Imagine if the grocery store, the cell phone provider, and biggest national construction outfit were all owned by the same company. You could buy just about anything and never have to enrich any competitors. That is the case in Mexico, where one of the world’s richest people, Carlos Slim Helú, resides.
How he amassed his wealth – $65 billion in 2017, according to Forbes — is a study in both business acumen and political connections.
Early Days:
Carlos Slim was born on Jan. 28, 1940, in Mexico City, Mexico. His parents, Julián Slim Haddad and Linda Helú Atta, were both Maronite Catholics of Lebanese descent. Carlos’ father, born Khalil Salim Haddad Aglamaz, was sent to Mexico in 1902 to avoid being drafted into the Ottoman Army. After arriving in Mexico, Carlos’ father changed his name to Julián Slim Haddad.
The family was part of a small but commercially prosperous community of Lebanese Christians who poured into Mexico in the late 1800s and early 1900s.
In a community devoted to commerce, Julian Slim was a natural, opening a dry goods store in 1911, which grew to offer more than $100,000 worth of merchandise just 10 years later. With proceeds from the store, he would go on to buy prime real estate in Mexico City during the 1910-1917 Mexican Revolution.
His savvy investments in real estate, along with his continued success as both a retailer and a wholesaler made Julián a rich man, with a net worth of more than 1 million pesos.
From a young age, Carlos took an interest in his father’s business. And his father happily obliged with business lessons about management, reading financial statements and keeping financial records.
In 1953, when Carlos was only 13 years old, his father died. After his father’s death, the young man continued to work for his late father’s company, which would ultimately be passed on to him. When Slim graduated high school, he went on to the National Autonomous University of Mexico, where he studied civil engineering while teaching algebra and linear programming.
While studying civil engineering, Slim also took an interest in economics, taking a series of courses on the subject in Chile after he graduated in 1961. He went into finance shortly afterward, working long days as a stock trader in Mexico City.
By 1965, at the age of 25, his trading had netted him roughly $400,000, more than $3 million in present dollars. He used the money to open his own brokerage firm, called Inversora Bursátil.
One of his biggest opportunities was the peso crisis in the early 1980s, coupled with a steep decline in oil prices. Capital was fleeing the country, and Slim bought a number of companies cheap.
A Wide Reach:
Slim has a hand in literally hundreds of other companies, largely through Grupo Carso SAB, Slim’s global conglomerate. Grupo Carso has or has had stakes in enterprises as diverse as Elementia, one of the largest cement companies in Mexico, retail including Sears and Saks Fifth Avenue, energy and construction (via CICSA) and automotive (via Grupo Condumex). He even has a stake in The New York Times.
Perhaps the biggest piece of Slim’s wealth comes from telecommunications. Slim is the owner of América Movil, formerly Teléfonos de Mexico, or Telmex. Telmex was the old telephone monopoly in the country, the government privatized the company, and Slim was one of the initial investors, via Grupo Carso (the other members of the consortium were France Télécom and Southwestern Bell Corporation). The price: $1.8 billion, half of which was put up by Grupo Carso, for a 20% stake. Carlos Slim was at the helm of Grupo Carso and, as such, took over at Telmex.
By 2012, América Movil, Slim’s mobile telephony company, had taken over Telmex and made it into a privately held subsidiary. América Movil, via the subsidiary Telcel, has a market share approaching 70% of the mobile phone line market, and 80% of the landlines in Mexico.
Now the company is poised to sell assets to bring its market share below 50%, in the wake of new anti-monopoly regulations in Mexico. But Slim is probably not upset that the various assets, such as cell phone towers, could easily bring in $8 billion or more – a very handsome profit on the original investment.
The Global Empire:
América Movil, through various subsidiaries, isn’t just in Mexico. In the U.S., the most visible brand is TracFone, a low-cost cellular phone operator. In Austria, the company owns a majority stake in Telekom Austria. Slim’s telecom empire reaches almost every country in Latin America.
Yet it wasn’t necessarily a deep knowledge of technology or telecommunications that made the company what it is today. Slim has often said that his strategy is to reinvest the profits into the business itself and fuel growth. Telmex, for example, invested billions over several years to install an updated fiber network in the 1990s, and that left the company in a position to offer high-speed internet service.
The pattern is typical of Slim’s business deals over the course of his life – buy an asset, reinvest and sell at a profit. Telecommunications is only the most visible piece of that strategy.
Carlos Slim The Turnaround Specialist:
Slim’s strategy has been to buy up sometimes troubled companies and try to turn them around. The advantage of that model is that it doesn’t necessarily require a specific knowledge of any given sector – just a keen sense of what is undervalued and what isn’t.
Slim is also less interested in the fine details of the businesses he buys. Any transaction is just that – the goal is to sell his stake at a profit later. For instance, his purchase of a stake in The New York Times is less about editorial policy and more about the idea that the paper can gain value as an asset.
Carlos Slim Corners the Market:
Another issue is monopolistic practices. One of the assets Slim picked up with Telmex was one of the largest Mexican makers of copper wire. He then stopped Telmex from buying wire from the company’s competitor. For years, the Mexican government has fought to curb Slim’s dominance in the telecommunications sphere.
However, when the Mexican government attempted to increase competition in the phone business, it didn’t account for the fact that new companies had to pay Telmex an interconnection fee. Telmex simply set such fees very high, making it tougher for any other provider to undercut prices, especially for long distance calls. Eventually, the practice stopped, after much negotiation between the government, Slim and the upstarts.
Critics have noted that with Slim’s companies owning such large market shares, and driving out competitors, the Mexican economy has suffered. A lack of an even playing field means that new entrants have a tougher time mounting a challenge to an incumbent player.
América Móvil held 72% of the Mexican wireless market in 2016, according to the Organization for Economic Cooperation and Development (OECD). However, AT&T is spending billions to compete with América Móvil. New challenges lie ahead for the telecom giant in upcoming years.
Carlos Slim’s Real Estate Holdings:
Not an area that Slim focused on in his early years, real estate has become a major part of his portfolio in the past two decades. Part of this was a natural undertaking as part of the expanding conglomerate, such as the 20 shopping centers throughout Mexico, 10 of those in Mexico City.
However, in 2006, Slim purchased the Duke Semans mansion for $44 million, considered one of the last great private residences on Fifth Avenue in New York City. In 2015, it was put up for sale for $80 million but taken off the market in 2016 when he could not find a buyer.
Slim also purchased two commercial buildings in the United States in 2015, including the PepsiCo Inc. (PEP) Americas Beverages’ headquarters just north of New York City and the Marquette Building in Detroit.
Grupo Carso’s main complex headquarters in Mexico City, named Plaza Carso, includes the Museo Soumaya, Museo Jumex, the Plaza Carso Shopping center, three residential towers and three commercial office buildings completed at an estimated cost of $1.4 billion.
Finally, Slim’s late wife was an avid art collector, and he built the Museo Soumaya in her honor. It houses almost 70,000 works of art, including the largest collection of Rodin art outside of France, as well as a host of masterpieces by Matisse, Van Gogh, Monet and Dali, just to name a few.
More of What You Didn’t Know About Carlos Slim:
Birth date: January 28, 1940
Birth place: Mexico City, Mexico
Birth name: Carlos Slim Helú
Father: Julián Slim Haddad, real estate investor
Mother: Linda Helú Atta
Marriage:Soumaya Domit Gemayel (1966-1999, her death)
Children:Carlos, Marco Antonio, Patrick, Soumaya, Vanessa, Johanna
Education: Universidad Nacional Autonoma de Mexico, 1961
Nicknamed “El Ingeniero” (the engineer).
His father was a Lebanese immigrant, as were his maternal grandparents.
His father died when he was 13.
Bought shares of the Banco Nacional de Mexico at 12.
Is a huge baseball fan.
Has been criticized for monopolizing markets in Mexico.
Founded the Telmex Foundation, Carlos Slim Foundation and Historic Center of Mexico City Foundation.
Timeline:
1965 – Acquires a bottling company, Jarritos del Sur, and incorporates a stock brokerage, Inversora Bursatil. Also establishes real estate, construction
and mining companies.
January 1966 – Incorporates his real estate company, Inmobiliaria Carso.
1970s-1980s – Expands and diversifies his holdings in real estate, industry and commercial enterprises.
1980 – Slim combines all of his business interests into Grupo Galas, known today as Grupo Carso.
1982 – During Mexico’s financial crisis, Grupo Carso acquires the controlling interest in dozens of companies.
1990 – Grupo Carso goes public and its companies merge. Grupo Carso acquires Telmex, the newly denationalized telecommunications monopoly, in a venture with Southwestern Bell, France Telecom and several Mexican investors. Carso Global Telecom is created as Telmex’s holding company. Slim also acquires mobile telecom company Radiomovil Dipsa, a subsidiary of Telmex, and renames it Telcel.
1994 – Founds Museo Soumaya, a non-profit art museum named after his wife.
March 14, 1994 – Slim’s cousin, financier Harp Helu, is kidnapped. The billionaire is released in June after the family agrees to pay an undisclosed amount, which may have been an almost $30 million ransom.
1995 – Founds the Telmex Foundation.
1996 – Grupo Carso splits into Carso Global Telecom, Grupo Carso and Invercorporacion.
1997 – Purchases Mexico’s arm of Sears Roebuck. Telmex USA begins operation.
1997 – Slim undergoes successful open-heart surgery. Begins handing over day-to-day operations of his businesses to his children.
2000 – Acquires the ailing CompUSA for nearly $800 million.
2005 – After acquiring a 13% stake in MCI, Slim sells off stake to Verizon Communications Corp. for $1.1 billion.
March 2007 – Slim pledges $6 billion to his charitable foundations.
May 2007 – Founds the Carlos Slim Health Institute, a non-profit that aims to make health care affordable and accessible in Latin America, through his Carlos Slim Foundation.
December 2007 – Unable to turn CompUSA around, Slim sells it to a restructuring firm. The retailer shuts down most of its stores and its remaining assets are sold off.
2008-2009 – Buys a nearly 7% stake in the New York Times, and invests $250 million into the company via a six-year lending agreement.
2010-2013 – Ranked the world’s richest man by Forbes four years in a row.
2011 – Opens a new Museo Soumaya facility in Mexico City. The museum is designed by Slim’s son-in-law, architect Fernando Romero.
July 2014 – While attending a business conference, Slim proposes the idea of an 11-hour per day, 33-hour work week. He says the three-day work week would improve quality of life.
January 14, 2015 – Slim exercises warrants to acquire 16 million more shares of the New York Times, making him the company’s largest individual shareholder, with an almost 17% stake.
June 2015 – Slim’s TV production studio, Ora TV, drops a partnership on a project with Donald Trump after Trump says in his presidential campaign launch that some Mexicans crossing the border into the United States are “rapists.”
January 18, 2017 – Slim announces plans to launch Nuestra Vision, a television channel tailored to Mexicans living in the United States.
January 27, 2017 – Slim offers to help Mexico negotiate with US President Donald Trump after seeing the national response Mexico has had in facing the new US government. The billionaire praises Trump’s negotiation skills and says the US president wants to “transform the United States” and there will to be “positive” changes for those in Mexico.
March 2018 – He and his family rank seventh on Forbes’ 2018 list of the world’s billionaires, with a net worth of $67.1 billion.
