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Berkshire Hathaway Inc
Hennes & Mauritz AB
America Movil SAB de CV
Koninklijke KPN NV
Telekom Austria AG
HSBC Holdings PLC
Carlos Slim’s title as the world’s richest person is increasingly in jeopardy. The Mexican mogul’s lead over the next-wealthiest man, Bill Gates, has narrowed to about $4.7 billion as of March 5—he led by as much as $14.5 billion in January. The Lebanese immigrant’s son, who turned Mexico’s phone monopoly into a pan-Latin American powerhouse, lost almost 10 percent of his net worth last month. His fortune is now $71.5 billion, according to the Bloomberg Billionaires Index.
Slim became the world’s richest person in 2007. To get there, he passed Gates, the co-founder of Microsoft (MSFT), and Warren Buffett, the takeover artist behind Berkshire Hathaway (BRK/A). Both Gates and Buffett have pledged to give away most of their wealth before they die and have sunk billions in Gates’s foundation, putting a dent in their fortunes.
Buffett was the biggest gainer in the index this year, adding $7.2 billion to his fortune for a total of $55.1 billion as bets on derivatives boosted profits at Berkshire Hathaway. Even so, he comes in fourth, behind Amancio Ortega of Spain, the founder of Zara (IDEXY) and other stores, who overtook him in August 2012. Ortega’s wealth has increased 1.1 percent this year as his company responds to competition from the H&M (HMB) clothing chain. Gates has added $4 billion, or about 6 percent, to his wealth as Microsoft stock rises alongside investor optimism that demand for business software is returning.
Slim’s América Móvil (AMX) has long faced accusations from competitors and regulators that it wields monopoly power, controlling 70 percent of Mexico’s wireless market and about 80 percent of its land lines. A draft of a new telecommunications reform bill in Mexico stipulates that companies with at least 40 percent market share could be forced to rent parts of their network to rivals, the Reforma newspaper reported late last month. Regulators could also revoke operating licenses for monopolistic behavior, the paper said, citing the draft it obtained.
Concerns over new regulations have helped drive the stock down 25 percent since October 2010. Mexico’s benchmark IPC index has gained 25 percent over the same period. “The market used to pay a premium for it to be in the dominant position in two of its operations, Mexico and Colombia,” says Pablo Vallejo, an analyst at Corporativo GBM in Mexico City. “All the scenarios contemplated in the reform are bad news for América Móvil.” Arturo Elias, a spokesman for Slim, declined to comment.
Slim’s attempts to diversify have yet to pay off. After spending more than €3 billion ($3.9 billion) last year to acquire a 28 percent stake in Royal KPN (KPN), América Móvil saw the former Dutch phone monopoly’s shares fall 65 percent. Shares of Telekom Austria (TKA), meanwhile, have dropped 36 percent since América Móvil agreed to buy a 21 percent position in June. Slim has said he considers the stakes in European carriers long-term investments.
Their weak performance, combined with América Móvil’s challenges, are making shareholders skeptical that bets outside Latin America are the best use of cash, says Richard Dineen, an analyst at HSBC Holdings (HBC). With regulators in Mexico and Colombia threatening to further restrain América Móvil, it may need to use its cash to strike bargains with governments to fend off crippling rules. Slim could offer to extend high-speed Internet access to rural regions or subsidize services for low-income families, says Dineen. With the kind of cash the company has on its books, he says, “you can do an awful lot to win hearts and minds.”
The bottom line: With his fortune down to $71.5 billion, Carlos Slim has seen his lead over Bill Gates drop to $4.7 billion from $14.5 billion in January.