In the January edition of WIRED magazine, in an article entitled “Shanzhai,” Frog Design‘s Jan Chipcase takes writer Bobbie Johnson on a tour of Shanghai’s electronics markets. If Chipcase’s name does not ring a

The telecom sector got a big shakeup recently, with AT&T (T) announcing that it will buy T-Mobile in a deal that would boost AT&T's subscribership to almost 130 million - pushing it past Verizon (VZ) as the largest wireless carrier in the U.S. The $39 billion deal is far from complete, however. It still has to make it through regulatory agencies - and, given the antitrust implications of a deal between two of the four-largest cellular service providers in the country, the deal is likely to face quite a bit of scrutiny.

The AT&T / T-Mobile deal shined a light on a sector that has languished in recent years. Since the March 2009 low, the S&P 500 is up about 95%; the SPDR S&P International Telecom Sector exchange-traded fund (IST), meanwhile, has made less than two-thirds of that gain, as investors have looked for flashier growth-oriented shares amid the market

For our dividend portfolio we follow the strategy pioneered by Tweedy Browne of buying companies with high dividend yields but low payout ratios. You can read Tweedy Browne’s investing studies here. Telefonica (TEF) is one company we own that fits the bill. TEF offers a current yield of approximately 6% and over the last five years has paid out only an average 41% of free cash flow as dividends.

Telefonica is headquartered in Spain and is the fifth largest telecommunications company in the world with 278M accesses (or total connections) as of June 2010. The company has operations in Spain, Europe and Latin America. Although the company is Spanish, 70% of sales are outside Spain. A detailed overview of Telefonica’s business and growth is shown in Appendix A.

Many telecom companies in developed markets have taken on the persona of utilities with low growth and modest returns on capital for

Sprint Nextel Corp. (S), the third-largest U.S. wireless carrier, extended its $1.2 billion three-year health care purchasing contract with VHA Inc. Sprint has been providing wireless and wireline services to VHA for more than 14 years.

The contract win will serve as a major catalyst to the company in the current scenario in which it is eyeing opportunities for growth. Sprint has been worried since the proposed merger of AT&T Inc. (T)) and Deutsche Telekom’s unit T-Mobile USA was announced, following which its shares tumbled. The dramatic fall raised management’s concerns regarding faltering market sentiments over its stock.

Spring stated that the approval of the merger might significantly alter the structure of the overall telecommunication industry. AT&T and Verizon Communications Inc. (VZ) are already the prime wireless providers and, following the T-Mobile buy, the former would be almost three times the size of Sprint. Additionally, the two dominant companies would

We took a look at what George Soros is selling. This is what we found:

Monsanto (MON): Soros reduced his stake by nearly 50% to 3.2 million shares in the latest full quarter. Monsanto, with a market cap of $36.41B, is one of the largest agricultural product companies in the world. The firm offers chemicals and genetically-modified seeds to boost farm production across a wide variety of crops. Although the stock is currently trading at a somewhat expensive P/E ratio of 32.95, the company has top-notch profitability, with an operating margin of 16.01%. The company also has a ROE of 11.28%, and offers a $1.12 (1.70%) dividend.

In addition to rising food prices, there are a few factors that appear to be in Monsanto’s favor. First of all, Monsanto has a global presence, and should benefit from increased food demand in emerging markets, especially Latin America, where Monsanto has already

Sandvine (SNVNF.PK), a Canadian supplier of telecommunications networking equipment, said Wednesday it swung to a loss in the first quarter as revenues fell and expenses rose.

The Waterloo-based company reported a quarterly loss of US$2.7 million, or 2 cents per diluted share. That compares with a net income of US$0.5 million, or near break-even on a per share basis, for the year-ago period. Excluding special items, the company’s loss for the quarter was US$1.9 million, or 1.4 cents per diluted share, in line with analyst estimates.

Meanwhile, revenues fell 7% year-over-year to US$19.2 million from US$20.7 million, which was actually a smaller drop than the company had expected. Last month,

By Ryan Cole

One small box is about to save America’s cellular companies.

The simple fact is, despite a massive build-out, America’s networks are stretched as thin as they can be. AT&T (T) has long been mocked for its network – but now Verizon (VZ), with its iPhone surge, is experiencing the same problems. Data caps and heavy overage charges are being levied in an attempt to keep usage down – but that’s a losing battle.

As Americans upgrade to smartphones – and as a number of tablets and laptops get their internet over the air – data usage is expected to grow 30-fold in the next five years, and 500-fold in the next 10 years.

Complicating matters – there’s no space left. Not in terms of bandwidth, but in terms of real estate.

“Can You Hear Me Now?”

Currently, the only way to get signals to users on the

Standard & Poor’s Ratings Services is warming to AT&T Inc.’s (T) (A-/Stable/A-1) planned acquisition of wireless carrier T-Mobile USA and also is positive on US wireless tower operators.

While the AT&T deal certainly leaves Sprint (S) out in the cold, we think there are more options available. Most obvious is that Sprint can muddle through largely on the strength of its 4G offerings. We think Sprint’s Q1 CDMA/4G results will again positively surprise investors. This time, though, it won’t look like a fluke. Should this happen, we’d expect Sprint’s favorable Q4/10 and Q1/11 results will

Let me start off by separating my thoughts about AT&T (T) the company with my thoughts about the merger deal. AT&T is one of the best dividend stocks in the market, and has an absolutely fantastic yield. AT&T currently has a 6.1% yield and has done a great job of growing its mobile subscriber base over the past five years because of its exclusivity deal with Apple (AAPL) for the iPhone. Now that the iPhone is available on Verizon’s (VZ) network, AT&T is looking to increase its subscriber base to become the largest carrier in the nation. This would be a fantastic deal for AT&T -- but a terrible deal for consumers.

A Soon-To-Be Duopoly?

The cell phone industry is becoming an oligopoly. The industry is controlled by fewer and fewer players. If the deal passes, smart phone customers will only have three carriers to choose from for nationwide services:

After a wild couple of weeks in the domestic wireless sector following the announcement that AT&T (T) would purchase T-Mobile from Deustche TeleKom (DTEGY.PK) in a $39B deal, the speculation in the media has centered mostly around other potential wireless mergers in the U.S.

Odd, considering that the U.S. market is very mature and past major telecom mergers a la Sprint (S) and Nextel in the wireless sector and MCI (MCIP) and WorldCom in the wireline/data sector have largely been flops. Between merging networks and combining billing systems, it's extremely time-consuming and underproductive to undertake (trust me, I know from first-hand experience of working the projects of trying to merge the billing systems of MCI and WorldCom). The synergies aren't as easily achievable as the companies want to believe. Especially companies on the scale of AT&T and T-Mobile.

If an investor wants faster growth and more profitable companies, the opportunities

AT&T’s (NYSE:T) recent acquisition of T-Mobile for $39 billion adds a new weapon to the company’s arsenal, providing additional spectrum that will enable 4G LTE deployment to more customers. The move heats up competition with providers like Verizon (NYSE:VZ) and Sprint (NYSE:S). ^[1] Sprint’s CEO has actually raised concerns that the merger between AT&T and T-Mobile would stifle competition and put too much power into the hands of AT&T and Verizon, the two leading telecom players in the U.S.

The total number of U.S. mobile phone subscribers has grown from 195 million in 2005 to around 300 million today. However, we anticipate the growth rate to moderate going forward, as wireless penetration (as a percent of total U.S. population) saturates.

Since, increased market penetration and competition will make it difficult for telecom players to raise mobile subscription pricing, AT&T and other providers are shifting focus to connected devices like smartphones,

Uncertainty about the state of the modern telecom industry is everywhere you look. Though the T-Mobile/AT&T (T) deal is still pending, many analysts speculate further consolidation will occur, especially for industry giants Sprint (S), Verizon (VZ) and Vodafone (VOD). Here’s a look at eight players that dominate the industry, plus some commentary on their prospects moving forward.

Verizon (VZ): We think this once sleepy telecom has potential to enter a new growth phase as it grabs market share from competitors with its adoption of the iPhone handset. The company should be able to handle the new services demanded by customers, and on a relative basis, outperform its peers. Average revenue per customer should get a shot in the arm over the next few years as Verizon rolls out higher revenue bundled plans and increases smart phone penetration. The company is worth $36 per share discounted at a 10% rate. It's

Verizon (VZ), which has traded in a range between $25 and $40 for the

The proposed AT&T (T) acquisition of T-Mobile raises serious antitrust issues, which have yet to be investigated by the FCC. (Of course, if the deal is blocked, T-Mobile’s long-term viability will be called into question.) One casualty of the merger controversy could be Qualcomm’s (QCOM) expected windfall unloading the spectrum from its unsuccessful MediaFlo venture.

The FT reported Wednesday:

[T]he Washington-based Rural Cellular Association, which represents nearly 100 rural and regional telecommunications network operators in the U.S., told the Federal Communications Commission that it should delay AT&T’s proposed acquisition of the Qualcomm spectrum.

“AT&T is on a spectrum-buying binge, including both this Qualcomm acquisition and the recent announcement that it will acquire T-Mobile,” said Steven Berry, the association’s chief executive.

“These actions are further proof that AT&T is doing everything possible to strengthen its already dominant position in the wireless industry at the expense of competition.”

I don’t know how

In recent weeks, AT&T (T) submitted a bid to take over T-Mobile for $39 billion. This has led to mass speculation on both sides, wondering whether the DOJ will step in and block the merger due to antitrust laws or not.

On one side of the coin, those that are for the bid claim that the merger will lead to greater coverage for all Americans throughout the United States. This follows President Obama’s initiative to bring complete coverage to all Americans by 2015. In response to antitrust talk, these pro-merger supporters believe that T-Mobile is not a big player in all local markets, such as Miami and Detroit, where other smaller competitors, like MetroPCS (PCS), hold more subscribers. Based on the competition factor at the local levels, they believe you can’t make the case that this is a horizontal merger of two super firms depleting competition in the industry.

However,

Sprint (S) is an underperforming company which will likely improve over the next several years as a result of both efficiency gains and improving competitive dynamics. Currently, Sprint is undervalued by up to 50% because the market is focusing primarily on the company’s current cost structure and competitive position. The potential AT&T (T) / T-Mobile (DTEGY.PK) merger has raised additional concerns about Sprint’s ability to attract top devices to its platform. Because the value of a stock is based primarily on the outlying years (exit value assumption), Sprint’s stock will likely revalue at a much higher level when investors fully price in what the company will likely become.

Valuation Summary

Sum of the parts: Normalized Sprint + Network Vision NPV

Sprint deserves a discounted valuation because of the many headwinds (iPhone) and risks (WiMax, Clearwire (CLWR)) they face. I account for this risk by building in a