What are you expecting in terms of Q2 earnings?

We are expecting improved earnings from most of the telecom carriers and equipment manufacturers for the first half of 2007, and that includes the upcoming quarterly forecast. We continue to see revenue and earnings strength in the mobile/cellular carrier segment, along with equipment manufacturers providing infrastructure that enable related voice and data for wireless services. It should come as no surprise that the overall stock performance in this sector has been correlated to cellular subscriber growth, especially overseas.

We have witnessed the strongest returns among wireless carriers in emerging markets, as demonstrated with higher valuations of China Mobile ADS (CHL), up nearly 100% in one year, and with similar gains in Eastern Europe, including Vimpelcom ADS (VIP) and Mobile Telesystems (MTS). Further mobile subscriber retention in Latin America is also apparent, with market share gains for American Movil (AMX) and NII Holdings (NIHD).

In the United States, several of the mobile carriers have shown consistent strength, although overall performance has not been as impressive, on a comparable basis, as with the international regions. Cellular subscriber growth remains a bit more tepid in North America.

Are there currently any mergers or private equity takeovers?

This is an interesting question, because we are not necessarily seeing an abundance of mergers between public telecom companies as we had seen over the comparable period last year, but we are identifying a meaningful pickup of private equity deals focused on the telecom carriers segment.

This year, we can start with Bell Canada (BCE), which is one of the largest private equity deals to take place in telecom, if not for private equity transactions to date. This was followed by Alltel Wireless, the 4th largest United States cellular carrier.