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Tickers in this Article: MICC, EZA
The introduction of exchange-traded funds (ETFs) has opened to door to a wide array of investment opportunities that were not available a couple of years ago. One of the biggest winners has been the international ETFs. First there were ETFs that concentrated on a region of the world, and then it moved to specific countries. The newest products offer exposure to specific groups of countries that make up the emerging market asset class.

The Last Frontier
However, when doing my research I found one continent that is lacking representation in the U.S. investment world - Africa. There is an ETF that invests 100% of its assets in South African countries, iShares MSCI South Africa (NYSE: EZA). The problem with EZA is that it does not give investors exposure to the countries throughout the remainder of the continent which have the high growth potential.

Investors lucky enough to find a way into the local stock exchanges were rewarded with large gains in 2006. A number of African stock indexes rallied over 50% last year as big money views the continent as one of the last investment frontiers. Because it is next to impossible to invest in the growth in Africa through the U.S. exchanges or the local stock exchanges, we must think creatively.

Pay For Your Ticket to Africa with MICC
A little-known company based out of Luxembourg may be our best option for entering the growing African market. Millicom International Cellular (Nasdaq: MICC) provides affordable and readily available telecom services to nearly 16.5 million customers in 17 emerging markets throughout the world. The regions of focus are Africa, Latin America, and Asia where basic telephone services are insufficient and a growing economy is resulting in an increasing demand for communication services.

A number of the countries MICC has entered never had the landline infrastructure that we have become accustomed to here in the United States. So, instead of running wires all over the dessert and forests, why not use a less expensive wireless network. As the population moves out of poverty and into the middle class a growing necessity will be communication. As of right now, the options for the masses are limited. If MICC can remain the leader and become the standard in these countries the bottom-line growth will be a byproduct.

Growth Story
When MICC reported Q1 earnings on April 24, 2007, the numbers were staggering. When compared to last years numbers, revenue increased 86% to $563 million and net profit shot up to $87 million versus $33 million in 2006. (The $87 million does not include a one-time sale that generated $258 million in net income.) The company now has 16.5 million subscribers, up 94% from the first quarter of 2006.

Expansion
In January 2007 the "tigo" brand launched in The Democratic Republic of Congo and Sri Lanka, and by the end of the first quarter there were nearly 200,000 subscribers in the Congo. In the earnings statement, the CEO discussed how Central and South America are currently the fastest growing regions, and Africa could see higher growth rates in the future. Three African countries Ghana, The Democractic Republic of Congo and Sierra Leone had the best percentage gain of subscribers over the last year.

As the company continues to expand with capex spending in Africa, and more wealth flows downward, it will only create opportunity for more growth. One of the challenges MICC will face is the cost of the mobile phones its subscribers use. As technology advances and cheaper models are brought to market, it will result in a new demographic open to the use of communications equipment. The potential from continued growth in the Africa region is nearly limitless.


Is MICC For Your Portfolio?

The big question is whether you should consider buying shares of MICC. Based on the fundamentals the stock has an above average price/earnings ratio and price/sales ratio when compared to its competitors. However, I believe MICC is unique due to the niche business model and it is growing at a much faster pace than its peers. I am always more than willing to pay for future growth.

The stock has been on a tear, rallying 35% year-to-date and up over 20,000% from the 2002 low. The uptrend has been very impressive, but there are still spots to enter from time to time. With a beta of 3.5, the volatility is extremely high and therefore buying opportunities arise when the stock falls dramatically to attractive levels. The best approach is to be patient and wait for the pullback that occurs every few months.

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