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 Business News | April 2005 
Carlos Slim Still Unable to Crack US Market
 Wire services
| | Carlos Slim's interest in the US market has long been evident. |
Latin America's richest man is now more than a billion dollars richer. But after selling his stake in MCI to Verizon, Carlos Slim of Mexico is once again without a major foothold in the U.S. market.
Analysts once speculated that Slim was holding out for the top spot at MCI Inc. the former WorldCom with the shares he bought at bargain-basement prices when the company was emerging from bankruptcy.
Instead, it turned into another chapter albeit a lucrative one in Slim's history of in-and-out deals north of the border. New York-based Verizon Communications Inc. announced on Saturday it bought his MCI stake to strengthen its bid to acquire the long-distance carrier based in Ashburn, Va.
In 2000, Slim ended a joint venture with U.S. carrier Sprint Corp. His purchase of retailer CompUSA Inc. that same year was less than wildly profitable. And in 2003, Slim was turned down in a bid to buy the Circuit City Stores Inc. retail chain.
Which all leads to the question of what Slim will buy next.
"This appears to be a classic speculative financial transaction, without any strategic aim or attempt at gaining position," Celso Garrido, an economics professor at the National Autonomous University of Mexico, said of the MCI deal. "It appears to be simply profit-taking."
The odd thing, Garrido added, is that the action "appears to favor a potential competitor, promoting growth at a rival like Verizon that will probably one day take a stake in Latin American mobile telephones," which are Slim's strong suit.
To be fair, Slim had said in 2003 that his 13 percent MCI stake "is a financial investment."
"We are not thinking about buying it or taking seats on the board," he said.
Still, Slim's interest in the U.S. market has long been evident.
"By becoming president of MCI, Carlos Slim would be fulfilling his dream of entering the United States in a big way," Ryan O'Connelly wrote in the magazine America Economia in 2004. "Up until now, the magnate ... has only bought small firms in the country."
Slim has stakes in U.S. firms including the food and tobacco conglomerate Altria Group Inc., and high-end retailer Saks Inc. But both appear to be buy-low, sell-high holdings.
Analysts say Slim may well turn his sights away from his onagain, off-again interest in the U.S. market and use the estimated US1.1 billion he earned from the MCI sale to go on another buying spree in a region that has been good to him: Latin America.
Not bad for shares that Slim reportedly acquired for the equivalent of just US388 million a few years earlier.
"He may see the United States as a difficult place, as perhaps not the best growth market," Garrido said. "Now he can take his marbles and go shopping somewhere else."
The question is, how much is there left to buy in the Latin American telecom sector, where Slim already owns companies in most major countries?
He has already bought Brazil's largest long-distance carrier, Embratel Participacoes SA. He snapped up AT&T Corp.'s Latin America division, as well as leading mobile phone carriers in Brazil, Argentina and El Salvador, and acquired fixed-line carriers in Peru, Colombia and Chile.
The 65-year-old Slim jumped to No. 4 in Forbes magazine's 2005 rankings of the world's wealthiest people, with an estimated net worth of US23.8 billion. A year earlier, he was in 17th place with US13.9 billion.
The son of Lebanese immigrants, he first made his money in retail and then branched into telecommunications with the purchase of former telephone monopoly Telefonos de Mexico, or Telmex, which remains Mexico's dominant carrier, and in which he continues to hold a controlling stake.
In his native Mexico, Slim is omnipresent. Diners at one of Slim's hundreds of chain restaurants can use a Slim wireless service to connect to Slim's Internet provider, where they can conduct online banking at Slim's bank, or pay off credit cards for Slim's department stores.
Some Mexican shopping malls are also nearly one-man shows, anchored by his Sears de Mexico stores. Slim also recently bought out J.C. Penney Co. operations here. The malls are filled with Slim-owned record stores, sporting goods stores, drug stores, restaurants and bakeries. Even the ATM machines are linked to Slim's bank.
Indeed, so big is Slim's empire that an extra billion or so just might not make that much difference.
"Telmex continues to look around for acquisitions," said Manuel Jiménez, a telecommunications analyst at Vector Brokerage. But the recent US1.1 billion boost to his wealth "isn't a determining factor," he said. |
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