Published: September 24, 2009

When it comes to investing, there are almost never any guarantees or absolutes. But I can give you one iron-clad, take-it-to-the-bank prediction -- wireless communication is going to throw off buckets of profits during the next few years.

I'm not exactly going out on a limb.

Across the globe, the world's seven billion inhabitants have different customs, hobbies, religions, and lifestyles. But we all like to stay in contact with friends and family. And as wired phones fade, mobile phones have evolved from an expensive novelty to an indispensable piece of hardware.

Polls show that more than 90% of consumers would happily give up a dishwasher, microwaves, televisions and most other luxuries before they would live without their cell phone. Rarely do billions of people speak in one resounding voice about a single product or service.

But when they do, it's always a good idea for investors to heed the message.

It wasn't that long ago when mobile phones were carried by less than one in 200 people. The world has changed quite a bit in 20 years. Today, there are more than 3.9 billion devices in operation -- about one out of every two people worldwide.

This saturation means the hyper-growth rates of the past are over in most developed markets -- so investors need to look abroad.

The number of mobile phone subscribers in 34 key emerging countries could double from 2.1 billion today to 4.3 billion by 2013 according to a study by Tariff Consultancy. These countries could soon represent about two-thirds of the world's wireless phone users.

China remains the key growth driver for the industry. Penetration rates are still below the 50% mark, but that is changing quickly. In fact, roughly four million mobile phones are sold in China every day.

So it comes as no surprise that China Mobile is signing up seven million net new customers each month and now has a subscriber base of 500 million.

But the next big catalyst may be Africa, where many regions are skipping landlines and going straight to wireless -- more than twice as many Africans are connected via mobile than traditional land phones. And considering cell phone towers are less expensive than rolling out cable to remote areas, I expect wireless infrastructure to remain a key spending initiative for many African governments.

Africa is forecast to see robust annual subscriber growth of +13.3% during the next five years according to Portio Research. At that rate, roughly 80% of the world's population will be wireless by 2013.

But it may not stop there, ongoing technological advancements will keep most users upgrading to take advantage of the latest styles and features. Mobile phones have branched out from their humble origins with cameras, MP3 players, GPS and other functions. And the widespread rollout of third-generation (3G) networks has accelerated the adoption of mobile broadband internet service.

Thanks in part to generous subsidies from retailers, these "smart" phones are surging in popularity. In fact, more than 170 million units were sold last year -- and that total is expected to jump to 192 million in 2009.

Smart phones account for nearly one-fifth of all mobile phones, and even pessimistic projections point to +15% or better annualized growth in the years ahead.

Clearly, this has been a boon for manufacturers like Apple (Nasdaq: AAPL), maker of the trendy iPhone. But with millions of customers signing up for expensive data plans and other premium services, the transition will also lead to stronger average revenues per user for wireless carriers.

This demand is translating into big opportunities for telecom firms.

From equipment vendors to wireless carriers, there is an entire telecom ecosystem supported by our unbridled love affair with these handy devices.

At the moment, economic weakness has depressed sales. But this slowdown won't stick around forever, and we're already seeing signs of global stabilization.

Fortunately, short-sighted traders have hung up on the sector, slashing the price of many telecom stocks by -30% or more. Think every time you see somebody chatting on a mobile phone, it means more cash for those telecom companies.

But the best way for investors to generate income from this burgeoning sector isn't with individual stocks, it's with exchange-traded funds (ETFs).

I've recently identified two of the most promising. Click here to get their names and ticker symbols -- it's on the house.

-- Nathan Slaughter
Editor
The ETF Authority