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$49 billion is Slim's pickings in Mexico

March 09, 2007|Marla Dickerson | Times Staff Writer

MEXICO CITY — Telecom mogul Carlos Slim Helu has built a corporate empire so vast that it's nearly impossible for most Mexicans to go a day without slipping a few pesos into his pocket.

Those pesos add up. On Thursday, Forbes magazine estimated his net worth at $49 billion.

That represented a stunning $19-billion increase from 2006, the biggest one-year jump in a decade for anyone on the magazine's annual list of the world's richest people.

Microsoft Corp. co-founder Bill Gates' $56 billion helped him retain the top spot. Investor Warren Buffett was again runner-up with $52 billion.

But with those tycoon-philanthropists increasingly focused on giving away their fortunes, the 67-year-old Slim appears destined to surpass them both. Although his third-place ranking didn't change from 2006, he increased his wealth by 63%. That's a growth rate of $2.2 million an hour.

When Mexicans talk on the phone or use the Internet, they're almost certainly doing it through a company controlled by Slim, who in 1990 bought control of the old state-owned telephone company Telefonos de Mexico, or Telmex, and turned it into a cash machine. Profits from that near-monopoly have bankrolled Slim's telecom acquisitions around the region, propelling his America Movil wireless spinoff into the largest provider of cellphone service in Latin America.

Mexicans buy cigarettes from Slim's tobacco company, apply for mortgages at his bank and purchase policies at his insurance firm. Shoppers patronize his department stores, eat at his restaurants and browse for CDs at his music outlets.

Travelers fly his discount airline. Industrialists buy his auto parts, electronics, steel and ceramic tile. The government hires his infrastructure firm to build highways, water treatment plants and oil platforms. More than 250,000 Mexican employees draw paychecks from his companies.

"It's virtually cradle to grave. It's Slimlandia," said George Grayson, a Mexico expert at the College of William and Mary in Virginia. "You are engulfed by Slim in Mexico."

The portly Slim has more than tripled his fortune since Forbes published its 2004 list, thanks to a string of acquisitions and the ballooning value of his telecom holdings. His current net worth is equivalent to nearly 6% of his nation's gross domestic product, a feat unmatched even by America's robber barons at the height of their influence.

News of the spectacular increase in his wealth elicited cheers and jeers in Mexico, where Slim is a polarizing figure. And it comes at a sensitive time for the nation. President Felipe Calderon is under pressure to confront business oligarchs blamed for squelching competition, exacerbating income inequality and retarding Mexico's economic growth.

"I have tremendous respect and affection for him personally," former Mexican Foreign Minister Jorge Castaneda said of Slim. But Castaneda, who has publicly advocated dismantling Telmex, which controls 94% of Mexico's land lines, added, "The problem is that this is a country where we don't have either the regulatory capacity or the political will to break up monopolies."

To some Mexicans, the son of a Lebanese immigrant shopkeeper represents the triumph of hustle over heredity in a nation where a few dozen families have held sway for generations. Slim isn't flamboyant or ostentatious. He has given foreign competitors fits. His ranking among the world's business elite invokes pride in a country that often suffers from a sense of underachievement.

"I'm rooting for him to take first place" on the Forbes list, said Teresa Sotelo, 50, an accountant in the capital. "He's Mexican. We always have to root for our countrymen."

For others, Slim is the outsider who has become the consummate insider, a prime example of the crony capitalism that has benefited the few at the expanse of the many. Nearly everyone gives Slim credit for being a savvy businessman. He made his first investments as a child and has coolly snapped up assets at bargain prices during periods of economic turmoil.

But critics say his purchase of Telmex was a sweetheart deal that merely replaced a public monopoly with a private one. Studies have shown that Mexicans pay some of the highest telecom rates in the world, which is undermining the nation's competitiveness.

Rivals say Telmex has thrown up numerous roadblocks, including high connection fees that have blocked their market access. Regulators have had little success in leveling the playing field. Slim's companies routinely use Mexico's lumbering court system to stave off authorities' rulings against them for years.

And it's not just telecom that's locked up tight. Of the 10 Mexican billionaires listed on the latest Forbes list, seven made their fortunes in industries where there is little competition in Mexico.

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