Profiles in Personal Finance: Carlos Slim

Carlos Slim is currently the richest man on earth with 67.8 billion dollars in his account. His fortune has grown an average of 3.5 billion dollars a month so far this year.

He lives in Mexico, a country where more than half the population struggles in poverty. Slim controlled companies currently account for nearly half of the entire Mexican stock exchange’s value.

Slim’s ascent up the world wealth league has been very rapid. Here’s a look at who he is and how he did it.

Slim was born in Mexico City on January 28, 1940 and has credited his father, a Lebanese immigrant who settled in Mexico in 1902 — for laying the foundations of his immense wealth. Slim’s father opened a retail store in 1911 and young Carlos helped out behind the counter. The store proved a big success and his father used the profits to invest in property.

Slim’s father trained him to keep crystal clear accounts of his pocket money income and expenditure. Errors and omissions meant deductions.

That early training paid off and Slim began his own business career on the playground, trading baseball cards. By age 12, he had moved on to trading stocks and bonds. And at the age of 26, Slim ventured into the business world with a construction engineer diploma and $400,000 he had inherited from his parents.

Slim followed in his father’s business footsteps. In the 1980s, when Mexico was reeling from a debt crisis and investors were pulling out, Carlos was buying companies — with the money inherited from his parents — and turning them around into efficient profit making enterprises. “They were cheap”, he said, explaining his business strategy.

But Slim did not really stand out from Mexico’s business elite until 1990, when he snatched a controlling stake in the national fixed line telephone network — Telmex. The company owns about 90 percent of Mexico’s phone lines, and since then, the market value of Telmex stock has rocketed from $7.39 billion to over $41 billion.

It was the most recent increase in the value of Telmex’s shares that helped push Slim’s wealth over that of Microsoft founder Bill Gates who is worth about 59.2 billion dollars.

Most of Slim’s profits come from his Mexican telecommunications industry gathering which also includes Telcel, which covers 80 percent of mobile telephony, and America Movil, which has more than 100 million clients across Latin America.

But, Slim owns more than just phone services. Even if Mexicans never pick up a Slim phone, make a Slim connection to the internet or chat on a Slim mobile, they are probably still customers of Carlos. They shop in his department stores and convenience shops, buy CDs from his music outlets, eat in his restaurants and smoke his cigarettes.

Many of the country’s ATMs are provided by Slim’s bank Inbursa. There is also a Slim infrastructure company which is busy building roads, water treatment plants and offshore oil platforms.

As Slim’s wealth has grown, so has the criticism. Business groups regularly complain about Telmex’s business phone rates, which are more than twice as high as in the United States. President Felipe Calderón, who took office last December, is under pressure to show that he won’t buckle in the face of Mexico’s powerful monopolies and has been trying to beef up regulation of Mexico’s telecommunications industry.

Perhaps as a response to the increased criticism and new scrutiny as the world’s richest man, Slim has announced that he will increase his private foundation’s endowment from $4 billion to $10 billion by 2011, promising “there would be no ceiling on his donations”.

In past interviews, Mr. Helu has doubted the usefulness of charity, arguing that private enterprise, which creates jobs, does more for the poor than philanthropy. Although he is under pressure that he should participate more in humanitarian actions, Slim has dedicated himself to starting new jobs in Latin America because he believes that is the right thing to do.