Worldwide mobile-phone adoption reached a remarkable milestone in November. The number of cellular subscriptions hit 3.3 billion, equal to half the world's population, according
to research firm Informa Telecoms & Media. That's a sign of just how quickly mobile technology has spread over the past two decades, but it also indicates that the global
wireless-phone market has room to expand. As people in developed and developing countries alike become more affluent, companies such as América Móvil, China
Mobile, and Turkey's Turkcell Iletisim Hizmetleri have opportunities for continued growth. At the same time, even in areas where the cellphone market is mature, customers are
using more voice and data services, both of which add to their bills and translate to higher revenue for providers. For those reasons, CGM Funds manager Ken Heebner, whose Focus
fund is among our top choices for 2008, has loaded up on shares of a couple of Russian firms: Vimpel Communications and Mobile TeleSystems, or MTS.
Since mobile-phone penetration in Russia is already over 100%, meaning that many in the country have multiple lines, both Vimpel Communications and MTS are expanding into
neighboring states, such as Belarus, Ukraine, and Uzbekistan. MTS, for example, added about 3.3 million customers in the third quarter, 1.6 million of them outside Russia. "Each
of the markets is smaller, but collectively they provide a lot of growth potential," Heebner says. In all, MTS, majority-owned by Russian conglomerate AFK Sistema, has 79
million subscribers. (AT&T Wireless, by comparison, has 62 million.) The ADR shares have soared 80% in 2007. Still, with 60% earnings growth in 2007 and a P/E of 15 based on
estimated 2008 earnings - lower than Vimpel Communications' 18 - the stock still sounds like a good call.
Last updated December 14 2007: 11:42 AM ET