JBL: The Case for American Express

I am like a dog on a sunny day looking out the window at the park and not able to go play.

Right Call, Wrong Company

My most recent article recommended Turkcell (TKC) because of my recent visit to Afghanistan, and the effect a democratic presence in the region would have on capitalism and the ability to make money.

I went on to say that, with the consolidation in the cell-phone industry, Turkcell would be a great takeover play. The day the article came out, there was a takeover play in Turkey's cell-phone market; it just wasn't Turkcell. Instead, Vodafone (VOD), another one of my picks, won an auction to buy Telsim.

One of the knocks against Vodafone was that it was paying too much for 3G licenses. Now the same thing is being said about its Telsim purchase. The Turkish government had estimated the value of Telsim at $2.8 billion; Vodafone paid $4.55 billion.

I believe Vodafone bought the wrong company; it should have bought a cell-phone company that made money, like Turkcell. It should not have bought a cell-phone company that has a third of Turkcell's subscribers and that won't make money in the near term.

The Vodafone-Telsim combination does create more competition for Turkcell, but I still like the company. And I still own my shares of Vodafone, despite a decline in its share price. I believe Vodafone is in a great position due to its large subscriber base and the 3G license that it owns. But I don't feel the Telsim acquisition was the best way to spend its money.

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