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Carlos Slim has one of the world’s biggest Rodin collections, almost 400 pieces – and the snide dig in Mexican art circles is that the telecoms tycoon knows the price per kilogramme of each one.
His favourite is “The Thinker”. A bronze cast of the sculpture is displayed in the Mexico City art museum that he built opposite the gleaming headquarters of América Móvil, the telecommunications company that he controls and that forms the bedrock of his $78bn fortune.
Mr Slim has done a lot of brooding lately about América Móvil, the biggest telephone company in the Americas with almost 300m subscribers. Much like in the probably apocryphal tales about his Rodin collection, the world’s second richest person has been weighing the value of its various businesses.
The reason for such deep thought is that this week, after months of delay, Mexico’s reformist government finally passed a monopoly-busting law that seeks to open the country’s $30bn-a-year telecoms market by revenues to greater competition, so putting Mr Slim in a bind.
The law stipulates that, so long as América Móvil controls more than half of Mexico’s telecoms market, it will have to subsidise competition through free network sharing, among other measures; and is also blocked from entering pay television. For months many wondered what Mr Slim would do.
The question has a special significance for him. He was catapulted into the ranks of the mega-rich with the $1.75bn purchase of Telmex – the former state monopoly that is América Móvil’s precursor – which he led in 1990. Moreover, Mexico still accounts for about 40 per cent of América Móvil’s $60bn of annual sales, making it worth protecting.
On Tuesday night, as Congress was poised to approve the new law, Mr Slim dropped his bombshell. For years he had ducked competition rulings with legal injunctions, and ploughed his Mexican business’s prodigious returns into ventures in 20 countries. Now, he said, he was going to break up América Móvil, selling almost a fifth of its domestic assets to as yet unidentified buyers.
The decision seemed to spell the end of an era in which oligarchs controlled swaths of the economy and the start of a more modern, competitive one: the “New Mexico” reformist President Enrique Peña Nieto wants to forge. But does it? Judging by Mr Slim’s form, it is too early to call time on the Old Mexico.
“Mexico is still Slim’s kingdom, his Rome,” says one Mexico City-based banker who knows him well. “He will still invest there and protect it. But the mix of businesses he has at home will become different, more focused on content, with any incremental expansion more likely to be in the rest of his empire.”
Born in Mexico 74 years ago to well-to-do Lebanese immigrants, el Ingeniero – the engineer, as he is known – is renowned for being a magnate of modest tastes. He is “generous with his time, not always with his money ... a disarmingly accessible, discreet and good-natured tycoon”, as Jorge Castañeda, the Mexican intellectual and former foreign minister, has commented.
Mr Slim lives in the Mexico City house he bought 40 years ago, dines with his six children every Sunday (he never remarried after his wife died in 1999), drives his own car and wears suits from his mid-range department store. He is delegating day-to-day operations to his children and their spouses while he thinks more about overall strategy. But the tycoon, who began as a trader, keeps a close eye on costs: at a recent all-day meeting, he realised everyone was hungry – and ordered a delivery, not of gourmet food, but fried chicken and chips.
Mexico is still Slim’s kingdom, his Rome. He will still invest there but the mix of businesses will be more focused on content’
- A Mexico City-based banker
His business style is similar – closer to the frugal asset-allocation model of Warren Buffett than the feverish entrepreneurialism of Steve Jobs. His eclectic range of businesses accounts for about 40 per cent of the value of the Mexican stock market, and includes in addition to telecoms, mining, finance, property, energy and football teams.
Mr Slim also owns some significant media assets, including a stake of more than 8 per cent in The New York Times and an 11 per cent holding in Shazam, a smartphone music-identification app. Last year he snapped up the Latin American rights to air Brazil’s 2016 Olympics, too. Such content will probably form the backbone of América Móvil’s slimmer Mexican operations.
His telecoms focus began with the pioneering of pay-as-you-go mobile phones. Increasingly he is turning to the high end, as the falling price of smartphones and tablets enables even emerging market users to consume digital entertainment in ever greater quantities.
As Mr Slim told the Financial Times 18 months ago: “Content is very important. We want to offer our customers whatever they want to watch, when they want to watch it, and at a price they like.” This week América Móvil was similarly blunt about its strategic thrust into “triple play” – bundled packages of telephony, broadband and pay TV.
It is an open question to whom Mr Slim might sell his assets. He is unlikely to favour local competitors such as the Mexico arm of Spain’s Telefónica, or Mexican media conglomerates Televisa and Azteca
How will the dust finally settle? Mr Peña Nieto can plausibly claim to have forced Mr Slim into action that will bring a new entrant into Mexico’s telecoms market. No government in living memory has managed this. That bodes well in the push for energy liberalisation, too.
Yet Mr Slim’s deep thinking has also yielded a typically hard-nosed solution. Until a couple of weeks ago, América Móvil’s market value stood at about $15bn less than when Mr Peña Nieto became president in 2012. The day after the break-up plan was announced, the shares climbed 10 per cent, meaning the group clawed back almost $7bn. Since América Móvil is 57 per cent owned by Mr Slim’s family, that translated into another handsome return for him as well.
The writers are, respectively, the FT’s Latin America editor and Mexico correspondent
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