On the Court

The name Grupo Pegaso has long been associated with the communications sector. What led to the extensive and successful diversification of the business?

My grandfather pioneered the communications industry in Mexico and he was a key player in the 20th century development of our country. His steps became my foundation, and thus I have always been inclined to pay more attention to the wireless industry. When you like what you do, you tend to do it better. In regard to our diversification, it has come about because my office receives an average of five diverse business proposals per month. Our exposure to other industries is very common.

What sectors of the economy do you believe hold particular potential in terms of strengthening Mexico as a contender for the title of Latin America’s largest economy?

In 2012, Mexico’s stock exchange was the second best performing stock market in the world, lagging only behind Germany’s. In the next decade, we should become not only the largest economy in Latin America, but one of the most dynamic among emerging markets. Three industries are set to drive this development. Manufacturing presents tremendous opportunities. For years, China has always been the go-to place for manufacturing, and according to JP Morgan, Chinese workers earned half of what Mexican workers earned in 2002. Today, they earn just 12% less than their Mexican counterparts. There are a number of Chinese companies moving their operations to Mexico to save on costs. Companies in 41 different countries are also looking to set up multimillion and multibillion dollar manufacturing facilities in Mexico. If most of these interested parties decide to build facilities in Mexico, construction companies will experience tremendous growth, not only in terms of these new facilities, but also in the construction of infrastructure to support the manufacturing explosion. Energy is another area where there are many opportunities. According to the US Chamber of Commerce, Mexico is the world’s most energy secure nation among 25 of the largest energy-consuming countries. Our Congress will pass a new energy reform bill that will inspire investments of billions of US dollars in Mexican energy companies, as the nation opens up the industry to private capital. We export 80% of our goods to the US, so it helps to be a neighbor of the largest economy in the world. In 2012, we earned $227 billion exporting goods to the US, and this will only get better since what it could take a month to receive from China, it only take a few hours from Mexico. With the North American Free Trade Agreement (NAFTA), there are no trade wars or tariffs to negotiate, and everything is set. These are a few reasons why the world is bullish about Mexico.

What is Grupo Pegaso most interested in developing in its portfolio and what are your growth and expansion plans?

We are taking a close look at the energy industry and, as always, the telecoms industry. As for growth, we are very bullish when it comes to the energy industry and more conservative in telecoms, but it is still early in the game to be specific.

Where do you see the main opportunities for the private sector?

US economist Jeffrey D. Sachs has expressed his views that in the US, there is a new progressive era in which the government will play a positive role in providing education, fighting climate change, rebuilding infrastructure, taking care of the poor and disabled, and generally investing in the future. Mexico needs all of its players to act in concert for the benefit of all Mexicans and in all areas of our economy, and all businesspeople should examine some projects from a purely financial perspective and others with more social benefits in mind. In regard to our future success, it depends on the ability of the government to implement a number of reforms, and also on its ability to be prepared for the implementation of the changes that need to happen.

What would you say are the key challenges that need to be addressed to enable Mexico to optimize its potential as an economic hub, particularly from an economic perspective?

We need to have judicial certainty in all aspects of business development, but especially in terms of fairness in market competition. The business community around the world, as well as local entrepreneurs, need to believe that they can invest in Mexico and compete on equal terms with local incumbents.

What are Mexico’s strengths as a host country for major sporting events?

We have held all sorts of world-ranking sporting events in Mexico, such as two FIFA World Cups, and that experience helps. In addition, Mexico is a very hospitable country with a tourism industry that consistently ranks as a top income producer. I believe it is within our DNA to feel comfortable as a host nation. We do not compete with the US, simply because there are enough events for everyone on this planet. We have our own unique style that is not comparable to anything or anyone else.

What can be done on the national level to address the current lack of high-profile tennis players in Mexico?

In the early 1990s, Mexico had four tennis players among the top 100 in the world. However, today we do not have any. We need to encourage and support young talented Mexican players to reach the highest levels, because while our country does have a tennis culture, we lack high-profile players. I believe that the Mexican Tennis Federation should work to bring in more expertise in this field. For example, we could organize seminars and courses with the best tennis coaches in the world, as well as host high-level youth competitions in our country. In this context, we are closely working with the private sector to strengthen the game of tennis in our country. For that reason, we are looking at establishing business partnerships and securing funds for projects and infrastructure. We believe that as soon as Mexico has a high-profile tennis player, the sport will experience a boom.

What is your outlook for 2013?

I have a positive outlook for this year. We will continue focusing our investments in fields that are beneficial for the social and economic development of the country. Agribusiness and Stevia production are two of our main investment activities. Also, we will expand our presence and infrastructure along the border region, as well as continue working to generate new content within the sports and communications industries.