Carlos Slim Bested by Mobile Billionaire in Guatemala

Bloomberg Businessweek

By Blake Schmidt
August 04, 2014

Guatemala’s Richest Person Lopez Beating Slim With Tigo MobileGuatemala ranks No. 1 in mobile network coverage, according to a report by the World Economic Forum. Mobile phones outnumber human beings. Photographer: Orlando Sierra/AFP via Getty Images

When Mario Lopez Estrada was head of Guatemala’s state telecommunications monopoly in the 1980s, making a phone call in the war-ravaged Central American nation was a hopeless endeavor.

Most cities didn’t have a single working phone. Switchboards were overloaded amid one of the lowest penetrations in Latin America, at 1.5 lines per 100 inhabitants. Getting a landline could take years, prompting businesses to abandon phones for two-way radios. Lopez saw an opening.

“No one believed in cell phones back then,” he said in an interview at his office in Guatemala City. “It seemed like a good opportunity, but no one had a clue it would reach this level. No one.”

Almost three decades later, Guatemala ranks No. 1 in mobile network coverage, according to a report by the World Economic Forum. Mobile phones outnumber human beings and Lopez’s stake in Tigo Guatemala, the country’s biggest mobile phone service with 54 percent market share, has made him the country’s first billionaire.

Lopez’s self-made fortune is noteworthy in a region where most wealth is inherited and divided between family members. Guatemala has an annual per-capita income of $5,300, about half the average in Latin America, according to the Central Intelligence Agency’s World Factbook.

Monopoly Position

“In Guatemala, there is no other large capital that was so quickly forged,” Juan Luis Bosch, co-president of Corporacion Multi Inversiones, said of Lopez. Bosch oversees a family-run empire started in 1911 by his grandfather, which invested $500 million last year to buy a stake in the Central America operations of Telefonica SA. (TEF)

Lopez left his communications minister post under President Vinicius Cerezo as the government granted a 20-year concession to Comunicaciones Celulares SA in what was an early step in the country’s effort to privatize its phone operations. Comcel was handed a monopoly in exchange for sharing profits with the government.

Lopez bought his first stake in Comcel in 1993 and increased his ownership to 45 percent after several share purchases. The company held its monopoly position until 1999 when Telgua, owned by billionaire Carlos Slim’s America Movil (AMX:US), and Madrid-based Telefonica entered the market.

“Lopez was in the right place at the right time — much like Carlos Slim,” said Fernando Lopez, president of Guatemala’s Chamber of Industries.

‘Somewhat Affluent’

The former public servant’s stake in Tigo is valued at about $1 billion, according to the Bloomberg Billionaires Index, based on the average enterprise value-to-Ebitda and price-to-book value multiples of three publicly traded peers: Telefonica, America Movil SAB (AMXL) and Portugal Telecom SGPS SA. He could become even richer if his partner, Millicom International Cellular SA (MIC), buys him out.

In a two-year put and call option agreement that Millicom and Lopez struck in January, Millicom has the option to buy his stake for $1.8 billion. Lopez said the backing of Millicom, which operates throughout Latin America and Africa, was essential in cementing his fortune.

“I am somewhat affluent,” Lopez said, before letting out a gleeful laugh inside the high walls of his guarded office building. “What’s important is to not stay in the comfort zone.”

Little Beans

Lopez backed a law passed in April that limited the power of local governments to block the construction of data transmitters. Guatemala’s Chamber of Industries and local newspaper El Periodico said an article in the bill favors Comcel over smaller competitors. Companies applying for the permits are asked to have 6,000 kilometers of cable already installed. Lopez says the law doesn’t favor his company.

Comcel’s monthly smartphone sales have surged sevenfold from a year ago to 150,000, fueled by a Twitter campaign that encourages Guatemalans to abandon their no-frills mobile phones, known as frijolitos, which means little beans, and cost as little as a shot of Zacapa, a Guatemalan rum, at the local bar.

“You have to constantly innovate,” he said, standing before one of the bronze sculptures by Mexican artist Javier Marin that adorn his office. “If not, you’re left behind.”