Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Mexico: World's Richest Man Has Busiest Week Ever

By

Despite being embroiled in a war with two major Mexican TV corporations, Carlos Slim finds time to invest in a new mining venture and buy a stake in Tabasco Oil.

PrintPRINT
The world's richest man, Carlos Slim, has entered into a fierce battle with two other Mexican heavyweights, Emilio Azcarraga and Ricardo Salinas, in a battle ostensibly over TV ads purchased by Slim's multitude of companies by the others' TV empires.

On Monday, Slim pulled advertising from Azcarraga's Televisa (TV) as rates shot up 20%, according to Slim. Televisa denied this, saying that Slim's companies had simply not bought the advertising early enough -- in the "upfront," an early auction of ad space -- and so would be charged the higher price. "This applies to all clients, not only to Slim companies," said a spokesman

Slim owns Telmex, Grupo Carso, and Telcel, an arm of America Movil (AMX), which, along with his other ventures, spent between $70-100 million on advertising with Televisa in 2010 -- about 1.5% of last year's revenue for the TV company.

Analysts have said that they expect Slim's companies to reverse their decision in order to reach the audience of the world's largest Spanish-language broadcaster which controls 70% of Mexico's broadcast market.

"Everything is negotiable," Michel Morin, an analyst at Barclays in New York, said. "There will probably be a desire on both parts to come to an agreement."

However, the saga took another turn on Wednesday as TV Azteca, owned by Salinas, refused to sell Slim's companies advertising space unless the phone companies offered lower connection rates to the phone companies of Salinas.

TV Azteca quoted a Grupo Salinas executive saying some harsh words on Slim's apparent monopoly. "We would be delighted to sell to [Slim] companies at market prices. We would also be delighted if Telmex and Telcel had a fair interconnection rate and at market prices," the statement said. "Telcel's interconnection price is discriminatory and depredatory and protects its monopoly."

The drama is telling of Mexico's telecommunications industry's move from a monopoly to its now heightened competition. Televisa and TV Azteca have both launched bundled TV, Internet, and telephone services, encroaching into territory traditionally held by Slim.

All three men appeared on a US government cable -- released by WikiLeaks -- detailing the 10 richest people in Mexico. The confidential document offered an insight into US thoughts on the disparity of wealth within Mexico as well as the monopolization of the market.

"The net wealth of the 10 richest people in Mexico -- a country where more than 40% of the population lives in poverty -- represents roughly 10% of the country's GDP," it read.

"Several of the business dynasties that these individuals own took off in the 1990s, when then President Carlos Salinas de Gortari (PRI) began dismantling Mexico's centralized economy. Salinas sold off more than 1,000 state-run companies from metal foundries to railroads.

"Unfortunately, in some cases, these privatizations ended up creating private-sector monopolies -- benefiting the savvy businessmen and politicians while leaving the average Mexican out in the cold."

While that saga plays out, the dispute between Cemex (CX) and ready-mix drivers in the United States has come to an end. The cement giant has agreed to pay out $1,514,449 in overtime back pay to 1,705 current and former employees.

The company is issuing $2 billion in shares as it struggled to pay debts and avoid fines. Cemex needs to pay its bankers $2.3 billion in 2010 to avoid a $200 million jump in annual interest payments.

Corn producer Gruma (GMK) was pleased to announce on Monday that it had paid off $817 million in debt, primarily by having sold off Banorte.

The Mexican economy as a whole demonstrated its health reporting that expansion in 2010 was the fastest in a decade. GDP in the fourth quarter was up 4.6% from 2009 while output for the whole of 2010 grew 5.5% from 2009. However, that year saw GDP fall 6.1% thanks to the global crisis.

Wal Mart de Mexico (WMT) reported a 14% rise in profits for the fourth quarter, thanks to a raft of new stores in the Central American countries of Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. The company claims revenue rose 25%.

Unperturbed by his row with two giant TV corporations, Slim announced that he would be investing in a new mining venture in Mexico following the huge success of Frisco, his own newcomer to the market. That company is set to invest $750 million this year in an attempt to double gold production and quadruple silver production. Frisco is planning to double its stake in Minera Tayahua to 91%.

Slim's Grupo Carso also announced this week an agreement to buy a 70% stake in Tabasco Oil.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE