Is This Russian Rocket Ready to Fly?

It used to be that unless your money was under the mattress, it wasn't safe. Nowadays, even putting your hard-earned cash under the mattress could mean its slow death by inflation. With seemingly nothing being risk-free anymore, I'm looking to the telecom sector to see if any opportunity abounds.

The problem with the telecom sector is that investors looking for fast-paced growth just aren't going to get it here. If you're into collecting a solid dividend payment and worrying relatively little about the validity of your cash flow, then the telecom sector is perfect for you. But who said the conventional wisdom that the turtle will always beat the hare has to prevail?

Certainly not Mobile TeleSystems (NYS: MBT) .

The provider of telecommunications services to Russia and many of its neighboring countries continues to prove that not only can a phone company provide solid dividend income, but it can grow quickly as well. If the name sounds familiar, that would be because I mentioned MTS, as well as its leading competitor, VimpelCom (NYS: VIP) , as potential bargain-basement buys in September. Two months removed from that statement, I can safely say that Mobile TeleSystems is separating itself as the company to own.

MTS reported third-quarter results Monday that beat consensus estimates on both revenue and profits. Perhaps the one blemish on the company's report was the 25% drop in year-over-year net income. But if that's the worst we can expect from rapidly growing MTS, I personally say, "Bring it on!"

One important factor to keep in mind when evaluating a company like MTS -- which derives the majority of its revenue from Russia -- is its average revenue per user, or ARPU. This indicator allows us as investors to quantify not just how many subscribers MTS is signing up to its cell phone and landline plans, but to establish the quality of the customers in its subscriber base. During the third quarter, ARPU in Russia increased by nearly 7% over the year-ago period, while the company's churn rate dropped by 160 basis points.

To put this in easier-to-understand terms: Customers are using their phones more, canceling their service less -- and Mobile TeleSystems is earning more with its capital expenditures because of it.

Even more impressive is Mobile TeleSystems' history of returning wealth back to shareholders. The company's trailing-12-month yield of 7.5% is higher than U.S. stalwarts AT&T (NYS: T) and Verizon (NYS: VZ) , and is more than double that of Vodafone Group (NYS: VOD) .

What we have with MTS is a telecommunications company with a forward multiple less than eight, yielding 7.5%, and projected to grow by 13% annually over the next five years. That sounds like a contract that would help any portfolio out.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He has had the same cell phone provider for 12 years, which, according to the guy working at AT&T store tonight, is "unreal." You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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