Girish Gupta

HOME

PHOTOS

ONLINE

Twitter
Instagram
IFTTT
Facebook
LinkedIn
Keybase
GitHub

BY COUNTRY

Brazil
Colombia
Cuba
Ecuador
Egypt
Guyana
Iraq
Jordan
Lebanon
Mexico
United Kingdom
Venezuela

BY MEDIUM

Text
Photo
Radio
TV/Video

BY PUBLISHER

Al Jazeera
BBC
BuzzFeed
CBC
Christian Science Monitor
CNN
Daily Mail
Datum
Ecologist
Economist Intelligence Unit
Emerging Markets
Financial Times
Foreign Policy
France 24
Fusion
GlobalPost
Guardian
Independent
La Prensa (Panama)
LatinFinance
Mancunion
Monocle
National (Abu Dhabi)
New Internationalist
New Statesman
New York Times
New Yorker
NPR
PBS
PRI
Radio France Internationale
Reuters
RTE
Sky News
Sun
Sunday Times
Telegraph
TIME
Times of London
USA Today
Vice
WLRN

ABOUT

About
CV
Contact (PGP Key)
Carlos Slim's Companies Accused of Gross Overcharging
Feb. 3, 2012

Published by Minyanville

That wry smile from last week may have been wiped off world’s richest man Carlos Slim’s face as his companies were accused this week of overcharging customers $13.4 billion per year between 2005 and 2009.


The Organization for Economic Cooperation and Development (OECD) made the allegations in a report published earlier this week, adding that a lack of competition in Mexico’s telecommunications industry cost it nearly $26 billion a year, 2% of Mexico’s GDP.


Slim’s América Móvil (AMX) runs around 80% of the country’s fixed lines and 70% of its cell phones and has regularly found itself the target of anti-corruption legislation. The company is to report its 2011 earnings next week.


Slim hit back at the OECD, accusing them of “inventing” the figures and using “outdated” records. The organization responded that its numbers represented the “opportunity cost” of a lack of competition in Mexico rather than any specific profit or loss, also taking into account those who forego use of the services thanks to high costs.


The report was produced at the request -- and funding -- of the Mexican government, thought to be on the attack against Slim, keen to ally with his staunch rivals, broadcasters Emilio Azcárraga Jean of Televisa (TV) and Ricardo Salinas Pliego of TV Azteca. The broadcast giants must be kept on side as elections loom next year.


Slim’s wry smile last week was down to news -- confirmed yesterday -- that those two rivals were not able to join forces and challenge his dominance of the telecoms sector, thanks to a ruling by the Federal Competition Commission.


The anti-trust commission voted 3-2 against a deal whereby Televisa would acquire a 50% stake in lusacell, owned by Azcárraga, for $1.6 billion. Shares in Televisa fell 3.9% on the news. It was the tenth fall in 11 days.


The company responded: “This decision … damages the potential for competition in a key sector for Mexico's development… The costs of fixed and mobile telephony and data services in Mexico are among the highest in the developed world.”  They have 30 days to appeal the verdict.


América Móvil, meanwhile, is working ever more with China, allowing the Financial Times to run the headline: “Carlos Slim gets a taste for dim sum.” Writing for the London Daily, Adam Thomson points out that Slim’s company is the region’s first to tap into the so-called “dim sum” bond market.


Slim is primarily purchasing network equipment from China, but, writes Thomson, “before long, a lot of the smart phones that the company offers to its 200m-plus subscribers throughout the Americas will come from China too.”


Rather than paying suppliers in US dollars, the company is doing so now in local currency which is much more favorable to those exporting.


“If we pay our Chinese suppliers in their own currency, we should get better terms and they will eliminate the currency risk,” Carlos García Moreno, the company’s Chief Financial Officer, told the paper. “It’s a win-win.”


Oil Hedge

With its dependence on oil revenue, Mexico has announced that it will be hedging oil exports at $85 per barrel this year, covering 211 million barrels, just under 25% below today’s price of $111 per barrel.


The country has hedged its oil since the late 1990s and the world’s markets eagerly await the figures every year. The banks involved in managing the hedge were not revealed but the Financial Times reports that in previous years, Goldman Sachs (GS), JPMorgan (JPM), Barclays Capital (BCS) and Deutsche Bank (DB) have sold the put options.


“Mexico is one of the most important players, perhaps the most important player, in oil hedging,” Miguel Messmacher, Chief Economist at the Finance Ministry, told the newspaper.


There was no need to exercise the program last year as market prices remained higher than last year’s $63 per barrel hedge. However, the biggest payout was in 1991 -- after the Gulf War -- when economists have estimated that the country made $800 million.


Auto Loss

Brazil may be about to hit Mexico’s auto industry with import taxes of 35% as the South American giant ends a 2002 trade pact with Mexico. The agreement is currently “under review,” according to Brazil’s Trade Secretary Tatiana Prazeres.


Last year saw imports of Mexican vehicles to Brazil rise a whopping 40% from 2010 to more than $2 billion. Exports the other way were just $372 million, according to Valor Economico.




More...

No deaths in major Mexico earthquake
Mar. 21, 2012


Mexican authorities come close to capture of drug boss Chapo Guzman
Mar. 12, 2012


Joe Biden meets Latin American leaders, won't back down on legalization
Mar. 6, 2012


Mexico election: Vazquez Mota closing the gap
Mar. 2, 2012


US and Mexico Sign Gulf Oil-Drilling Deal
Feb. 24, 2012


Deadly Mexican prison riot a cover for gang escape
Feb. 21, 2012


Felipe Calderon pleads to US: 'No more weapons'
Feb. 18, 2012


Mexican Inflation Up as 4Q Results Suffer From Peso Depreciation
Feb. 10, 2012


Josefina Vázquez Mota picked for Mexico presidential candidate
Feb. 6, 2012


Carlos Slim's Companies Accused of Gross Overcharging
Feb. 3, 2012


Telecoms, Broadcast Monopolies Prospering in Mexico as Televisa's $1.6bn Iusacell Deal Is Rejected
Jan. 27, 2012


Mexico's Chapo Guzman named world's most powerful drug trafficker
Jan. 12, 2012


Mexico Looks to Broker Europe Deal
Dec. 16, 2011


Carlos Slim Streams "Television" Online, Infuriates Rival Broadcasters
Nov. 17, 2011


Mexico Reduces Growth Forecast Despite Lower Than Expected Inflation Figures
Nov. 11, 2011








© Girish Gupta