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Saturday, December 2, 2023

López, Guatemala’s 1st billionaire, beating Slim with Tigo Mobile

When Mario López 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 fixed line could take years, prompting businesses to abandon phones for two-way radios. López saw an opening.

“No one believed in cellphones 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 globally in mobile network coverage, according to a report by the World Economic Forum. Mobile phones outnumber human beings and López’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.

López’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.

“In Guatemala, there is no other large capital that was so quickly forged,” Juan Luis Bosch, co-president of Corporacion Multi Inversiones, said of López. 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.

López left his communications minister post under President Vinicio Cerezo as the government granted a 20-year concession to Comunicaciones Celulares 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.

López 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 América Móvil, and Madrid-based Telefónica entered the market.

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

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: Telefónica, América Móvil SAB de CV and Portugal Telecom SGPS SA. He could become even richer if his partner, Millicom International Cellular SA, buys him out.

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

“I am somewhat affluent,” López 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.”

López 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 Periódico 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. López 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. These “frijolitos,” or “little beans,” cost as little as a shot of rum at the local bar.

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

López doesn’t see his growth stopping at telephony. He plans to invest in a solar power project and to put $200 million into a mall and office tower development in Asunción, Paraguay, which will house Brazilian lender Banco Itau. He is also considering wind power investments in Guatemala and solar in Ecuador.

“Everything is already taken in the big countries,” he said.

López, who has a minority stake in local newspaper Prensa Libre, also wants to start a bank. Comcel charges a fee for money transfers using mobile phones that can be withdrawn at Tigo offices, and offers minutes on credit interest-free. His Fundación Tigo helped wire money for food supplies in parts of rural Guatemala to fight malnutrition last year.

López says he has no further interest in pursuing a political career like his grandfather, Manuel Estrada Cabrera, a dictator who ruled Guatemala for 22 years before he was overthrown in a 1920 armed revolt.

“You have more possibilities to grow in the private sector,” López said. “You can always have more power than bureaucrats.”

López declined to reveal his age in a two-hour interview. Instead, he offered his thoughts on aging.

“Youth, much like the spring, is overvalued,” he said, flanked by miniature models of his helicopter and jet plane. “They both bring many flowers, but also thorns. In maturity, there may not be so many flowers, but there are many fruits.”

© 2014, Bloomberg News

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