Monday, January 23, 2006

An opportunity revisited

Back in November, I wrote about Africa being an opportunity for patient investors. The only company I mentioned there as an example was Millicom, the Luxembourg-based provide of cellular services in Africa and other emerging markets.

I had bought a few Millicom shares in September at around $18/share and intended this to be a long-term hold, possibly buying more at opportune moments. Well, something interesting happened last week. Millicom announced that it has received unsolicited takeover offers, and is considering them!

The stock has taken off since then, including a $9/share jump on one day. The shares now trade at $39 and are not cheap anymore. An offer is likely to be higher than even this price, but buying more at this point is risky. I am holding onto my shares, and if a pullback ensues if the takeover does not materialise, will be looking to add more for the longer term.

Another related investment I made was in Turkcell (TKC), Turkey's largest cellular service provider. The second largest provider in Turkey, Telsim, was bought recently by Vodafone. Turkcell will also ultimately be bought by a Dutch/French/German telco. A cheap entry point to Turkcell was possible thanks to the bird-flu scare. Shares have recovered since then, though they are still attractive. Buy on any more avian panics.

Others worth watching are Hutchison (HTX), which provides cellular services in several Asian countries, incuding India, Indonesia, China Mobile (CHL), China Unicom (CHU) and Portugal Telecom (PT). I own PT shares, and see it as a takeover target for a European major.


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