4 ms·

Rich in irony as well -- Slim's purchase of Telmex, the state-controlled telephone monopoly, meant that he could stifle competition and charge exorbitant rates.

by mcknz 16y ago

Rich in irony as well -- Slim's purchase of Telmex, the state-controlled telephone monopoly, meant that he could stifle competition and charge exorbitant rates. That's pretty much as far as you can get from encouraging employment for the poor.

slay2k 16y ago
Not to mention the purchase was allegedly laden with government kickbacks and various forms of corruption.
jacobolus 16y ago
“Purchase” is a pretty rich description, too. Slim paid an obscenely low price for Telmex – it was making $1.1 billion yearly profit, and Slim’s company paid less than $900 million for a 10% stake, which money came from loans Slim got on letters of credit (i.e. it wasn’t even his own money). Telmex was and is a near monopoly, with the kinds of monopolistic pricing that goes along with that. Basically, Slim’s fortune is made on a corrupt business deal with the corrupt president of the time (Salinas) who he was buddy-buddy with, followed by gouging the Mexican citizenry on phone bills for the last 2 decades. (Salinas’s PRI party made out well too, as Slim gave lots of money back to them over the subsequent years.) I really don’t think he’s in any position to talk about charity.
- lionhearted 16y ago
  > Slim paid an obscenely low price for Telmex – it was making $1.1 billion yearly profit, and Slim’s company paid less than $900 million for a 10% stake So he paid $900 million for $110 annual profits? So a P/E of around 8? That's not an obscenely low price, especially if they already had complete market share and premium pricing. The only way to go from there is down, and it's a high capital business that'd most like need lots of capital improvements to stay competitive. For comparison, AT&T is trading a 12 times earnings, but that's in a much more healthy and stable market than Mexico. I guess getting a 10% stake at 8 times earnings is an okay deal, but it doesn't jump out to me as a great deal. Would you be excited to buy a stake at that price in a high capital Mexican business with no growth potential because it's tapped out? I wouldn't.
  - jacobolus 16y ago
    No growth potential? Yearly profits proceeded to shoot up by like 200% over the next several years.

by mcknz 16y ago

slay2k 16y ago

Not to mention the purchase was allegedly laden with government kickbacks and various forms of corruption.

jacobolus 16y ago

“Purchase” is a pretty rich description, too. Slim paid an obscenely low price for Telmex – it was making $1.1 billion yearly profit, and Slim’s company paid less than $900 million for a 10% stake, which money came from loans Slim got on letters of credit (i.e. it wasn’t even his own money). Telmex was and is a near monopoly, with the kinds of monopolistic pricing that goes along with that. Basically, Slim’s fortune is made on a corrupt business deal with the corrupt president of the time (Salinas) who he was buddy-buddy with, followed by gouging the Mexican citizenry on phone bills for the last 2 decades. (Salinas’s PRI party made out well too, as Slim gave lots of money back to them over the subsequent years.) I really don’t think he’s in any position to talk about charity.

lionhearted 16y ago
> Slim paid an obscenely low price for Telmex – it was making $1.1 billion yearly profit, and Slim’s company paid less than $900 million for a 10% stake So he paid $900 million for $110 annual profits? So a P/E of around 8? That's not an obscenely low price, especially if they already had complete market share and premium pricing. The only way to go from there is down, and it's a high capital business that'd most like need lots of capital improvements to stay competitive. For comparison, AT&T is trading a 12 times earnings, but that's in a much more healthy and stable market than Mexico. I guess getting a 10% stake at 8 times earnings is an okay deal, but it doesn't jump out to me as a great deal. Would you be excited to buy a stake at that price in a high capital Mexican business with no growth potential because it's tapped out? I wouldn't.
- jacobolus 16y ago
  No growth potential? Yearly profits proceeded to shoot up by like 200% over the next several years.