Carlos Slim's takeover of Telmex
Carlos Slim's takeover of Telmex
In the pivotal year of 1990, telecommunications history in Mexico underwent a dramatic transformation...
In the annals of business history, the year 1990 holds a special place for Mexico's telecommunications landscape. It was a year when prominent Mexican entrepreneur, Carlos Slim Helú embarked on a journey that would forever alter the course of the nation's telecom industry.
Telecom industry background
In 1990, Carlos Slim Helú negotiated the acquisition of Telmex with Southwestern Bell (AT&T) and France Telecom, who wanted 5% each to retain control.
It was agreed that the CEOs of the foreign companies would have veto power together over decisions at Telmex.
Telephony in Mexico was in the hands of Ericsson and Compañía Telefónica Mexicana, until 1958 when it passed into the hands of Mexican entrepreneurs Eloy Vallina and Carlos Trouyet.
In 1972, the government acquired 51% of Telmex, but did not invest enough in modernizing the company.
In the 1980s, Telmex had a policy where users had to buy a share to get a telephone line.
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Telmex privatization and acquisition
In 1990, Carlos Slim Helú, with a consortium, won the auction for 20.4% of Telmex for $1,734 million.
After acquiring Telmex, significant changes were made, such as modernizing the vehicle fleet and reducing bureaucracy.
Contracts with suppliers were renegotiated, significantly reducing costs.
Annual investment in Telmex increased significantly under Slim's administration, exceeding $2 billion.
The privatization of Telmex helped improve Mexico's perception abroad and attracted international investors.
By the summer of 1994, Telmex's market cap reached nearly $24.5 billion.
Part 2
In the transformative landscape of 1990s Mexico, a decade marked by privatization, global integration, and rapid technological advancements, a remarkable story of business growth and adaptation unfolded.
As Telmex expanded its horizons, it laid the groundwork for América Móvil, a telecom powerhouse that would become one of the world's largest telecommunications companies.
Decade overview
1990s: A decade of profound changes in Mexico, including privatization and opening up to the world.
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Telmex
Growth: From 6 million phone lines in 1991 to over 12 million in 2000.
Revenues: From $5.2 billion pesos in 1989 to $96.3 billion pesos in 1999.
Mobile telephony: Telmex reported revenues of over $2 billion pesos in 1994.
Mobile phone competition
Telcel had 35,000 customers in 1995 and grew to nearly 400,000.
América Móvil
Established in 2000 as an independent company from Telmex.
Growth: From 9 million subscribers to 225 million in 18 countries by 2010.
Financing the company: Using a combination of internal cash flows and debt.
Merger of América Móvil and Telmex in 2010.
Ownership control
The Slim family controls 53.2% of América Móvil's outstanding shares.
Telmex's business
In 2022, it reported 20.8 million 'revenue generation units' and annual sales of nearly $100 billion pesos.
Pension liability: More than 40,000 retirees and a $10 billion-dollar pension fund.
Grupo Carso strategy
Focus on productive investments and reinvestment of profits.
Success factors
Success of Telmex and América Móvil: Result of sound agreements, cost control, discipline, risk-taking, and hard work.
Emphasis on simple structures and decisions based on financial flow.
