Buy what you know, urged one-time outperforming US fund manager and super investor Peter Lynch.
If we can see a consumer trend or a company doing well just by being observant in our everyday lives, it can pay to hunt for a way to turn that intelligence into a sensible investment, in order to profit.
Migration to mobile devices
If we look about us, and consider the consumer history of computers and the internet, its easy to spot a trend. Early on, corporations stuffed vast rooms with wall-to-ceiling banks of mainframe computers serving networks of desktop terminals. From there, the computing power moved to desktop devices. Domestic users then piled into desktop computers for home use.
The internet arrived and grew, with take-up from both business and domestic users. With the internet, home use exploded. Desktop devices gave ground to laptop devices; laptops to tablets and simultaneously, after following a separate evolutionary path, mobile phone devices offered more and more internet services, blurring the distinction between phones and tablets.
Theres no doubt that our internet-using habits are changing as we migrate from computers to mobile devices. Various researchers have it that more than a third of UK internet traffic originates from mobile devices, and growing. Such statistics make the timing of BT Groups (LSE: BT-A) (NYSE: BT.US) pitch at EE interesting, because EEis the leading mobile network operator in the UK with 31 million customers the largest 4G customer base of any operator in Europe.
If that doesnt sound like a challenge to Vodafone Group (LSE: VOD) (NASDAQ: VOD. US), I dont know what will. Nows the time to choose, I reckon. How do you see the future? Does it belong to BT or Vodafone?
A bright future
BT reckons integrating itself with EE will combine the UKs most advanced 4G network with the UKs most extensive super-fast broadband network. The move looks astute, and BTexpects to generate revenue synergies by providing a full range of communications services to the combined customer base.
The actions BT intends includeselling its broadband, fixed telephony and pay-TV services to thoseEEcustomers who do not currently take a service fromBT. Then theres potential to accelerate the sale of converged fixed-mobile services toBTsexisting consumer and business customers and offer new services, using both companies product portfolios, skills and networks.In all, BTexpects to generate revenue synergies with a total net present value of approximately1.6bn
BTs Chief Executivesounds excited by the deal. He describes the move on EE as a major milestone. I think hes right and now may be a good moment for investors to run a slide rule over the firm. 4G meeting the UKs biggest fibrenetwork seems like a potential game changer.
Should Vodafone be worried?
Just under a quarter of Vodafones revenue came from the UK during the firms most recent trading quarter. Vodafone is doing well around the world, and it will be a while before BT eats into Vodafones global market share. But in the UK it could be different. BT is shaping up as a serious player in the mobile communications and data transfer space.
BTs forward dividend yield runs at about 3.3% for 2016 and Vodafones at 5%. Thats a good place to start with our research. Where will these firms be in ten years time? Over to you
BT and Vodafone are both driving value creation within their businesses. A similar situation exists with these five shares that all make good candidates for further research. The Motley Fool analysts identified these London-listed market leaders as enduring long-term investments. You can download this wealth-building report now, free from obligation. Click here.
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