one page long.

As he has grown in international stature, Slim, who speaks passable English, has served on several blue-chip international boards. He was a director of Atria -- formerly Philip Morris of Marlboro cigarettes fame -- until April 2006 and still serves on the board of Philip Morris International.

He was a director of the French telecoms equipment manufacturer, Alcatel, and US telecommunications provider, SBC.

So where does Slim go from here? Apart from his art collection, he has generally shunned the trappings of enormous wealth. There are no 100-metre yachts, pneumatic trophy wives or Premiership football clubs. He briefly considered purchasing the Honda Formula One team when it came up for sale but thought better of it.

SUCH ostentation would not be in keeping with the lean and mean approach favoured by his companies. America Movil's headquarters are located in a former tyre factory. Slim likes to count the pennies carefully and keeps a keen eye on costs.

With his net worth now being calculated by 'Forbes' at $53.5bn, $500m more than Bill Gates, Slim is going to come under far more scrutiny from a gringo media much more intrusive than he has grown used to in Mexico.

Unlike Gates, who has promised to give away his entire fortune, Slim has resisted the lure of philanthropy, although he recently pledged to donate $6bn to his three charitable foundations.

Since undergoing heart surgery 13 years ago, Slim has handed over much of the day-to-day running of his businesses to his sons and sons-in-law.

The true test of his legacy will be how they develop these businesses in the years ahead when the founder is no longer there to guide them.

Irish Independent

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