As developing countries continue to make leaps and advancements, the telecommunications industry and the exchange traded funds (ETFs) that track the sector are in a position to benefit.
The Economist states that cell phones have a different role in developing countries than they do in industrialized nations. Cell phones are giving many of the world’s poor their first exposure to telecommunications. In the developed world, cell phones generally are just extensions to existing land lines.
What has the expansion of cell phones in emerging markets meant for the industry and these countries?
- A recent study showed that adding 10 cell phones per 100 people in a typical developing country will boost GDP growth by 0.8% per person.
- The spread of mobile phones in developing countries has been accompanied by the rise of home-grown mobile operators in China, India, Africa and the Middle East. These providers rival the providers in the West. (What’s next for global telecom?)
- The emergence of China’s two leading telecom equipment-makers, Huawei and ZTE, have entered the global stage in the past five years and now have a growing reputation for quality and innovation, prompting a shakeout among the incumbent Western equipment-makers (How to play China’s telecom boost ).
- The development of new phone-based services, beyond voice calls and basic text messages, are now becoming feasible.. The services tend to center around agricultural advice, health care and money transfer – things that could deliver enormous benefits to residents of poor nations.
For more stories on the telecommunications industry, visit our telecommunications category.
- iShares S&P Global Telecommunications (NYSEArca: IXP): up 6.9% year-to-date
- SPDR S&P International Telecom (NYSE: IST) is up 11% year-to-date
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.