MTS Confirms Interest in Taking Stake in Russian Mobile Phone Retailer
Russia's MTS has confirmed that it is interested in buying a minority stake
in the country's largest mobile retailer, Euroset. The retailer was raided by
police on two separate investigations last week - one related to claims of fraud and the other an alleged kidnapping by an employee several years ago.
"Theoretically, we can admit that we are interested in buying a stake. Not a controlling stake," MTS spokeswoman Irina Osadchaya told the Moscow Times newspaper. "We're just in a very early stage."
The comments however differ from a statement she issued last week when rumours of the talks initially surfaced. The rumours however differed in that they claimed the investment would be by the Sistema group - which is the largest shareholder in MTS.
Sistema is majority controlled by Russian oligarch Vladimir Yevtushenkov, who is related through marriage to the politically powerful Mayor of Moscow, Yuri Luzhkov. Media reports over the weekend suggested that the police raids were part of a plan to drive down the value of Euroset so that Sistema (or MTS) could buy it on the cheap.
The company is thought to be valued at
around US$1.5 billion, and has been trying to float on the local stock market
for the past couple of years.
Yevgeny Chichvarkin, Euroset's co-owner and chairman, said Friday that the company had "not yet received a letter of interest from MTS. But if and when we do, we will begin the negotiating process."
Euroset operates outlets in Russia, Belarus, Ukraine, Kazakhstan and Kyrgyzstan. The company recently set up outlets in India, where Sistema is currently financing a nationwide CDMA network rollout.
MTS is Russia's largest mobile operator by subscriber numbers - and according to figures from The Mobile World subscriber database ended Q1 '08 with 59.9 million customers and a market share of 35.7%.
If MTS does invest in the mobile retailer, it is expected that this would lead to a wave of consolidation as the other dominant operators, VimpleCom and Megafon seek stakes in retailers to protect their routes to market.
"There's no way one retailer would be bought and the other mobile-service providers would sit there," said Yekaterina Balykina, telecoms analyst at Alfa Bank. " It would be the end of independent retailers," she said.
On the web: Moscow Times - The Mobile World
Posted to the site on 8th September 2008
