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final presentation about Telmex, Biz Analysis
ICU School of IT Business
Youngduk Yun, in ITESM, Mexico

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  • Telmex

    1. 1. NI2005 Doing Business in Mexico A00801901 Yun, Youngduk
    2. 2. Contents <ul><li>General Information </li></ul><ul><li>Business Environment </li></ul><ul><li>Domestic Competition </li></ul><ul><li>Strategies </li></ul><ul><li>Governance </li></ul><ul><li>Social Responsibility </li></ul><ul><li>Outlook </li></ul>
    3. 3. <ul><li>General Information </li></ul><ul><li>Mission, Vision Statements </li></ul><ul><li>History </li></ul><ul><li>Indicators </li></ul><ul><li>Financial Status </li></ul>Telmex
    4. 4. Telefonos de Mexico <ul><li>Founded: 1947 </li></ul><ul><li>Headquarters: Mexico City, Mexico </li></ul><ul><li>Key people: Carlos Slim, Chairman/CEO </li></ul><ul><li>Employees: 80,000 </li></ul><ul><li>Revenue: $ 17.5 billion (in USD, 2006) </li></ul><ul><li>Taking about 80% of Telecom. Market </li></ul><ul><li>Standard & Poor's Rating : BBB+ (Dec. 26, 2007) </li></ul>
    5. 5. History
    6. 6. Mission & Vision “ To be a leading telecommunications group by providing our customers with integrated, high-value, innovative and world –class solutions, through human development and the application and management of state-of-art technology.” <Mission> “ To consolidate TELMEX’s leadership in the domestic market, expanding its telecommunications service penetration in all possible markets and be recognized as one of the best and fastest-growing companies in the world” <Vision>
    7. 7. Financial Status 28,534mil 175,006mil Figures in millions of pesos
    8. 8. Operation
    9. 9. <ul><li>Telecommunication Industry of Mexico </li></ul><ul><li>Competitiveness </li></ul><ul><li>Strengthened Competition Regulations </li></ul>Business Environment
    10. 10. Telecommunication Industry <ul><li>1/3 of whole Latin America Revenue </li></ul><ul><li>Growing fast compared to other sectors </li></ul><ul><ul><li>Growth of telecom. diffusion rate in mid/low income customers </li></ul></ul><ul><ul><li>Constant upgrade in network infrastructure </li></ul></ul><ul><li>Matured market of Wired-phone </li></ul><ul><li>> Expansion to broadband services </li></ul><ul><li>Mobile Telecom’s Diffusion rate: 45% </li></ul><ul><li>(Pyramid Research, 2006) </li></ul>Source: “ Wire/Wireless Telecommunication Industry Trend”, KOTRA, 2007
    11. 11. Higher Telephone charges <ul><li>Residential Calls * </li></ul><ul><li>Intl. business calls* </li></ul>$ at purchasing-power parity Source: OECD * Composite basket of annual usage including intl. calls, &calls to mobile Avg. charge for single call, excluding VAT (in usd$)
    12. 12. What’s the reason? By The Economist <ul><li>Telmex still exercises huge monopoly </li></ul><ul><li>-> as a “price-maker” </li></ul><ul><li>‘ Kafkaesque’ gov. regulations for competitors had been existed </li></ul><ul><li>> Delay of approving licenses for would-be competitors. </li></ul><ul><li>> Showing Telmex their business plans </li></ul>
    13. 13. Mexico's Antitrust Agency Starts Phone Market Probe <ul><li>declared as &quot;dominant operator” 6 years ago </li></ul><ul><li>Willingness of Calderon’s New Admin. </li></ul><ul><li>CFC’s investigation into the fixed-line telephone market (08.01.23) </li></ul><ul><ul><li>Followed by investigation on mobile telecom continued for years. </li></ul></ul><ul><li>Complaints from its rivals </li></ul><ul><ul><li>“ Stifling competition - unreasonable pricing and interconnection fees, based on market dominance” </li></ul></ul>Source:
    14. 14. <ul><li>Competition: Getting grower in Mexico </li></ul><ul><li>Main Domestic Competitors </li></ul>Domestic Competition
    15. 15. Main Domestic Competitors Source: “ Wire/Wireless Telecommunication Industry Trend”, KOTRA, 2007
    16. 16. Main Domestic Competitors Unit: $1,000,000 USD Source: “ Wire/Wireless Telecommunication Industry Trend”, KOTRA, 2007 As of Marzo, 2007
    17. 17. <ul><li>Global Expansion </li></ul><ul><li>Other Strategies </li></ul>Strategies
    18. 18. Global Expansion <ul><li>Telmex </li></ul><ul><li>International Network </li></ul>
    19. 19. Outbound Revenue * ‘05~’06 Change in Revenue for Telmex International Biz. Source: “Annual Report 2006”, Telmex, 2007
    20. 20. Expansion History Source:
    21. 21. Current Strategies <ul><li>Spin Off International Business </li></ul><ul><ul><li>Seeking to unlock the value of the faster-growing part of his company </li></ul></ul><ul><ul><li>May insulate the non-Mexican part of the business from increasing antitrust pressure </li></ul></ul><ul><li>Agreement with Cable TV Operators </li></ul><ul><ul><li>Competition will intensify as end-users get a wider range of choice of voice and other services </li></ul></ul><ul><ul><li>Easier for Telmex to TV market </li></ul></ul>*SCT: Secretary of Communications and Transport Source: 1. Telmex Signs Interconnection Agreement with Eight Cable TV Operators, Global Insight, 2006 2.
    22. 22. <ul><li>Governance Principles </li></ul><ul><li>Manager Profile </li></ul><ul><li>Board of Directors </li></ul><ul><li>Stock Ownership </li></ul>Governance Structure
    23. 23. Governance Principles A work culture in which the company will continue to evolve A strong foundation to face the challenges that come with change.
    24. 24. Manager Profile <ul><li>Carlos Slim Helú </li></ul><ul><li>Co-Chairman, Telmex </li></ul><ul><li>Has a substantial influence over the telecom. industry in Mexico and much of Latin America as well. </li></ul><ul><li>- Grupo Carso </li></ul><ul><li>Teléfonos de México (Telmex), </li></ul><ul><li>Telcel and América Móvil </li></ul><ul><li>Three Sons: Carlos Slim Domit, Marco Antonio Slim Domit and Patrick Slim Domit </li></ul>Hector Slim Seade CEO, Telmex Nephew of Carlos Slim General Direct Officer from 1995
    25. 25. Board of Directors Source: Name Status Year Age Gender Carlos Slim Domit Co-Chairman of the Board Officer 1995 40 M Juan Antonio Perez Simon Vice Chairman of the Board Officer 1990 67 M Adolfo Cerezo Perez Chief Financial and Administrative Officer 1991 M Javier Mondragon Alarcon Juridical and Regulatory Director Officer 1999 M Arturo Elias Ayub  Director of Strategic Alliances, Communications and Investor Relations Officer 1998 41 M Isidoro Ambe Atta Corporate Markets Officer 1997 M Jaime Chico Pardo Chairman of the Board Officer 1995 57 M Oscar Von Hauske Solis  Director of International Operations and Telecommunications Operations Office 1996 M
    26. 26. Stocks Ownership Capture from:
    27. 27. <ul><li>With Foundation Telmex </li></ul>Social Responsibility
    28. 28. Social Responsibility - thru ‘Foundation Telmex’ <Mission> Instrumentar eficazmente programas creativos y permanentes de alto impacto y cobertura nacional, que contribuyan a resolver las profundas desigualdades sociales que han limitado el desarrollo de nuestro país y a mejorar la calidad de vida de los mexicanos. Since 1996, Fundación TELMEX has worked to benefit the community and improve the quality of life.
    29. 29. Social Responsibility - thru ‘Foundation Telmex’ <Vision> Contribuir al desarrollo de México a través de programas de educación, salud, nutrición, justicia, cultura, desarrollo humano, deporte y ayuda en desastres naturales, generando oportunidades que propicien el desarrollo integral de los mexicanos por un mejor país
    30. 30. Social Responsibility - thru ‘Foundation Telmex’ Source: Annual Report 2006, Telmex, 2007 Its $1.2 billion endowment makes Telmex the region's largest corporate giver.
    31. 31. Summary - Got a huge success, but…
    32. 32. Outlook <ul><li>More stringent regulation: may constrain Telmex's ability </li></ul><ul><ul><li>However, Telmex successfully challenged this resolution and it was declared invalid in 2004. </li></ul></ul><ul><ul><li>Result of Ethical and Public Contribution </li></ul></ul><ul><li>A ‘winner’ takes it at all? Yes </li></ul><ul><ul><li>it will maintain its leading position in the Mexican telecom sector and solid credit metrics. </li></ul></ul><ul><ul><li>Also in the international operations </li></ul></ul>
    33. 33. Thank you Sushi with GM Daewoo ‘Matiz’ Sculpture Agrippa, Marcus Vipsanius In Korea, 3 days ago……..
    34. 34. References <ul><li>“ Telmex Signs Interconnection Agreement with Eight Cable TV Operators”, Global Insight, 2006 </li></ul><ul><li>“ Mexico's Antitrust Agency Starts Phone Market Probe” </li></ul><ul><li>“ Telmex’s Spin Off It’s International Business” </li></ul><ul><li>Google Finance, Telmex </li></ul><ul><li>Annual Report 2006, Telmex, 2007 </li></ul><ul><li>“ Wire/Wireless Telecommunication Industry Trend”, KOTRA, 2007 </li></ul><ul><li>‘ Telmex’ , wikipedia </li></ul><ul><li>“ Telmex and Telefónica Step on the Gas Pedal in Latin America ”, http :// </li></ul><ul><li>“ Monopoly money”, The Econimist, 2006 </li></ul>