Please install Adobe Flash Player.

Consulting services

  • Market entry strategy
  • Business plan development
  • Strategy audit
  • Competitive intelligence
  • Product evaluation
  • Due diligence
  • Distributor / agent search

Research services

  • Market studies analysis / sizing and trends
  • Customer service / satisfaction surveys
  • Competitive positioning intelligence
  • Brand tracking
  • Advertising effectiveness research
  • Pricing research

Customers

  • National operators
  • International operators
  • Telecom vendors
  • Incumbents
  • New entrants
  • Governments

Russian antitrust likely to clear MegaFon to buy Euroset stake

PDFPrintE-mail

MOSCOW. Oct 3 (Interfax) - The Russian Federal Antimonopoly Service (FAS) will probably clear telco Megafon to buy the Euroset cell phone retail network on the condition that it sells the products of its rivals.

"Our response will probably be positive and, of course, there will be conditions. We'll oblige them to trade not just their own products but also the products of competitors," FAS chief Igor Artemiyev told a press conference.

Artemiyev said that at this stage there was no indication the companies would have a domineering position. "It's a vertical alliance, so the answer is yes rather than no," he said, adding that the alliance would probably have a market share of less than 30%.

"Alternative sellers have just as much opportunity as Euroset in alliance with Megafon, and some have even more. MTS has even more such shops that could appear from this alliance," he said.

MegaFon asked the FAS for permission to acquire Euroset in September. The FAS said at the time that the deal was "complicated in nature". FAS chief Artemyev said at the time that that the service would carefully analyze the deal from the standpoint of possible harm to competition. "Such vertical integration is always a serious matter. When vertical companies grow too large, that's bad for competition," he said.

MegaFon and USM Advisors, a firm controlled by Alisher Usmanov, the cellular operator's main owner, sought to buy Alexander Mamut's 50% in Euroset. Another 0.1% of the retailer might be acquired from Mamut by Vimpelcom, which owns 49.9% of Euroset. So MegaFon and USM Advisors on the one hand, and Vimpelcom on the other, would each get 50% of Euroset.

"That is why we will be looking closely at the deal. The answer here is not unequivocal, and could be different. We will be working with the applicants and figuring out the coefficient of economic concentration. We must turn to the competitors - the companies MTS, Vimpelcom, and Rostelecom. If the deal is going to limit competition, we will act in accordance with the law," Artemyev said in September.

Business daily Kommersant has reported that Euroset could be valued for the deal at $2.5-$2.7 billion, factoring in its total debts of 10 billion rubles and net debts of 5.5 billion, meaning the value of Mamut's interest is $1.25-$1.35 billion.

The deal might be cash-free, and a final amount will depend on valuation of the assets used as payment, the paper has written. At the beginning of this year, Kommersant reported, citing its own sources, that Mamut might get in exchange for his Euroset stake 100% of the company SUP Media, which is currently held together with Kommersant Publishing House (controlled like MegaFon by Usmanov) and company management.

The deal should be accompanied by a MegaFon and Vimpelcom shareholders agreement on the principles of the corporate management of Euroset. One of MegaFon's terms is that President Alexander Malis, who has run the company for the last three years, should remain in place, a manager close to the retail chain told the business daily Vedomosti.

At the end of last year, Euroset commanded 32% of the Russian cell phone market by unit sales and had 4,700 stores. Its nearest competitor, Svyaznoy, has around 24% of that market.

MegaFon's interest in buying a Euroset stake has long been no secret to the market. Rostelecom has also negotiated an investment in the retailer's capital. One option discussed was MegaFon and Rostelecom acquiring Mamut's stake together.

Mamut had planned to partially divest of Euroset last spring by means of an IPO. Mamut and Euroset itself were prepared to sell up to 43.9% of the company's stock on the London Stock Exchange, with the entrepreneur's stake decreasing to 8.6%. The company was valued for the IPO at $2.7-$3.3 billion, due to an almost complete lack of demand among investors (the bid book for Euroset stock subscribed by 10%-15%).

Latest News

23 December 2016

MegaFon to buy Mail.ru stake for $740 million from Usmanov

MOSCOW, Dec 23 (Bloomberg) Alisher Usmanov and his partners are set to pocket $740 million from moving a stake in internet company Mail.ru Group Ltd. to MegaFon PJSC, as the Russian billionaire consolidates...
Read more...
20 December 2016

Deloitte says 7% Russian cell clients change operators in H1

MOSCOW, Dec 20 (PRIME) -- About 7% of Russian mobile subscribers changed their operators in January–June as compared to 4–5% of users who switched to other operators within six months in several...
Read more...
06 October 2016

MegaFon creates VKmobile

Mobile telecommunications carrier MegaFon has plans to register the trademark VKmobile depicted in the form of a SIM card in the social network Vkontakte signature blue color. It is reported by Life.ru....
Read more...
06 September 2016

Russia’s VimpelCom CEO Slobodin quits, Johnsen new CEO

MOSCOW, Sep 6 (Bloomberg) – VimpelCom Ltd.’s head of Russia has resigned after local authorities said he was wanted for questioning in connection with a corruption probe at his former employer....
Read more...
Joomla Templates and Joomla Extensions by JoomlaVision.Com