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Slim’s Pickings: The Start of the Billion Dollar Business

Article Overview: Helu’s big break came in the 1990s, when the Mexican government succumbed to pressure from the World Bank and International Monetary Fund to liberalize its country’s economy. A massive campaign of privatization began, with the government selling off the hundreds of companies that were state-owned. Among those companies was Telefonos de Mexico (Telmex), the Mexican national telephone company.

Slim’s Pickings: The Start of the Billion Dollar Business

Helu’s big break came in the 1990s, when the Mexican government succumbed to pressure from the World Bank and International Monetary Fund to liberalize its country’s economy. A massive campaign of privatization began, with the government selling off the hundreds of companies that were state-owned. Among those companies was Telefonos de Mexico (Telmex), the Mexican national telephone company.

Thanks to his father, Helu had developed a strong nose for sniffing out a good deal. In Telmex, Helu saw the potential for a huge hit. At the time, he had a close relationship with then-President Carlos Salinas de Gortari. Although he denies the accusation that the Mexican President gave him any special treatment, Helu was able to buy Telmex from the government for $1.7 billion in a deal that saw him resourcefully partner up with Southwestern Bell Corporation and France Telecom. At the time, auditors had valued Telmex at $10-12 billion. Helu had gotten a good deal.

Accusations of preferential treatment gained increasing strength after 1993, when Helu attended a gala fundraising event and made a very strategic and public announcement. He, along with 30 other high-profile Mexican business leaders, pledged $25 million each to Gortari’s political party. Whatever the truth, Helu took control of Telmex and established a landline monopoly throughout the country, as well as developed control of 70 percent of Mexico’s long distance market.

Since the 1990 acquisition, Helu has continued to use his Telmex profits to fuel his other investments and become a leader of the digital age. He sought out struggling – and cheap – companies where he thought he could bring renewed vision and turn things around. By bringing a stronger focus on the bottom line to his companies, Helu began developing a reputation for efficient cash management and implementing strategies of aggressive growth.

Today, among Helu’s biggest holdings is America Movil, which he grew to become Latin America’s biggest mobile phone service provider with more than 41 million subscribers. His Grupo Carso, which owns Telmex, also has control of more than 80 percent of Grupo Sanborns, which includes the Sanborns chain of department stores and a majority stake in Sears Roebuck de Mexico.

In Mexico, Grupo Carso has become a leader in everything from bakeries to railroads and retail chains. In 2000, Helu strove less successfully to enter the U.S. market by acquiring the troubled CompUSA for $1 billion. After cutting 1,500 jobs and divesting the company of some of its businesses, Helu was beginning to see some success. However, in 2002, after not realizing as positive results as he had hoped for, Helu decided to spin off his 51 percent stake in the company to two new holding companies.

Helu’s companies now make up roughly half of the value of the Mexican stock exchange, and are the equivalent to seven percent of the country’s GDP. He recently handed control of Grupo Carso over to his three sons, but Helu remains a powerful presence.

Despite the volatility of the Mexican economy and the 1994 devaluation of the peso, Grupo Carso has prospered. It is hard for most Mexicans to go through the day without coming into contact with one of Helu’s companies. With a knack for picking good deals, Helu has quietly risen to become the richest Mexican, the richest person in Latin America, and now, the second richest person in the world.

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Article Tags: aggressive growth, america movil, carlos salinas de gortari, company thanks, france telecom, fundraising event, helu, international monetary fund, massive campaign, mexican business, mexican government, mexican president, national telephone, preferential treatment, president carlos salinas, public announcement, salinas de gortari, southwestern bell corporation, telefonos de mexico, telmex



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