Carlos Slim (pg. 2)
Slim's cozy relationships weren't limited to powerful government officials. In the 1990s many of Mexico's trade associations were struggling financially because membership in the groups, once compulsory, had become voluntary, and some businesses stopped paying dues. Slim began supporting many of the associations. A trade group leader confessed to a U.S. researcher that he was glad for the financial help, but it certainly kept him from complaining too loudly about phone rates in Mexico.
Middle- and working-class Mexicans are less reticent, says Marco Muñoz, assistant director at the Teresa Lozano Long Institute of Latin American Studies at the University of Texas. They, too, feel Slim hasn't been a good steward of TelMex: Many Mexicans hoped the privatization would produce new operators and lower rates; instead, the company has a virtual monopoly more than 15 years after the government got out of the phone business.
That is due in part to Slim's masterful neutralization of his opponents. AT&T and MCI told local and U.S. regulators that TelMex consistently stymied their efforts to expand in Mexico by setting exorbitant rates to connect calls to TelMex's network. Meanwhile, consolidation in the U.S. - which reduced the landscape to just two big carriers - worked to Slim's advantage. AT&T, of course, is now owned by SBC, Slim's original partner in TelMex. And Verizon (Charts, Fortune 500) just agreed to sell a bunch of wireless and wireline assets in Latin America to Slim. (CEO Ivan Seidenberg got to know the Mexican businessman a few years ago when he was trying to buy MCI and had to cut a deal with Slim, who turned out to be one of the largest owners of the bankrupt company's distressed debt.)
Even as Slim was keeping competitors out of Mexico, he was looking to expand beyond his home country. AT&T CEO Randall Stephenson, who worked in Mexico from 1992 to 1996 overseeing SBC's investments, vividly remembers talking strategy with Slim in 1995. "It's always a late night with Carlos," says Stephenson, who recalls him laying out his plans to go into the rest of Latin America and bet big on wireless. Slim began acquiring wireless assets in the region, and he also took advantage of the dot-com crash in 2000 to scoop up phone assets that had gone belly-up, including AT&T Latin America, which provided him with a backbone for moving traffic throughout the region.
During a recent visit with Slim, Stephenson says he "pulls out this piece of paper, and he keeps on unfolding and unfolding." It was a handwritten table of all the major communications companies in the world. (Slim doesn't use computers.) In one column he had listed all the companies he owns or controls. Elsewhere he listed the other players, along with their revenue and operating and net incomes. "I took the sheet and made a comment about one of the companies, and he starts going through all the financial metrics for the company," Stephenson says, grinning. "He's got all that information in his head."
Another executive at a U.S. telco remembers being summoned to a pitch meeting in Mexico City a few years back, when Slim was looking to invest in busted phone companies. Slim grilled the group for a couple of hours, asking a seemingly endless number of questions concerning minute details about the business, such as margin information for each of the company's segments. Only after Slim left the room did the stunned executive realize that in addition to doing due diligence, Slim had gleaned valuable information about the competition. (An obsessive baseball buff - especially when it comes to the Yankees - Slim also has a moneyball memory for sports stats. In 1998 he even penned an article in a local magazine extolling the performances of historical baseball figures, both famous and obscure.)
Though Carlos Sr. gets most of the credit for building the Slim empire, the various companies for years have been managed by a network of relatives and confidants. While he was undergoing heart surgery in 1997, all eyes were suddenly on his sons. "When I was sick a few years ago, they were very young," says Slim. Still, "they were in charge, and nobody knew I was gone."
I have been whisked into a sparsely furnished conference room at Inbursa's Mexico City offices, waiting to meet the eldest son of the world's richest man. Security guards pace outside the door. Suddenly Carlos Slim Domit (Domit was his mother's maiden name) walks into the room unannounced, sleeves of his dress shirt rolled up, and apologizes for running late. Though Carlos Sr. has announced no formal succession plans, his eldest son and namesake may end up being the de facto public face of the Slim family (he now runs Grupo Carso, the most complex of Slim's three holding companies). It is a role that suits him: Friends and business associates say all the sons are social, but Carlos Jr. is the most charismatic of the three. A bachelor who enjoys car racing (observing, not driving), he seems to genuinely like interacting with the public. Unlike the children of many international moguls, he and his brothers didn't go to European boarding schools or pursue advanced degrees at B-schools abroad. They studied business as undergraduates in Mexico, and they learned on the job.
For Carlos Jr., that meant working at his father's banking operations in his teens, during breaks from school. He went on to join Sanborns (an old-style emporium known for its lunchtime cafeteria crowd), making frequent early-morning trips to La Merced market in an unsavory part of Mexico City to help purchase produce. Eventually Carlos Jr. took over the chain, and under his watch Sanborns became Mexico's No. 1 bookseller and music retailer. Since 1998 he's been running Grupo Carso.
If Carlos is the customer service guy, Marco Antonio is the moneyman. An intense fellow who has inherited his father's mind for math, the middle son has been in his current job, chairman of Inbursa, since 1992, when he was just 24. The stock has performed respectably but hasn't outpaced the broader market. The laid-back youngest son, Patrick, works with brother-in-law Daniel Hajj at América Móvil (Charts). That stock, traded on the New York Stock Exchange and the Bolsa, has tripled since Patrick became chairman in 2004 and has emerged as the greatest source of the Slim family's wealth.
The Slims have also had their share of clunkers, such as the Carlos Jr.-led 1999 purchase of a 15% stake in CompUSA, which has been a disaster. It was all part of a plan to build an Internet business in both the U.S. and Mexico that included dial-up Internet operator Prodigy and a Spanish-language portal. For once, the Slims' timing was terrible. They unwound their U.S. Prodigy investment as consumers flocked to broadband, but held onto CompUSA too long. The company was squeezed by direct sellers like Dell (Charts, Fortune 500) as well as by electronics retailers like Circuit City. Earlier this year CompUSA announced plans to shutter half its 250 stores, and the Slims have said they would consider selling the business. "If we have to make mistakes, we make small mistakes," Slim says. "We prefer no mistakes, of course, but small mistakes are the best mistakes."