Sunday, October 5, 2014

Opened position in Telenor (TELNY)

I have been very bullish on Myanmar for some time. The opening up of the country after years of rule by a military junta was really fascinating to watch. I do not think anyone expected the pace of political and economic reforms to happen as quickly as they did in Myanmar. These reforms have translated to big economic changes in the country. For example at one time, back when it was under British rule, Myanmar was the largest rice producer in SE Asia. Rice production collapsed under the military rule as they instituted socialist policies which of course do not work. The expectation now is that Myanmar will be exporting over 2 million tonnes of rice in a couple of years.

I want to take part in this economic growth but it has been hard to find a vehicle to invest in that will give exposure to Myanmar. I made some money on Yoma Strategic Holdings but it is overvalued currently. There is no stockmarket currently in Myanmar so I have to find a proxy.

Telenor is a wireless provider based in Norway that provides wireless services in Norway and many emerging markets. These markets include; Thailand, Bangladesh, Pakistan, India, Malaysia. The company also holds a 33% interest in Vimpelcom, a large Russian wireless provider.

Myanmar granted licenses to two providers Telenor and Qatar's Ooredoo. Telenor turned on their network last week and began service.

Telenor Group has announced that it will begin connecting customers in Myanmar on Saturday, September 27. The day marks the official roll-out of Telenor's network, starting in the nation's second-largest city of Mandalay. Telenor will then continue towards the metropolitan hubs of Nay Pyi Taw and Yangon, and thereafter expand into more towns, villages and rural areas.

I am considering Telenor a longer term investment as a play on not only Myanmar, which is described as the last big wireless opportunity, but on emerging Asia as a whole. As incomes increase wireless usage will increase along with revenue. Penetration rates in these countries are still low and there is room for significant growth in users and services. Telenor has been a decent performer and pays out a nice dividend (currently yields near 5%). The company has been buying back shares over the last few years so returning capital to shareholders is a priority which I like. An investment in Telenor is a good way to diversify out of the US and take part in the overall rise in purchasing power in emerging Asia.

Here is a link to the Telenor Investor page.

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