The Group’s companies currently generate more than 220,000 direct jobs and more than 500,000 indirect jobs.

It has taken Carlos Slim Helú 42 years of his life to build Grupo Carso, of which he is now Honorary Life Chairman, a position he also holds at Telmex, América Móvil and Grupo Financiero Inbursa. Although he continues to conduct business activities today, his primary focus is on the foundations he leads, thus his three sons, Carlos, Marco Antonio and Patrick Slim Domit, have taken over the reins of the businesses.

His leadership style is highly practical, for example, at Grupo Carso there is no corporate staff. Each company has its own structure so that the organization can be more efficient.

They were founded in 1965 with the acquisition of the bottling company Jarritos del Sur and the establishment of several other companies such as Casa de Bolsa Inversora Bursátil, Inmobiliaria Carso, Constructora Carso, Promotora del Hogar, S.S.G. Inmobiliaria, Mina de Agregados Pétreos el Volcán, Bienes Raíces Mexicanos and Pedregales del Sur, as well as a buy-sell-lease company for construction equipment. Inmobiliaria Carso was incorporated in January 1966. Carso comes from the first syllable of the names Carlos and Soumaya, Mr. Slim's wife.

At the end of the 1960s, several pieces of property were bought in the southern part of Mexico City, totaling approximately 2 million square meters, and were expropriated in 1989.


In June 1976 Galas de México was acquired. In 1980 the corporation that is today Grupo Carso was officially incorporated in order to obtain the majority stake in Cigatam, in which Philip Morris was a 29% partner.

The beginning of the 1980s marked a very important period in the history of Grupo Carso, as it became a group of large companies. This was a critical period in the history of Mexico, with the debt crisis and the nationalization of the Mexican banking system in 1982, the year in which Carso made the decision to invest intensively and actively.

Between 1981 and 1986 several investments and acquisitions were made, among which was Cigatam, the first and most important due to its cash flow and because in 25 years it increased its market share by 1.5% on average each year, despite very strong competition. Other companies were: Hulera el Centenario, with 23%, and Bimex. Reynolds Aluminio y Aluminio, S.A. was also integrated during this period.

In August 1984 Seguros de México and 33% of an important block of shares was purchased for US$55 million. Casa de Bolsa Inversora Bursátil, Seguros de México and Fianzas La Guardiana came together to form Grupo Financiero Inbursa.

In 1985 Grupo Carso acquired control of Artes Gráficas Unidas, Fábricas de Papel Loreto y Peña Pobre, and the majority of Sanborns and its affiliate Dennys.

In 1986 Compañía Minera FRISCO and Empresas Nacobre were acquired, as well as their affiliates, control of the market leading tire company Euzkadi, and later, in 1993, the majority of General Tire. In 1991 Hoteles Calinda was acquired.

At the end of 1990, Grupo Carso, together with Southwestern Bell, France Telecom and several Mexican investors, won the bid to privatize Teléfonos de México. When Grupo Carso bought 5.8% of Telmex at its privatization, it already had 25 years of successful business experience; Southwestern Bell acquired 5% and an option for an additional 5%, France Telecom 5% and a group of Mexican investors an additional 4.6%. Including Cigatam, the Grupo Carso companies have been publicly traded since 1981 and their history can be reconstructed through public information.

Grupo Carso has partially or fully sold several companies, such as tissue paper producers, tire companies, several hotels, printing and packaging businesses, part of Cigatam, El Globo, Química Fluor and Porcelanite, among others.

The Group’s companies directly employ more than 218,000 people.

Carso's growth has been possible due to the ongoing reinvestment of profits in its companies for the continued production of goods and services, which at the same time generates jobs for Mexicans. Grupo Carso focuses its growth and investments on the most dynamic sectors in the medium and long term, maintaining its flexibility and rapid decision-making.

Grupo Carso, S.A. de C.V. is a Mexican holding company that has proven its capacity to manage companies operating in highly competitive markets, both domestically and internationally.

 

T e l m e x

In 1990, Grupo Carso and other Mexican investors acquired 10.4% of the company’s stock, in partnership with SBC - 5% with an option for an additional 5% - and France Telecom 5%. Since 1990, Telmex has embraced a work culture where training, modernization, quality and customer service is a priority. Over the course of 16 years, Telmex has developed a world-class technology platform that has allowed it to optimize processes and strengthen the corporate culture, translating into improved levels of service and customer care. At Telmex, we focus our efforts on exceeding our clients’ expectations.

In 1991 Telmex was using electromechanical, analog and other obsolete equipment and technology in its operations, transportation, physical plant and maintenance, and had manual records and a 360-kilometer fiber optic network.

Telmex has modernized and today has more than 93,000 kilometers of fiber optic installed throughout the country; in 2003 it started installing the next generation technology required to provide access and transport to IP-based applications on 92% of installed lines.

Public telephony has been a very important part in facilitating access for the population at large, with the number of public telephones rising from 69,025 in December 1990, to 767,000 in December 2006.

Competition

In the fixed line business in Mexico, Telmex competes with operators primarily focused on the high-income A and B segments. In those competitive segments, Telmex has an approximate 66% market share, and 49% in the A segment alone. However, Telmex's commitment to provide telecommunications services has led to its being the country’s only fixed telephony operator with presence in the C-, D, E and prepaid socioeconomic segments, with 100% share of the market.


Competitors

CONCESSIONAIRE TOTAL
Local Telephony
 26
Long Distance
 44
Mobile 10
Local Cable Telephony (in 48 cities)
 10
Trunking
 28
Public Telephony
86
Internet Providers
 367
Satellite Services
27
Private Network Providers 24

 

Change Indicators

Indicator

 1990 2000 2006
% of line failures 13.5
 2.0
 1.2
% of same day line repairs
50.1
 72.0
 98.6
Average wait time for installation (days)
717
 51
 20.5

Consumer goods index rate (base: 1991)

100

   38.8

Analysis of some of the main quality and service indicators show consistent improvement over time. Also, the educational level of employees increased to an average of 15.0 years of schooling in 2006, compared to 6.8 years in 1990.


Telmex, S.A.B. de C.V. Subsidiaries

Year total or partial bought Country Company
2004 Argentina, Chile, Colombia, Brasil y Perú. AT&T Latina América, ahora Telmex
  Argentina Techtel
  Argentina Metrored
  Brasil Embratel
  Brasil Net Serviços de Comunicação S.A
  Chile Chilesat, ahora Telmex Corp. S.A.
  Uruguay Telstar
2005 EE.UU 2Wire
2006 EE.UU. Cobalt Publishing, LLC, ahora Sección Amarilla USA, LLC
  Colombia Superview
2007 Colombia TV Cable, S.A.
  Colombia TV Cable del Pacífico, S.A.
  Ecuador Ecuador Telecom., S.A.
  Perú BoGa Comunicaciones, S.A.


Investment

In the period between 1991 and 2006, our company invested the equivalent of US$27.692 billion dollars in Mexican telecommunications infrastructure and, if operations in Latin America are included, more than US$30 billion over the past 16 years. This is in addition to investments made by América Móvil.

América Móvil is a very good example of value creation for investors. It was a pioneer in the prepayment area since 1996, accelerating the development of an existing scheme, the “Hot Bill” real-time billing service. This gave rise to the prepaid system, a solution that revolutionized the Mexican, Latin American and global markets. Telcel’s Amigo was born in April 1996, a subsidized handset to sell more prepaid cards.

One of every two Latin Americans has a cell phone, higher than the world mean. Some Latin American countries have even higher penetration than developed economies such as Canada and the United States, as is the case in Chile, Argentina, Colombia, and Ecuador. This is thanks to the investment that AMX has made in each of the markets in which it operates.

The number of customers has risen from the 35,000 that Radiomóvil Dipsa had when it was privatized (1990), to América Móvil’s 107 million cellular subscribers in Latin America at the end of the third quarter of 2006. This implies annual growth of close to 70% in 16 years.

More than 85% of América Móvil’s customers are prepaid, and prices per minute are lower than European rates, and beneath than prepaid rates in the US, and the equipment is significantly subsidized. With broad distribution and subsidized equipment, strong growth has been achieved in Latin America, allowing for an approximate 55% penetration rate, similar to that in developed countries such as Canada.

For example, in Mexico, if one considers only prepaid rates, Telcel has the lowest rates of all OECD member countries.

Shares of AMX have the highest liquidity on the Mexican Stock Exchange and its ADR program is one of the largest in the world (the return on AMX stock since the creation of the ADR program is 629.04%, while the return on the NYSE Composite Index, the index of reference, is 46.54% during the same period).

In the Mexican wireless telecom market we currently compete with Telefónica, Nextel, Iusacell, Unefon and Axtel. Throughout the years we have seen international companies such as Vodafone and Verizon, as well as multiple local operators.

Today, América Móvil is the fifth largest wireless operator in the world by number of shareholder subscribers.

América Móvil, S.A.B. de C.V.Subsidiaries

Year total or partial bought Country Company Brand or trade name
1999 EE.UU. Topp Telecom Tracfone
2000 Ecuador Consorcio Ecuatoriano de Telecomunicaciones, S.A. Porta
  Guatemala Telecomunicaciones de Guatemala S.A. Telgua, hoy Claro
  Brasil Se crea Telecom Amèricas en conjunto con Bell
Canada International y SBC International, Inc. 		ATL, Telet y Americel hoy Claro
  En diciembre de 2000 inicia operaciones América Móvil, nacida al escindirse de Telmex su subsidiaria de telefonía móvil, Telcel, así como sus inversiones en Guatemala, Ecuador y EUA
2001 Brasil Tess Tess hoy Claro
  Colombia Comcel Comcel
2002 Brasil Adquiere del gobierno brasileño licencias para operar en Sao Paulo, Paraná-Sta. Catarina y Bahía-Sergipe Claro
2003 Brasil BSE Claro
  El Salvador Compañía de Telecomunicaciones de el
Salvador (CTE) 		CTE, hoy Claro
  Nicaragua Empresa Nicaraguense de Telecomunicaciones S.A. Enitel, hoy Claro
  Argentina CTI Móvil CTI Móvil
2004 Uruguay Obtiene licencia para ofrecer servicios CTI Móvil
  Honduras Megatel Megatel, hoy Claro
2005 Perú Obtiene una licencia para operar telefonía celular Claro
  Paraguay Hutchinson Paraguay Claro
  Chile Smartcom Chile Claro
  Perú TIM Perú Claro
2006 República Dominicana Verizon Republica Dominicana Claro
2007 Puerto Rico Verizon Puerto Rico Claro


We have had ongoing buyback programs at Telmex and América Móvil (more than 60% of the companies). Also, the holdings of both companies’ shares have constantly increased, financed with current dividends and credits based on cash flow from future dividends. This is how Amtel and Carso Telecom went from a 5% stake in 1991 to more than 40% and 50% in 2006, respectively. Telmex and América Móvil are the only emerging market companies with international telecommunications presence that are under the control of nationals.

The creation of value achieved by Telmex and América Móvil has benefited hundreds of thousands of domestic and foreign investors.

 


The Ten Principles of Grupo Carso.

Carlos Slim Helú summarizes what he considers to be the Group’s business principles in 10 points, which have been communicated to his relatives, colleagues, employees and work force.

  1. Simple structures, organizations with minimal hierarchies, personal development and internal training for executives. Flexibility and rapid decision making. Operate with small company advantages, those that make great companies grow large.

  2. Maintain austerity in good times in order to strengthen, capitalize and accelerate the development of the company, and thus avoid bitterly drastic adjustments in times of crisis.

  3. Always be active in modernization, growth, training, quality and the simplification and continuous improvement of production processes. Increase productivity and competitiveness, reduce costs and expenses using global benchmarks.

  4. Companies should never be limited by the size of the owner or manager. Do not be a big fish in a small pond. Minimize investment in non-productive assets.

  5. There is no challenge that we cannot overcome if we work together, with clear objectives and knowing the tools we have at our disposal.

  6. Money that leaves the company evaporates. This is why we reinvest profits.

  7. Corporate creativity is not only applicable to business, but also to solving many of the problems our countries face. This is what we do through the Group's Foundations.

  8. Firm and patient optimism always yields its rewards.

  9. All times are good for those who know how to work and have the tools to do so.

  10. Our premise is and has always been that we leave with nothing; that we can only do things while we are alive and that businessmen are creators of the wealth they temporarily manage.

Carlos Slim took some of these points from business lessons from his father, Julián Slim Haddad, who brought his son to work at a very young age and noted his unique interest in commerce.


Ideal

The new challenge is to promote the development of Latin America and fight backwardness by training and developing human and physical capital with a company named IDEAL (Impulsora del Desarrollo y el Empleo en América Latina, or Promoter of Development and Employment in Latin America), which is primarily focused on developing physical capital; and two foundations, the first making profitable investments and the second, supporting training and development of human capital on a non-profit basis.

 

Grupo Carso currently includes the following holding companies:
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