Carlos Slim Helú: Telecom titan

23:20Now, when Telmex was privatised in 1990, the sale was the largest privatisation in Latin American history and Carlos won the bid. He put up half of the US$1.8 billion cost and got a controlling 20 % stake. He became the biggest shareholder as well as chairman. And upon buying Telmex, he promised a phone in every village and to be fair, he did spend billions on infrastructure. Some did question whether buying a failing telecoms company was a good investment. But as one executive said at the time, it's like selling water in the desert. Within a year of his purchase of Telmex, net profit was up 44%.

23:55Which meant that in 1991, Fortune magazine, which does people outside of the US, they listed Carlos Slim as one of just 202 billionaires in the world. So at the age of 51, Carlos Slim is officially worth$1 billion. He is a billionaire. But he's still a long way off being the richest person in the world, which he became at one point. So how does he get there?

24:23But on his way to a billion, let's learn a little bit more about Carlos the person. Yeah, all the money in the world can't keep you healthy forever. And in 1997, he almost dies. Yeah, at the age of 57, he had a heart valve replaced. It didn't go according to plan. He was briefly declared dead on the operating table after suffering a massive hemorrhage. Yeah, and remember, his dad died of a heart attack. And after this health scare, he starts handing over some of the day-to-day running of his empire to his children. He had six kids with his wife, Samaya. Remember, that's the love of his life, the person for whom his museum of art is named after.

24:57But in 1999, she died aged 51 from kidney problems. As you say, love of his life. He never remarried. Their wedding photo remains on his desk. Although he did actually quip to a Telegraph reporter back in 2011. The only sports he practices nowadays is highball and box spring. referring to cocktails and mattresses. Yes, nice. Anyway, most of his children still work in his business empire. They've taken on different aspects and different parts of the conglomerate. And every Monday he meets his three sons and two sons-in-law for a home-cooked meal at his house to discuss business. It's kind of reminiscent of LVMH bosses.

25:31Oh, yes. Bernard Arnault's kind of monthly lunches of his kids. I know, and we remarked at the time on that one, and you can hear that episode in our archive, about whether his kids look forward to that meeting. I'm just wondering. Yeah, you kind of wonder how they look at the blogger's calendar. Oh, great. It's time to go and have dinner with Dad again. Anyway, his health scare doesn't stop him. Back on the business story, after buying Telmex, he then bought one of the two main suppliers of the copper cables that Telmex used for telephone wires, that is proper vertical integration. And then he made sure that Telmex didn't buy any cables from the other big supplier.

26:05But perhaps the secret to his vast wealth was a little detail of the deal that was done. Remember when he bought Telmex, the ailing telecoms company back in 1990? There was an extra bit that he bought at the time, which nobody could know how important it was going to be because he had the cellular, the mobile license for the entire country. And just think what that does in the age of the Internet and wireless communication. Right, because nobody could really predict the rise of the smartphone or the rise of digital communication. So he was sitting on a goldmine, which he hadn't previously realized.

26:37Now, this is huge because by 2001, the cell phone division of Telmex called America Movil became a separate company. And with the rapid growth of cell phone usage, the company absolutely dominated Mexico. Incredible numbers. By the late 2000s, Telmex controlled over 90 % of Mexico's phone lines and America Movil controlled over 70 % of Mexico's cell phone market. And don't forget the 2000s are also the time of the dot-com crash, which Carlos took advantage of. So he bought other telecoms companies on the cheap, including AT &T Latin America. Today, Americomovil is Latin America's biggest telecom company.

27:14Which effectively means, to my mind, that Carlos Slim operates a monopoly on the telecoms market. Yeah, he's often been accused of being a monopolist, one of the big criticisms that people have of him. And some people say monopolies are very good for the people who own them, but they're not very good for the rest of the economy because you don't get the kind of competition, the kind of innovation, that race to try and be better than the next person, which makes services better and cheaper. You don't get that with monopolies. And arguably, that has knock-on effects for the consumer, right? Because you can basically charge whatever you want, you can provide a bad service, and you don't have a kind of worthwhile competitor to go to to give your money to and say, hey, I'm not having a good time with this other guy.

27:55Can you provide me with a better contract? You've got no choice. Like it or lump it. So many argue that Carlos' control of the Mexican telecoms industry slowed down the nation's development. Yeah, the OECD, that's the Organisation for Economic Cooperation Development, the club of some of the most advanced economies, estimated that it cost Mexicans an extra$13 billion a year between 2005 and 2009 because there was no price competition. And a 2007 study from the World Bank asserted that public and private monopolies were the main issue for slow economic growth and development of the Mexican economy.

28:29In fact, it's one of the worst countries in the world in terms of competitiveness. Well, no wonder if he's got 70 % of the telecoms market and he dominates in other areas. And so why was he allowed to have such dominance? Well, you know, he's the country's largest private employer and the biggest taxpayer. Yeah, when you put it that way, he's got a lot of power indeed. And according to the Wall Street Journal, Mexican Congress routinely killed legislation that threatened his interests. And because his firms account for a big chunk of the nation's advertising revenue, that makes the media reluctant to criticise him because they live off advertising revenues.

29:02Right. You've got to imagine also that his riches have brought him enormous amounts of political influence. I imagine when you become a political leader in Mexico, one of the first people you are invited to meet is Carlos Slim. And though he has a reputation for being a pretty personable guy when you do meet him, he's known also to have a short temper and to be sensitive around press criticism. We should say that Carlos himself denies he's monopolist. I like competition. We need more competition, is a quote from him. Conveniently, however, he also thinks there's no harm in dominating a market if they offer a good service and low prices.

29:35In his words, if a beer in Mexico costs one peso and in the US it costs two pesos, then I don't see the problem. Yeah, unless in fact, unless one of the competitors could sell it to you for half a peso. So you are still paying double what you might otherwise pay, even if it's half what it is in the US. A very good point. Now, he denies that his companies charge high prices, despite many analyses suggesting otherwise. He's also told the New Yorker, if society were to tell me to get out of business, I would do it. But please, ask my critics what they have done for the country. How many jobs have they created?

30:05Oh, how they hate me. That's funny. With the money he was making from his telecoms empire, he invested further into other sectors, construction, mining, oil, broadcasting, airlines, hotels, rail, you name it, he owns it. And by 2007, he controlled more than 200 companies across his portfolio. So in 2007, Carlos Slim companies made up one third of the$422 billion Mexican stock exchange. Remember when we did Mukesh Ambani and we were talking about the percentage of the stock exchange? This is dwarfed by the dominance of Carlos Slim at 5 % of Mexico's gross domestic product. Mukesh Ambani was something like 3%.

30:46Yes. And so he's almost double the size of Mukesh Ambani's grip on the Indian economy. And you can listen to that episode in our archive. If you recognise the name Ambani, remember, that's the guy who paid for the$600 million wedding. Featuring, you know, very famous guests, including Beyonce and one Boris Johnson. OK. Anyway, this is the moment when he sneaks ahead of Microsoft founder Bill Gates. You can listen to that episode too. And they vie for the title of world's richest person over the next few years. Now, some people say that the reason why Slim was beating Gates to the top is because Slim, unlike Bill Gates, was rather slow to adopt charity and philanthropy.

31:25Yeah, it's worth remembering just how big these numbers are. So he's$59 billion at the age of 67 in the 90s. That means for at least two years, Carlos had been making$27 million a day. Just for context, by the way, because we're talking about Mexico, a fifth of Mexicans were getting by on less than$2 a day. Incredible inequality. But it wasn't just in Mexico who was spending money. Throughout the 2000s, he pushed beyond Latin America. He purchased some stakes in US businesses. So in a very typical move for Carlos, when the financial crisis hit in 2008, he actually bought a$150 million stake in the Wall Street Bank Citigroup.

32:02Yeah, going back to that thing, invest at the moment of maximum fear. And having lived through the financial crisis as a journalist and reporting on it, I can tell you people thought that the financial world was on the brink of collapse. But did you still hear about Carlos Slim and people like Carlos Slim going around picking up the wreckage? Yeah, people like Warren Buffett bought in and lent some money to Goldman Sachs, for example. So Carlos Slim's buying into Citi. So this takes incredible courage to be rushing in when everyone else is rushing the other way because banks were going bust left, right and centre.

32:32So what does the richest person in the world do with all that money besides go on a bit of a shopping spree? He buys a newspaper to add to the portfolio. He bought a 7 % stake in the New York Times, put$250 million into the company through a six-year loan. And again, this was during the height of the financial crisis, where it was pretty hard to borrow money from banks who didn't have any. And in 2015, he spent another$101 million to buy more shares, bringing his stake to 17%. Newspapers are a funny business. They haven't been great investments financially, but they do get you influence and power.

33:05Witness right now in the UK, there is a bidding war going on to try and buy the Daily Telegraph, which is actually a profitable newspaper, which is pretty rare among newspapers. But often they are trophy assets. Witness Jeff Bezos buying the Washington Post. Yes. And one of our other billionaires, Patrick Sunxiang, who's a biotech entrepreneur, who is now the billionaire owner of the LA Times. Yeah. So it gets you influence. It gets you control of the narrative. It gets you power. It gets you a direct line to the editor-in-chief who may themselves also be very well connected. And also it gets you a lot of sway with politicians because politicians are very, very sensitive to editorial lines that newspapers will take.

33:44And understandably, when the stakes are this high, you are bound to make some people very angry with the purchase. Now, in fact, a New York Times Mexico correspondent said, Slim is the consummate monopolist. Does being embroiled in a business culture of backscratching and unseen forces make him a great partner for the times? I don't think so. We've talked a lot about his successes. It hasn't always been easy. Now, in the second half of the 2010s, Carlos actually started slipping down the rich list rankings. Now, this is partly due to, as we mentioned, the rise of the tech bros like Mark Zuckerberg and Jeff Bezos.

34:17Yeah. Also, Latin America is prone as a continent to basically have financial crises from time to time. And there was a currency depreciation against the dollar. There was a recession in Brazil. Argentina had been in problems. So that can affect the purchasing power of the pesos you're making in Mexico when you translate that into purchasing power in other currencies. And unlike some of our other billionaires, like Jeff Bezos and Mark Zuckerberg, he's actually tied quite regionally to Latin America. Yeah. The net result of that is that his fortune is worth less in dollar terms. So that's another reason he starts falling down the list.

34:52Now, one of the issues is that when a new government took power in Mexico in 2012, they also brought in anti-monopoly laws designed to increase competition in telecoms. And they were pretty much designed to curb the power of America Mobile. Yeah, a competition consultant said the government's attitude towards his empire was quite a big change. This is the first time Slim does not have a copy of all the keys, according to this unknown consultant. Now, under the new law, his company couldn't charge fees to its smaller competitors when their users called into its network, and it has to share its infrastructure like its cell towers.

35:26This meant a steep fall in profit for America Mobile over the next few years. But Carlos fought back, arguing the new laws forced America Mobile to subsidise its competitors. And in 2017, Mexico's Supreme Court ruled that allowing competitors to use its network free of charge was unconstitutional. Despite this back and forth, having a conglomerate which operates across many industries means you spread the risk. So he could weather storms in particular industries and markets pretty well. Now, Carlos has repeatedly claimed he's about to retire, but then suddenly branches out into a new territory.

35:59And it's a move that's been compared to the tactics of his hero Genghis Khan, who used to kind of lull his rivals into a false sense of security with tactical retreats before going on the offence. Yeah, and age 84, it doesn't look like he's stopping. In June of this year, he got into the UK telecoms market. He paid£400 million for a 3 % stake in BT, formerly known as British Telecom, a former monopoly. And this year was the first time his wealth topped$100 billion, according to Forbes. So Carlos is officially a centibillionaire.

36:34But$102 billion these days, sadly, only brings you to number 14 on the list. So he's no longer the richest person in the world. But still, when you're talking about people who earn hundreds and hundreds of billion dollars, number 14 isn't too bad a place to land at. OK, so we're going to judge him. He's 84 years old. He's worth$102 billion. Let's assess him in our categories. So we assess all our billionaires according to different metrics. Wealth, rags to riches, you know, how far have they travelled to their wealth, levels of villainy, and we rank them from zero to a ten. So let's start with wealth.

37:06How much is Carlos Slim worth? 102 billion. He was the richest man in the world for many years. Out of 10, I'm going to give him a very solid nine, particularly because he comes from one of the poorer countries in the world. I'm actually not going to give him his higher ranking because part of how we judge this category is how they spend it. And he's not exactly a lavish spender. So apparently for decades, he didn't own any houses outside of Mexico. And he still lives in this unpretentious house in Mexico City. Like Warren Buffett lives in the same house he's had since the 1950s in Omaha. Yeah, I mean, I feel like his palate is probably a little bit more adventurous than Warren Buffett.

37:43Warren Buffett, famously big lover of McDonald's. I kind of feel like maybe Carlos Slim has slightly more elevated tastes than that. I'm still going to give him a nine simply because of the wealth relative to his country. For example, in 2007, his wealth was 6 % of Mexico's entire national income. Now, if Bill Gates were to have a similar chunk in the United States, he would have to be worth 784 billion, rather than the actual 59 billion that Carlos Slim was worth back in 2007. Still, I feel like if you want to make it in the worst stakes for me, you've got to spend like a billionaire. You like to see the cash flash.

38:20I like to see the cash flash. I want to see submarines with missile detection systems, you know, supercar collection. So I'm going to give him a modest seven out of 10. Okay, nine for me, seven for you. Rags to riches. How far has he come? Well, it's an interesting one because his family comes from pretty humble origins as, you know, Lebanese immigrants to Mexico. But by the time Carlos was born into the family, they were doing quite well. Basically a pretty solidly successful business person, teaching him the ropes, giving him some advice on how to get ahead. But he did get very, very rich. So I'm going to give him a six.

38:53And in a country, I guess, where getting very, very rich was actually quite rare at the time. Yeah, six for me. I would say six for me as well. You know, he's done pretty well for himself. Okay, so Villeney, have his monopolies damaged Mexico? Yes, according to some. An Oxfam report, for example, said that extreme wealth inequality in Mexico continues to grow. The total wealth of Mexico's 14 ultra rich individuals has doubled since the start of the COVID pandemic. In particular, That of Carlos Slim, writes Oxfam, the richest man on the continent has as much wealth as around 64 million Mexicans.

39:28And as we said earlier on the monopoly question, the OECD reckoned that between 2005 and 2009, his monopoly of telecommunications cost Mexicans$13 billion a year. Oh, that is a lot of money. And also the environmental costs of his business. You know, he's been called out for businesses in oil and mining. You know, his company actually won a$774 million contract on a Maya train project, which has caused serious environmental damage. So apparently legal complaints were filed by groups living along the route trying to stop the railway's progress. Yeah. And the Guardian newspaper named him as a top carbon emitter alongside 11 other billionaires, including Jeff Bezos and Roman Abramovich.

40:12You can listen to those episodes on our archive. And they went on 12 of the world's wealthiest billionaires produce more greenhouse gas emissions from their yachts, private jets, mansions and financial investments than the annual energy emissions of 2 million homes. I mean, it's amazing that Carlos Slim has kept such a clean profile, given the fact that Mexico is often racked with, you know, organised crime, violence, drug trafficking, etc. He seems to have risen to the top, the very top of the economic tree without any of that tainting his international reputation. Especially, you know, going through several decades, right?

40:45He's kind of sat pretty and made money continuously throughout the years. He's an incredible survivor. On villainy, I'm going to say that monopolism is bad for a developing country. America decided monopolies were bad. That's why you have something called the antitrust laws, which are competition laws, because they wanted to break these big steel trusts, banking trusts, railroad trusts, because they realised they were holding America's development back. So as a monopolist, I'm going to say that that's villainy. So I'm going to give him an eight on that basis. I mean, for you, the reason why he's villainous is the monopoly aspect.

41:17I would say for me, the environmental aspect is kind of what tips it over for me. I think, you know, I think that it seems incredible that he's one of the billionaires who are producing the energy emissions of two million homes. Like that seems wild to me. I'm going to give him an eight on villainy for his monopolistic tendencies. And you're going to give him? I'll give him an eight too. For different reasons. For different reasons. OK. Let us then talk about philanthropy. How much of your villainy can you absolve through your philanthropy? So on carloslim.com, there's a rather long quote from Bill Clinton that begins with, Carlos Slim is one of the world's most important philanthropists and most people have never heard about his humanitarian activities.

41:58So let's talk about them now. OK. He does donate billions to various charities from education to health, although many have argued that he doesn't give enough, given the poverty in Mexico and how ubiquitous his companies are. You can't step out your front door without giving Carlos Slim some money. Now, interestingly, he's been publicly sceptical about whether money spent on philanthropy is actually worthwhile. Back in 2007, he said he had no intention of going around like Santa Claus, giving away his money. And at the time when he was the richest person in the world, he was actually openly critical of the giving pledge started by Bill Gates and Warren Buffett to give away half your money in your lifetime.

42:32He said charity doesn't solve poverty. how much charity has been done in the past years? Trillions of dollars. Instead, he argued, many of the problems will be solved by business activity and development. But presumably his business activity and his development, not so much of that of his competitors. Well, funnily, you should mention that because he said, wealth is like an orchard. You have to share the fruit, not the trees. He'd like to own the trees. Yeah, he liked to own the trees and any trees that want to be planted. I'm sorry, you're not coming into the orchard. So I don't know what to think about philanthropy.

43:03He's given away a lot of money, although sceptical about how much good it does. So I'm going to do a straight down the middle, give it a four, maybe. Yeah, I would say a four out of ten. So, OK, four from both of us on philanthropy. Power. In 2018, Forbes ranked Carlos the 20th most powerful person in the world. Now, understandably, given that Bill Clinton wrote a foreword for his website, he's also been known to host Clinton at his home. Yeah, he's had a turbulent relationship with Donald Trump. and Donald Trump, of course, had a turbulent relationship with Mexico and Mexicans. In 2015, Carlos's TV production studio scrapped a TV deal with Trump after Trump said, remember this, some Mexicans crossing the border into the United States were rapists.

43:44Yeah, Trump once described Carlos Slim as the string-pulling manipulator who orchestrated a media conspiracy to defeat his election campaign. Two years later, however, Carlos offered to help Mexico negotiate with Trump and he actually praised Trump's negotiation skills and said Trump would create positive change for those in Mexico. So a very weird relationship. Denise Dresser, a Mexican academic who won a journalism prize in 2009, for an open letter she wrote to the billionaire. It says, past presidents made, I'd say, feeble attempts to regulate Carlos Slim, but they created a monster so big it's very hard to domesticate him at this point.

44:18Wow. So sounds as if Mexico has a very turbulent relationship indeed with Carlos Slim. So power, I would say in Mexico. In Mexico, it's a 10. I mean, he's the most powerful person in Mexico, probably more powerful than the president. I mean, imagine if Rupert Murdoch owned important companies across every single kind of industry in the UK and you get someone like Carlos Slim. Yeah. Within Mexico, he's a 10. And Mexico is one of the world's most important developing economies. I'm going to give him an 8 for worldwide power. Right. I'm going to go with an average. So 10 in Mexico, 8 for worldwide power.

44:55So I think he's a 9 out of 10 for me. I imagine if you get elected to lead Mexico, one of the first people you call is Carlos Slim. Yeah. OK, so you're giving him an 8, you're giving him a 9 on power. And then legacy. How will people remember him? What will he leave behind? Well, interestingly, when Carlos was asked if money motivated him, he said, The truth is, when I pass away, I will not take one cent with me. In my opinion, wealth is a responsibility and in some ways a compromise. You must keep it growing and use it to society's benefit. New York Times editorial board member Eduardo Porter wrote, it takes about nine of the captains of industry and finance of the 19th and early 20th century to replicate the footprint that Mr.

45:37Slim has left on Mexico. So he's talking about people like Rockefeller, Vanderbilt, Aster, Carnegie. So Carlos Slim's impact on Mexico is big as a bunch of those combined. So that's quite a legacy. Yeah. And in fact, if you go to Mexico City now, and you wander around Central Historical, that entire district has been completely cleaned up, that historic old town by Carlos Slim, because it was once full of all these crumbling buildings, it was a real kind of hotbed for crime. And walking through it, it's hard to imagine it ever was like that. It's now beautiful, vibrant, completely well preserved.

46:13Yeah, it's a tricky one, isn't it? Because he's become vastly rich. And he would say he's taken Mexico with him. Do you know what I mean? I think he would argue that he's tried to do good things for his country. He's pulled the country up alongside his own vast increase in wealth. And not many of our billionaires can say that they've done that for the country they were born in. You know, some billionaires, you know, like Ambani, yes. But, you know, if you're, say, Jeff Bezos or Mark Zuckerberg. You've left a huge impact on the world. But on America, did you pull up America from being a pretty like developing nation?

46:46No, you can't really say that. But Carlos Slim can say that for Mexico. Okay. So I mean, legacy within Mexico, he'll probably be one of the most famous people ever. He'll be like Rockefeller in the US, won't he? I mean, he'll be member for generations as being the rich guy. So I think, again, in Mexico, I'd give him a nine at least for legacy. So yeah, Will he be remembered in the rest of the world? Not so much. So overall, I'm going to give him a seven for legacy. Oh, so nine in Mexico, seven internationally. What's that divided by two? Eight. Eight. I think an eight out of 10 works for me. Split the difference.

47:17Split the difference. And then we've got to decide, this is always the hardest pit, whether he's good, bad, or just another billionaire. Oh, it's difficult, isn't it? I mean, I did rank him quite high on villainy. Yeah. I'm going to say he's marginally bad. I think he probably has done great things for Mexico. He's been described as incredibly competent. But because of his monopolistic tendencies, which I'm convinced is bad for a country, I'm going to say he's just shades into the bad territory. I think when you think about the level of inequality in Mexico and, you know, putting aside the billions he's done philanthropically, it clearly hasn't really made a dent on inequality in Mexico.

47:56And he's become this real symbol of the gap between the rich and the poor, something that's only really expanding. It's a tricky one. Do you blame the rich people for inequality? Do you know what I mean? Is it the people who get rich's fault that there's inequality or is it the way the society is organised? But then when the rich people are engaging in business practices, like you point out, of monopolies, you know, and strangling competition, and actually, you know, some might argue costing people money out of their pocket because they exercise such a monopoly on their daily life. Then I think, yeah, I think you have to say that they're bad.

48:30That's a good argument. Okay. Or like I say, he wanders into bad territory for me. So Carlos Slim, you are sadly a bad billionaire. I'm sure he'll be gutted.

48:45So who do we have on the next episode? We have a woman who spotted a gap in the market, a gap between generations, and named a company after it. Her name is Doris Fisher, and she, with her husband Don, founded the clothing giant The Gap. Which was born in the summer of love, faded in the 1980s, was totally dominant in the 1990s. And we'll update the story to tell you how she made a billion from that. Good Bad Billionaire was produced by Hannah Hufford and Louise Morris, with additional production support from Emma Betteridge. James Cook is the editor, and it's a BBC Studios production for BBC World Service.

49:25For the BBC World Service and the podcast commissioning editor is John Manel.

49:41America is changing. And so is the world. But what's happening in America isn't just a cause of global upheaval. It's also a symptom of disruption that's happening everywhere. I'm Asma Khalid in Washington, D.C. I'm Tristan Redman in London. And this is The Global Story. Every weekday, we'll bring you a story from this intersection, where the world and America meet. Listen on BBC.com or wherever you get your podcasts. Thank you.