Q. You are always referred as a candidate to buy companies in Spain.
A. In some cases, it is probably in good faith, and in others, maybe to create more competition in offers. When we are entering something it is made public, we formally register.
Q. Are you interested in investing in Spain?
A. Yes, of course, we are interested in the telecommunications sector. At that time, we demonstrated we were interested in mobile telephony when 10 mega were tendered out. But it was like a beauty contest. We proposed to the authorities that the concession would be offered depending on who could offer better prices to the customers, but they considered first those who invested more in rural areas. For a new company, its capacity of investment in rural areas is minimal. We thought it was more interesting to offer smaller prices to the customers, but it was not possible.
Q. Before that contest, there were others you did not take part in and other opportunities to purchase.
A. You are saying when the second and third license came out? In that time, we were not yet in our international expansion outside Mexico, not that long ago. Actually, we went out, mostly when Telefonica entered Mexico.
Q. Your possible entry to Spain to the telecommunications business is observed when your group is much diversified. Couldn’t you enter other sectors as well?
A. This is what we are strongest and most experienced at.
Q. Back to the military metaphor, your rival army in Latin America is Telefonica. What is your opinion of it?
A. It is an extraordinary company that has grown substantially. Competition has made us better. We (Telefonica and Telmex) would not have improved so much all by ourselves. We compete in many countries, and what they are learning in Latin America they are applying it in Europe.
Q. It caused quite a commotion when you revealed that President Aznar proposed President Zedillo a merger between Telefonica and Telmex.
A. And he did. Aznar called Zedillo and Zedillo said that Telmex was a private company, that he had nothing to do with it. Zedillo called me to know who they need to talk to. There were some meetings to see what the proposal was. Alierta met with Jaime Chico, Director of Telmex. But our idea was that Telmex should remain Mexican.
Q. Telefonica complains about the little competition and liberalization of the sector in Mexico.
A. We compete with Telefonica in 15 countries or more. We have entered in many countries with small participations, like Uruguay, Paraguay, Chile or Jamaica. When we entered Peru, they had 70 percent of the market. But when you have a license and you build your network, you compete with the one next to you. In Mexico, where we have reached 68 percent of the mobile share, we actually started at 0 percent. The monopoly was held by other company, our competitor. No competition means when they do not let you in.
Q. But also when you find barriers. For a long time you have refused to grant Telefonica fixed telephony interconnection.
A. There was a discussion, because the law says that the company has to be mostly Mexican. Telefonica publicly says that its affiliate is 100 percent Spanish that is not mostly Mexican. And, even as we think that law must be changed, our position is that it contravenes the law. But if the authorities instruct us to do it, we will do it. And we have. There is interconnection already, but what needs to be done is changing the law, because the law is being broken.
Q. Telefonica has a legal structure to observe the law.
A. Any structure is false, because it is not true that Telefonica has a Mexican partner holding the majority for control and decision-making. But we agree that it should be allowed to be 100 percent foreign as in mobile telephony. Foreign investment should be allowed in Mexico within the entire telecommunications sector, as well as in other countries.
Q. Are you afraid they now steal your market share?
A. We already have 600 competitors in Mexico for Telmex. We believe there must be competition and convergence. This is an ever increasing business with decreasing prices and competition makes us better.
Q. You got ahead of Telefonica by announcing the launching of the iPhone, though not exclusively.
A. They have modified their strategy and are no longer signing exclusively. The original business model they first launched did not work very well and they have been correcting it. The iPhone is a great product, very attractive and holds a certain market segment, especially because this will already be a third generation telephone, a more advanced product than the former one.
Q. The OCDE (Organization for Economic Cooperation and Development) says that Mexico is one of the countries with highest telecommunications prices.
A. Well, that is not so. Prices in Mexico are lower than in Spain, and I don’t think that Spain is the most expensive country in the world, though it is very expensive. In mobile, Mexico stands on the OCDE’s lowest. It is shown in some high-quality and more updated statistics.
Q. In fixed telephony, Telmex holds a great control over the market.
A. When Telmex was privatized, it worked as a monopoly on long distance for six years, but local service is open since 1990. Nowadays there is telephony, broadband and paid television services. The main competitor of fixed telephony is mobile. Telmex, today, holds 82 or 84 percent of the telephony market, but on mobile, it holds less than 20 percent, Telmex alone. In paid television, Telmex does not have anything, in broadband, the cable companies started it and they were able to provide it before us, but we have been growing and we are close to 60 percent. Besides, they have been providing three services at a time (voice, broadband and television) for one year and a half, almost two, and we have not got the authorization to provide the triple play yet. If Telefonica enters these markets, good for them, because this is a business that requires high investment and Telefonica will be able to make it.
Q. You are giving Telefonica a warm welcome to your fief...
A. And we would also like to be in your fief…
Q. Which paths do you see to enter Spain?
A. If you would widen the spectrum. The United States are opening lower frequencies. If you would let us, we would enter here tomorrow. In order to lower the prices and to encourage competition, you could open the spectrum in Europe.
Q. Have you thought about entering as a virtual mobile operator?
A. No, not much. Because you depend on the price you are sold and it is your competitor who sells you.
Q. You have met with the Instituto de la Empresa Familiar (Family Enterprise Institute). How is your relationship with Spanish businessmen?
A. I have good friends here. I am surprised by their talent. They are many, they are very good and they are expanding everywhere. Encouraging Spanish enterprise abroad has been an intelligent state policy started by Felipe Gonzalez. Not only they become more competitive, but there is an important development of human resources. I am also surprised by the importance of the family enterprise in Spain. I strongly believe in it. It is not thinking about the trimester, the options or the salary, but it has a more solid long-term vision. It makes fewer mistakes because it is more careful. And, although it is sometimes criticized for the lack of professional administrators the family enterprise employs family that has educated in the business since birth, but if they do not work, it calls someone from the outside.
Q. Is Felipe Gonzalez your counselor with respect to Spain?
A. Friends are not counselors.
Q. Does he give you advice?
A. We don’t talk about business; we mostly talk about the new society, the new civilization paradigms. Felipe is a universal guy. More than a politician, he is a statesman. But he is not a businessman; I think business is not his thing. He is not interested in it and we have more interesting things to talk about. We are more interested in challenges on how to solve problems in the countries. That is what I talk about with Felipe.
Q. Which are, according to your judgment, the priorities?
A. All the efforts made to fight poverty by means of charity, condoning debts, occasional food or health support has supposed spending thousands and thousands of millions of Euros. There have been congresses, thousands of specialists, experts meetings… And they have not solved the problem. The way to put an end to poverty is employment; based on good nutrition, quality education and economic activity to promote it. How? By investing in infrastructure, housing, tourist, health and education services, credit granting to micro and small enterprises, where employment is generated. Besides, the times when physical strength was determinant are gone. Now, you need knowledge and for that reason women are in the same conditions as men.
Q. What led you to leave advice on the side and focus in this more philanthropic labor?
A. The foundation has been working for more than 20 years. The companies are already well guided, with great human equipment. And, although the foundation has been working for many years, we have been finding solutions and we want to work exhaustively in all Latin America; for example, in early education. A child with early education can empower better his capabilities. My daughter and I have been working in this for many years, and we want to elaborate manuals so the parents have the tools to stimulate their children’s learning.
Q. Are you optimistic about the capacity for development of Mexico and Latin America?
A. Yes. Even though there are many holes, larger countries are close to break the underdevelopment barrier. I speak, in alphabetic order, of Argentina, Brazil, Colombia, Chile and Mexico. This is more than 80 percent of the population.
Q. In Mexico, the energetic reform is still pending. Do you support the opening of the oil market?
A. It would be a mistake if Pemex and the country share the oil richness with other companies. It is a richness that is just laying there and should be exploited, and it should be an impulse for Mexico`s development. It is sad that in the past years it has not always been like that. Fortunately, President Calderon is considering a national infrastructure fund and great investments with those resources. It is not a problem of sharing richness, but of active investment in exploration and production.
Q. Brazil has allowed entrance of foreign investors and it is being successful in its discoveries.
A. In Mexico, it is very clear where the oil is in deep waters. It is known because the asphalt stain floats on the surface of the sea. If you already know where it is, you have to do it yourself. Oil should be public. Then, for engineering, technology and construction, you should hire the best. Carso is already building oil platforms.
Q. Your general opinion about Calderon seems positive.
A. It is, he is doing well, and the faster he makes the infrastructure investment, the better he will do, and he is taking some counter-cyclic measures to attenuate this situation of deceleration in the world.
Q. There are still significant differences in wealth distribution in Mexico.
A. Wealth distribution is different from income distribution. Wealth has to be effectively managed to create more wealth; and income, or profit, that is the product of wealth, should have a better distribution. Income distribution in Mexico is bad. In fact, one of the elements that determine when the development barrier is broken is the strengthening of the middle classes. Income has two ways of distribution: through well remunerated employment which is the most important, and through efficient public investment in health, education and infrastructures. What should be distributed is the fruit, not the tree.
Q. Your group won’t stop growing. What would you like your conglomerate to be in five years?
A. Last year, two out of three Latin Americans had a mobile phone, and this year I hope for three out of four. What we would like now, besides of remaining present, is that there would be a high penetration of broadband in Latin American countries, to pass from alphabetization to digitalization, and incorporate to the knowledge society; either by the computer and the fixed line, or by the third generation mobile phone. What we want is that everybody has connectivity, computer, broadband and information that allows equity of opportunities.
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