MEXICO CITY — All is not well in the kingdom of Carlos Slim.
For more than 25 years, he has dictated the terms of Mexico’s telecommunications industry and built an empire, making him one of the world’s richest men.
Mr. Slim and his family are billionaires
50 times over. He has stood at the very
top of the Forbes World’s Billionaires
list — more than once. His flush years
in Mexico enabled him to span the
Americas with companies that touch
nearly every facet of modern life:
telecom, banking, construction, retail
and media, among others.
But at home in Mexico, the game is changing. And there is not much he can do about it, analysts say.
Determined to bring his dominance to an end, leaders from Mexico’s three biggest political parties have put aside their own animosities in recent years, meeting in secret sessions to chip away at Mr. Slim’s domain.
Now, the plan they concocted to increase competition in the telecommunications industry, signed into law two years ago, is starting to bite.
Profits for Mr. Slim’s flagship company, América Móvil, are in steep decline, falling 24 percent in 2015 and almost 44 percent in the first six months of this year, compared with the year-earlier periods. A closely watched metric of profitability on Wall Street has also fallen, and the company’s stock has dropped by 39 percent in the past year.
In its quarterly report last month, the company acknowledged that increased competition was crimping profits in Mexico. Under the new law, it must submit to special rules as the dominant phone company. It cannot charge fees to its smaller competitors when their users call into its network and it must share its infrastructure, including cell towers, all of which Mr. Slim says forces him to subsidize behemoths like AT&T.
“What has changed the most and is most relevant here is the authorities, and their attitude toward this empire,” said Ernesto Piedras, the director general of the Competitive Intelligence Unit, a consulting and research firm. “This is the first time Slim does not have a copy of all the keys.”
Regulators in Mexico, sometimes against their government’s wishes, had tried for decades to rein in Mr. Slim’s dominance, finding themselves thwarted at every turn.
His monopoly was so dominant that it cost Mexicans an extra $13 billion a year between 2005 and 2009, according to the Organization for Economic Cooperation and Development. Still, his wealth, armies of lawyers and government connections kept him a step ahead of weak regulators, former officials say.
But when the Institutional Revolutionary Party took back the presidency in 2012, it looked to reassert its power in a country where the state — not big businesses — has traditionally been king. And Mr. Slim offered a way to score political points at the same time: Mexicans were already openly scornful of what they called his expensive and often unreliable service.
Overhauling telecom was a crucial part of President Enrique Peña Nieto’s push to recast the image of Mexico and his party, which had governed the nation for seven decades before losing an election for the first time in 2000. He vowed a new Institutional Revolutionary Party, dedicated to recharging the economy. He promised a new era, declaring it “Mexico’s moment.”
The celebration was short-lived, with corruption and security scandals sinking Mr. Peña Nieto’s approval ratings to the lowest of any president in a quarter-century. But the economic overhauls continued. Mexico is inviting private companies to drill for oil. Changes to the school system are underway. And Mr. Slim is facing effective competition for the first time.
For Mexico, the telecom law offers a stark contrast to the state’s many failed promises — to end corruption, enact the rule of law and bridge inequality. That the government has managed to take on Mr. Slim, arguably the country’s most powerful citizen, is proof that where there is political will in Mexico, there is a way.
“This administration invested in the economic reforms, but they ignored the reforms in the judicial system and in the field of corruption,” said Enrique Krauze, a prominent Mexican historian who knows Mr. Slim.
Still, the changes have done little to dent Mr. Slim’s market share. He retains nearly 70 percent of the cellphone market and about 65 percent of fixed lines.
In an interview, Mr. Slim said the new law established a certainty that all businessmen appreciate. But he bristled at the notion that his company required special regulation, or that it had stalled or impeded regulation in the past.
“Look at all the regulation they have imposed on us. Look at them!” he said. “Every time they complain about something, they lobby to impose a regulation.”
Mr. Slim acknowledged that profits were down. Currency woes in Latin America have taken a heavy toll. And the recent entry of AT&T, which haspromised to spend billions to compete with his company, has helped bring down cellphone plan prices significantly, including his own. Through it all, Mr. Slim said, his customers have stayed with him.