VimpelCom Buys Half of Russia's Largest Phone Retailer

Russia's VimpelCom has confirmed long running rumours and has acquired 49.9% the country's largest mobile phone retailer, the Euroset Group for approximately US$226 million. VimpelCom as a minority shareholder does not expect to consolidate Euroset results and will not guarantee any of its obligations.

Russian Oligarch, Alexander Mamut paid US$400 million cash and assumed about US$850 million in debt to buy the firm only a few weeks ago. Eldar Murtazin, chief analyst at Mobile Research Group recently told the Moscow Times that the mobile operator may have always intended to take a stake in Euroset, but chose to wait until it was sold to an Oligarch so that it could structure the deal in a way which does not impact on its financial results.

The firm also has an option to take a further 25% of the company after three years.

Commenting on todayĆ's announcement, Alexander Izosimov, Chief Executive Officer of VimpelCom, said, "Historical analysis across multiple markets shows that the level of importance of retail networks rises during challenging market conditions. Hence, it is in our best interest to forge solid relationships with the retail operators at this point in time. We believe that acquiring a stake in a leading retailer, like Euroset, will allow us to strengthen our competitive position and to stabilize the market. Clearly, the financial crisis does require from every company a very careful approach to managing its financial exposure and this deal has been completed after very intense and careful analysis. As a result, we are quite confident that this transaction is not going to jeopardize the financial viability of VimpelCom".

Currently Euroset operates approximately 5,100 outlets in Russia, Ukraine, Belarus, Moldova, Kazakhstan, Kyrghyzstan, Uzbekistan and Armenia. In 2007 the company's revenues reached $3.14 billion.

Posted to the site on 27th October 2008