While the decoupling debate of emerging mkts to developed markets rages on– EM investors who are on the fence can look at the cellular sector in EM as being defensive during a period when there is a question about top down growth. Disposable income is growing in places like the , Latin America, Middle East, Russia and obviously India and China. Getting exposure to consumer is often best and most efficiently found in the cellular sector where the increased spending on phone services reflects rising wealth effect. According to a recent Goldman Sachs report, there are 300m middle class folks in the BRICs ( more than 3K per year…this will grow to 500MM in 2010 and 1.4Bn in 202GDP growth may be revised down slightly across GEMs but domestic demand remains robust. Domestic will rise in Russia and China this year and fall a bit in Brazil and India. India presents the best example of the demographic and growth opportunity. Only 21% of the Indian population uses a cell phone yet this market is growing at 8mm subscribers a month. The cellular market remains one of the most competitive and high margin businesses for domestic companies in various emerging markets, as well as for some of the legacy players globally(ATT, Vodaphone, DT). Two of the top ten companies in terms of revenues are located in emerging markets. Speculation says that in ten years US and European carriers will have 40% only of the global mkt. Having watched Vimpelcom and Mobile Telesystems up close for the last ten years, I have witnessed staggering penetration and profitability. These two companies, like others in the sector are looking outside their backyard(Russia and Eastern Europe) and have already begun to move into Asia and Africa. Their knowledge of how to operate in an emerging market gives them an edge over many of the western players.
Names to watch in Middle East
Orascom Telecom
MTN
Names you can BUY:
Latin America
NIHD·
AMX
Eastern Europe
VIP
MBT
China:
CHL
CHU
India:
Western guys like VODAPHONE AND ATT are best proxy for this growth…. (ATT is gaining wireless spectrums and has teamed up with local wireless provider Mahindra.)
About Tim Seymour
Timothy Seymour is Co-Founder and Managing Partner of Red Star Asset Management and is also Chief Operating Officer of the $116 million Red Star Double Alpha Fund. Prior to coming on board with Red Star, Seymour was the Head of Fixed Income in Moscow at Troika Dialog Group, and was later appointed Global Head of Sales for all products. In January 2000, Seymour moved to New York to found Troika Dialog USA, a full-service NASD/SEC regulated brokerage firm and subsidiary of Troika Dialog Group. He also oversaw the development of Troika's US corporate finance business, working with multinationals seeking strategic partnerships and green-field projects in Russia, as well as Russian companies making acquisitions in the US. Seymour holds an MBA from Fordham Graduate School of Business with a concentration in International Finance and a BSBA in Marketing from Georgetown School of Business Administration. He comments regularly on developments in Russia's capital markets on CNBC, Bloomberg and CNN.
GEM cellular story remains core consumer play
While the decoupling debate of emerging mkts to developed markets rages on– EM investors who are on the fence can look at the cellular sector in EM as being defensive during a period when there is a question about top down growth. Disposable income is growing in places like the , Latin America, Middle East, Russia and obviously India and China. Getting exposure to consumer is often best and most efficiently found in the cellular sector where the increased spending on phone services reflects rising wealth effect. According to a recent Goldman Sachs report, there are 300m middle class folks in the BRICs ( more than 3K per year…this will grow to 500MM in 2010 and 1.4Bn in 202GDP growth may be revised down slightly across GEMs but domestic demand remains robust. Domestic will rise in Russia and China this year and fall a bit in Brazil and India. India presents the best example of the demographic and growth opportunity. Only 21% of the Indian population uses a cell phone yet this market is growing at 8mm subscribers a month. The cellular market remains one of the most competitive and high margin businesses for domestic companies in various emerging markets, as well as for some of the legacy players globally(ATT, Vodaphone, DT). Two of the top ten companies in terms of revenues are located in emerging markets. Speculation says that in ten years US and European carriers will have 40% only of the global mkt. Having watched Vimpelcom and Mobile Telesystems up close for the last ten years, I have witnessed staggering penetration and profitability. These two companies, like others in the sector are looking outside their backyard(Russia and Eastern Europe) and have already begun to move into Asia and Africa. Their knowledge of how to operate in an emerging market gives them an edge over many of the western players.
Names to watch in Middle East
Orascom Telecom
MTN
Names you can BUY:
Latin America
NIHD·
AMX
Eastern Europe
VIP
MBT
China:
CHL
CHU
India:
Western guys like VODAPHONE AND ATT are best proxy for this growth…. (ATT is gaining wireless spectrums and has teamed up with local wireless provider Mahindra.)
About Tim Seymour
Timothy Seymour is Co-Founder and Managing Partner of Red Star Asset Management and is also Chief Operating Officer of the $116 million Red Star Double Alpha Fund. Prior to coming on board with Red Star, Seymour was the Head of Fixed Income in Moscow at Troika Dialog Group, and was later appointed Global Head of Sales for all products. In January 2000, Seymour moved to New York to found Troika Dialog USA, a full-service NASD/SEC regulated brokerage firm and subsidiary of Troika Dialog Group. He also oversaw the development of Troika's US corporate finance business, working with multinationals seeking strategic partnerships and green-field projects in Russia, as well as Russian companies making acquisitions in the US. Seymour holds an MBA from Fordham Graduate School of Business with a concentration in International Finance and a BSBA in Marketing from Georgetown School of Business Administration. He comments regularly on developments in Russia's capital markets on CNBC, Bloomberg and CNN.