The Business Year

Héctor Slim Seade

MEXICO - Telecoms & IT

Educate & Invest for Success

CEO, Telmex

Bio

Héctor Slim Seade graduated with a Bachelor’s degree in Business Administration from Anáhuac University. He then went on to begin his career with Grupo Inbursa as an analyst in 1983. In 1989, he occupied the position of CEO of Proveedora Inbursa. In 1990, he became the CEO of Fianzas La Guardiana. When Banco Inbursa was founded in 1993, he became CFO of the company. He has been working with Telmex since 1995, and became CEO in 2006, after serving in a variety of positions within the company.

What is the Telmex story? Telmex was a public enterprise that was privatized in December 1990; Grupo Carso was awarded the tender process in partnership with France Télécom and the […]

What is the Telmex story?

Telmex was a public enterprise that was privatized in December 1990; Grupo Carso was awarded the tender process in partnership with France Télécom and the Southwestern Bell Corporation, today’s AT&T. Back in the 1990s, Telmex was a very outdated IT company in terms of technological usage and equipment, therefore we had to modernize the company at all levels; management, technology, and business practices. For that reason, our main priority was to invest in the company’s modernization from the technological point of view, as well as to train our workforce to adapt themselves to the company’s new practices and levels of technology. We had around 50,000 employees; the main concern was to improve on education standards. Right after the takeover we established the Instituto Tecnológico de Teléfonos de México (Inttelmex), our own training and education facility that has become a leading institution in its sector. Since 1990 up to now, the educational average level increased from 5.9 to 16 years of education. When we acquired Telmex, the company was ranked around 60th in a worldwide ranking—in 2000 we were top of the league, according to Forbes and in 2012 this was reaffirmed by the World Finance Telecoms Awards. This period proved to be a very critical moment for the company. We needed to heavily invest in many fields. Telmex and Telcel have invested more than $44 billion in the Mexican IT sector since 1991, a period of 22 years in which the IT sector has become very competitive, attracting foreign players. We have supported the development of telecommunications and broadband services in all market segments nationwide, covering more than 105 million Mexicans. Telmex’s investments represent over 80% of the sector’s overall levels. Today, our company reaches over 97% of Mexico’s population, and we take our social responsibility to serve the Mexican people in terms of connectivity and digital culture and education, as well as in national social programs, seriously. At the same time, we are pioneers in many fields worldwide, and, for example, Telcel was the first company in the world to introduce pre-paid mobile telephone services in 1996.

What are the main developments you have seen in Mexico in terms of the provision of broadband services, and what role has Telmex played in this context?

We started offering broadband services in 2001, four years later than the cable operators in the country. Back then, Telmex had around 67,000 clients, whereas our competitors had around 165,000. In terms of market share, we had around 28%. However, if we look at figures from 2011, Telmex owns more than a 70% market share—we have reversed roles. Investment and more investment has been key in this process, and I am proud to say that thanks to our growth and development the broadband segment in Mexico has been growing at an annual rate of around 54% over the 2002-2011 period, which represented one of the highest growth rates in the world.

What are the main lines of investment Telmex prioritizes for the future?

Today, we put a lot of emphasis on investing in cultural and educational programs, such as digital libraries. We believe it is a natural step after experiencing such impressive growth in segments such as broadband. In this regard, we need to strengthen broadband penetration in the low-end market spheres of the country, an area where the main hurdle to overcome is the low purchasing power of Mexican families and the lack of computers in households. The National Institute for Statistics and Demographics (INEGI) says that there are only 10 million households with a computer in Mexico, whereas there are over 30 million households in the country. Telmex has played a key role in increasing the number of computers in family units by selling them through economic programs that enabled families to pay them back little by little through their telephone bills. In fact, we have financed over 3.5 million computers in Mexico from 1999 up until today. Therefore, we will keep a strong focus on increasing penetration rates in these segments. For that reason, at the moment we are also heavily investing in digital culture and internet programs. Today, more than 86% of internet users utilize it for entertainment purposes, and we need to boost the number of people who use it for other applications such as e-government, e-banking, e-health, and e-education. According to the ITU’s Measuring the Information Society 2011, only 1.2% of Mexico’s population uses the internet for government-related purposes, whereas the same figure in Europe stands at around 46%, Brazil 11%, and Chile 12%. At the same time, only 18% of Mexico’s primary schools have internet access. Therefore, Mexico has great development opportunities in the segments that depend on current penetration rates as well as educational programs, because we have the necessary infrastructure that let us create massive events of digital culture such as Aldea Digital Telcel 4GLTE – infinitum (Digital Village), which received more than 154,000 visitors and obtained the Guiness World Record as the largest worldwide event of digital inclusion.

What role is Telmex playing in developing educational facilities in this sector?

Telmex is playing a key role in this process, and we have launched more than 3,600 digital classroom/libraries; we worked with public schools, Telmex Classrooms, among others in the country by providing computers and broadband access, and we have already facilitated with this program internet access for more than 3 million people. Also, we developed over 350 educational workshops to provide scientific and mathematics education to children. We also spent time training teachers to be ready for these workshops. Finally, we also developed specific management software for schools and teachers to optimize their time, resources, and workload. Over the years, both teachers and pupils under Telmex programs have been nationally and internationally recognized. According to our research, students’ performance in the “Enlace” educational evaluation and their learning curve has improved by 35% thanks to our programs, something that has also been seen in the national exams the government carries out. We additionally developed an educational network at the higher education level in order to boost knowledge and technological exchange: its name is Académica. Today, there are over 260 universities at the international level that—free of charge—are part of this technology platform. In addition, we have developed our institution to a higher education level, and those interested can even take MA courses in the Inttelmex IT free of charge. These are just some of the initiatives we are heavily focusing on at the moment. However, we constantly develop other social and educational projects nationally and internationally, such as an alliance with the Massachusetts Institute of Technology (MIT/OCW) for the development of online higher education, as well as an educational collaboration agreement.

How significant is the expansion of the Triara Data Center you carried out in 2012 for the company’s future?

Through América Móvil, there are seven Data Centers that operate across Latin America, including Mexico, Brazil, Colombia, Argentina, Chile and Peru which are very important for our services and activities, especially due to our commitment to keep improving IT services for our customers. This allows us to guarantee our residential and global corporate customers total certainty and security in safeguarding their information, which is their most valuable asset and where we offer practically unlimited hosting. Additionally, all of América Móvil’s Data Centers are interconnected and therefore we are able to offer these services within our territory as well as abroad, which is a huge competitive advantage for us. In Mexico, we have almost 17,000 m2 of Data Centers which are located in two different cities: Querétaro and Monte- rrey, which have the highest quality international standards and certifications in terms of information security, service management, quality, environmental and infrastructure as ICREA Level 5 Certification (HSHA-WCQA: High Security High Available World Class Quality Assurance), ISO 27001, Structured Cabling (BELDEN, TYCO, ADC), ISO 9001, SAS-70, NFPA 75, ISAE 3402, ITIL, CDCP, CCNA, CCNP and Microsoft. In fact, broadband and Data Centers represent two of the main areas of investment for the company.

What has been Telmex’s approach to the development of the national wi-fi network in public places?

Currently, we have more than 8.6 million broadband clients. That means that they all have wi-fi services in their homes—either wired or wireless. On top of that, Telmex has more than 5,400 public wi-fi spots that are continuously growing. They are located in key areas such as universities, airports, parks, public areas and service stations. We have more than 4.8 million connections to our many wi-fi spots every month.

What is your general outlook for 2013 for both Telmex and the telecommunications industry?

I believe that the sector requires higher levels of investment at all levels in order to further boost its development, because we have to keep in mind that without constant investment our sector cannot be competitive. At the same time, Mexico lags in telecommunications multi services. I believe that operators need to be granted the right to offer all services accompanied with a regulation that gives incentives to invest in order to increase the infrastructure. I truly believe that such a process would boost investment, creativity, flexibility, and development in the sector, and in the end, the main beneficiary would be the consumer and the country. It is a win-win situation for everybody.

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