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Column 092214 Wall

Monday, September 22, 2014

Mexico's Slim, World's Richest Man, must Deal with Reforms

By Allan Wall

Oh, the ups and downs of billionaires!

Mexican telecoms mogul Carlos Slim (owner of Telmex, Telcel and América Movil) was the world’s wealthiest man for several years.  But in March of 2014, Forbes magazine announced that Slim had dropped to second place, with Microsoft mogul Bill Gates back in the number one position, which he had held before Slim.  (See Mexico’s Carlos Slim is No Longer the World’s Wealthiest Man). It’s not that Slim wound up begging with a tin cup on a street corner, he was still worth a cool US$70 billion.

In the world of billionaires, however, things go up and down.  Forbes reported on July 15th (see here) that Slim had moved back on top of the world, once again the world’s richest man, with a net worth of US$79.6 billion.  Bill Gates, on the other hand, was  just going to have to get by on a net worth of US$79.1 billion.

Carlos Slim dominates telecoms in Mexico, controlling 70% of the country’s mobile phone market and 80% of the landlines.

That may be about to change.  Slim, along with broadcaster Televisa, was the target of a new Mexican telecoms law designed to drastically reduce his telecoms market share.

The reform, signed into law by President Enrique Peña Nieto in July, is forcing Slim to slim down his telecoms in Mexico.  The telecoms mogul has to get his holdings in the Mexican phone market under 50 percent.  So he is working on that and I, for one, have confidence that Slim is going to come out ahead on the whole deal.

Both Slim’s fall to the number two spot in March, and his return to the number one spot in July, were related to the telecoms reform.  It’s believed that in May, there were fears about the effects of upcoming telecoms reform on Slim’s empire, which brought down his net worth.  By July, however, Slim had convinced investors that he’s going to get through this fine and still has enterprises worth investing in.  The jump in Slim’s wealth in July, which put him back in the number one spot, was due to a gain of US$5 billion in only 12 business days.  Now he’s wealthier than ever.

Besides, the whole world is Slim’s oyster and he has plenty of telecommunication business outside Mexico.  The telecoms mogul has plans to expand in Latin America and Europe.  For example, Slim is purchasing another big chunk of Telekom Austria which gives him half of that company.

One of Slim’s nicknames is el Rey Midas, from the ancient Greek legend of the king whose touch could transform anything to gold. 

The Mexican telecoms reform was not initially welcomed by Slim, but he’s very pragmatic and flexible, and is now making a virtue of necessity, looking to advance his businesses while reducing his share of Mexican telecoms.

Furthermore, Slim is certainly not limited to the telecoms business, with interests in many other fields.  Through his Grupo Carso conglomerate, Slim has holdings in real estate, retailing, finance and banking, mining, airlines and other fields. 

Another great project Slim has his eye on is the new airport to be constructed in Mexico City.  This is an ambitious undertaking and, if completed as planned, would be a spectacular structure.  See video here about the airport proposal; it’s so fascinating I showed it to my high school students. 

The airport is being designed by world-renowned British architect Norman Foster and Mexican architect Fernando Romero, son-in-law of Carlos Slim (sheer coincidence, I’m sure).  

The new airport is to be constructed adjacent to the Benito Juarez International Airport currently serving Mexico City.  The project is expected to cost US$9.16 billion but will probably cost more.  Construction is to begin next year, in 2015. 

So who will build the new airport?  Nine Mexican construction companies appear interested in bidding for the contract.  One of them is Slim’s Grupo Carso. 

If Carlos Slim could win that contract, his wealth could expand even more.  

So you see, reducing his share of Mexican telecoms is not going to slow Carlos Slim down. 

And according to Forbes latest estimate, Slim’s net worth has already increased by US$6 billion in two months, making Carlos Slim now worth US$85.4 billion! 
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Allan Wall
, an educator, resided in Mexico for many years.  His website is located at http://www.allanwall.info.

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