it's good to talk

Let's talk about world population: Of the 16 countries in the world that have a populations of 75 million or more, 3 qualify for the title of developed countries. The other 13 are still "developing" basic infrastructure like telecoms

Let's talk about growth: Of the big developed 3, the US has the highest population growth rate of just under 1%. Japan is flat and Germany has a negative population growth number*.

Let's talk about "the other 13": The other 13 countries account for 59% of the world population and all with the exception of Russia have population growth rates higher than 1% per annum*. Nigeria leads this pack with a growth 2.38% per annum* and the 8th largest population in the world.

Let's talk Nigeria: I am a Nigerian and a student of the Peter Lynch school of investing: "Buy what you know". 6 years ago that was really hard as very few of the fortune 500 companies had a substantial presence in Nigeria that tapped into the population's buying power. The only visible foreign consumer-oriented companies were the mobile phone operators

Let's talk mobile phones: GSM technology came to Nigeria in 2001 and MTN was one of the pioneer providers. In the first year of operation, 10% of MTN's ZAR12M revenue came from its Nigerian operations and ZAR7.5 got you US$1. Today, MTN has a presence in over 20 developing countries, the revenue has grown to ZAR58M with 34% of that coming from Nigeria and the currency has stayed fairly steady with ZAR7.7 getting you US$1 at today's rates. Fact is over 100 million Nigerias appreciate the chance to talk & MTN has the money in the bank to prove it.

Let's talk hedging: The uncertainties of the 1st world markets in the last one year has left many an investor weeping. House prices are crashing and consumer confidence is falling... but not in the third world. In China over 1,000M people are talking and China Mobile is helping them. In India over 1,000M people are talking and Reliance Communications is helping them. Over 100M people in Mexico & Nigeria are talking thanks to American Movil & MTN. Fact is the finances of a telecommunications company that is willing to provide services to any of the over $4 billion consumers in the third world is insulated from the global crisis today. It a great hedge against the emotions of the US consumer & the strength of the dollar.

Let's talk diversification: Buying the shares of the different telecoms companies listed above is contrary to Mr Lynch's common sense. Buying into a fund that's invested in these companies, trading at 12% discount to asset value and up 50% from its July 2006 value where the S & P is flat? That's a move Mr Lynch may be proud of. The Emerging Markets Telecommunications Fund (ETF) has done all these. Just as the name says, its a fund that invests in the stock of emerging markets telecoms companies.

Recent conventional wisdom advocates investing in the emerging markets by buying funds that track the MSCI Emerging Market Index. Being from an "emerging market" country, I think differently. A lot of the companies listed on the index are in the natural resources industry and cannot fully tap into the power of a large population, but the telecomms companies can and the ETF is a painless (more volatile, more familiar & more rewarding) alternative for the long-term value investor in me.

Let's talk about me: This is my first post on this blog and I wanted to do a SHORT writeup on why I think investing in the Emerging Markets Telecommunications Fund (ETF) has been a good thing for my portfolio. I've tried to be brief but I have the feeling that this is one of the longer posts on this blog & I apologise. It must be the Nigerian in me. Now you see why MTN Nigeria will always turn a profit. We love to talk!

* CIA world fact book