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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area
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To: Dale Baker who wrote (3441)5/3/2004 11:12:09 AM
From: Dale Baker  Read Replies (1) of 37387
 
Here's one I have been in for a while (TLK), might be interesting:

Q: Where are you investing?
A: Telecom Indonesia is a stock we like. It is the largest telecom company in Indonesia. Only 8% of the population of Indonesia has phone service. But that is increasing at 40% a year, and a lot of that increase is happening in cellular. It is one of the reasons we like the cellular theme across a number of countries, because you are going from very low penetration to high penetration, and in many cases consumers are bypassing landline connections altogether.

Telecom Indonesia owns a 50% market share of the cellular business and 80% of the land-line business. Here is a company growing quite rapidly and trading at 10 times earnings. It is very profitable and has a 25% return on equity. Cellular companies in emerging markets are becoming extraordinarily profitable, because the cost of technology has been dropping. The cost of adding a subscriber in terms of technology has dropped dramatically in the last five years. There is an extreme relationship between how much you charge for service and penetration. Dropping the average cost per user by $1 or $2 a year has a massive impact on volume growth and penetration.
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