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Telmex's CEO talks straight about foreign ownership, the WTO and competition
Telefonos de MEXICO (Telmex), Latin America's largest telecom operator, is simultaneously loved and hated. Forbes magazine called Telmex the No. 1 telecom in the world in 2001, and the company's stock is a constant favorite among Latin American market analysts. Meanwhile, competitors, the U.S. government, and Mexico's own Federal Competition Commission (CFC) describe Telmex as a behemoth monopoly that takes advantage of weak government regulations to maintain its control of the nation's telecom industry.
While the big name, and big owner, behind Telmex is Chairman Carlos Slim Held, the man controlling the company's day-to-day operations and successes is CEO Jaime Chico Pardo. The successful spin off of America Movil, now Latin America's No. 1 mobile telecommunications concern, and a 100% increase in earnings over three years, are among his accomplishments.
Chico answered a call from BUSINESS MEXICO to discuss where Telmex is, and where it's headed.
What is Telmex doing to develop Mexico's relatively low 14% fixed-line telephone penetration?
I think you have to look at that figure in different ways. If you look at fixed-line penetration, it's 15% today. If you look at fixed plus data-line equivalents, then you're probably at 18%. If you look at fixed-data equivalents and wireless, you would probably be talking of a significantly higher figure, probably 35% to 40%.
At the end of the day, the challenge we have is that the number of customers that can pay for telecommunications services in Mexico is limited. There are 10 million people registered with social security and 2 million more for people who don't have a permanent job. Twelve million registered people gives you an idea of how many people have regular salaries and how many people can pay for services like telecom. So the market, even though it is big in terms of numbers, is very small in terms of the ability of people to pay for services today. As we have economic recovery and sustained economic growth, we are looking at a market that has great economic potential, but that has to happen first. So what we have done is to say, how can we adapt our services so that more people take advantage of them? The...