The future of mobile retail Federation will become clear after the unification of “Euroset” and “Coherent”

The future of mobile retail Federation will become clear after the unification of “Euroset” and “Coherent”

MOSCOW. July 12. /TASS/. The attempt of cooperation between two competing mobile operators “VimpelCom” and “Megaphone” in mobile retail segment on the basis of the company “Euroset” failed: the operator announced July 12 on termination of joint activities in the framework of this business.

Although the basic parameters of the upcoming transaction are already known, while experts not undertake to predict, how will it affect the market of these changes, because the front probably waiting for the second stage – the unity of “Euronetwork” “Coherent”.

The brand “Euroset” became one of the most recognizable brands in 2000 years thanks to an aggressive advertising campaign with the use of obscene language and the person of the owner of the company Evgeny Chichvarkin. Harsh public statements and extravagant wardrobe, it has earned the reputation as one of the most scandalous Russian businessmen. Problems in business Chichvarkin began after accusations by law enforcement agencies in the illegal import of mobile phones. The businessman was forced to sell his company and to emigrate to the UK.

“MegaFon” and “VimpelCom”, which now owns 50% of retailer Euroset on Wednesday announced the signing of a full-fledged legally binding document under which MegaFon will consolidate 100% of the company. Thus “Vympelcom” the transaction will receive half of the salons “Euroset” (from 4.2 thousand salons of the retailer). Now “Vympelcom” about 1.5 thousand private salons of “MegaFon” – more than 4 thousand.

The deal on the division of Euroset requires the approval of regulators and will be finalized only after compliance with all preconditions. MegaFon plans to apply to the Federal Antimonopoly service on the consolidation of “Euroset” in the near future, VimpelCom also intends to apply to the Antimonopoly office.

General Director of “TMT Consulting” Konstantin Ankilov believes that the deal “MegaFon” and “VimpelCom” – an important and symbolic event, but it is to be expected. “All this went on for quite some time, since it is clear that to exist in terms of two masters is impossible,” he explained. The same opinion is shared by the head TelecomDaily Denis Kuskov. “The deal was a long time ago, and it is an expected decision, as firms are competing,” said the expert.

At the same time who has more to gain in this transaction, while difficult to say, says Grand. In his opinion, the increase in sales points of “MegaFon” will not necessarily lead to an increase in the number of connections, which are now extremely small. Following the deal, MegaFon will be the number one number of outlets, said Pieces. “But I don’t think it will significantly change the number of connections. Yes, theoretically it’s possible, but too early to say what it will lead,” he said.

According to Ankilov, MTS (of which 5.7 thousand points of sales at the end of the first quarter of 2017) competitors will have no effect. “Regarding long-term forecasts, much depends what happens to “Connected”. I think that the Union will eventually take place, but when, while difficult to predict”, – the expert believes.

In March this year, the head of MegaFon Sergey Soldatenkov told that negotiations about the division of “Euroset”. Then the newspaper “Vedomosti” with reference to sources reported that MegaFon will buy a package of “Euroset” and will increase its stake in the company to 100%. According to the newspaper, “Vympelcom” will receive 2 thousand salons, but will pay the partner a little more than 1 billion roubles in debt.

The “Euroset”, according to the newspaper “Kommersant”, will be combined with “Connected”. The combined company in the first phase may get under management of about 5 thousand of stores: approximately 2.7 thousand shops “Coherent” and more than 2 thousand – “Euroset”, and in the future the number of stores will increase to 6 thousand

The declining trend in

In recent years, the market trend to a reduction in mobile retail, reminded Ankilov. “The reduction in mobile retail is a General trend that will help improve the industry in the long term and retain the subscriber base,” he said.

In December last year, the General Director of “VimpelCom” Kjell Johnsen said that he considers excessive the number of stores in the Russian mobile retail. According to him, the model of multi-brand mobile retail a thing of the past, and is replaced by General, and this trend is observed worldwide. VimpelCom will make the decision to develop own retail in Russia based on the size of distribution networks. Then Johnsen said that the optimal number of owned stores to the “VimpelCom” – 2 thousand.

The need to reduce mobile retail in Russia, said the President of MTS Andrey Dubovskov. The operator is ready to optimize its network of beauty salons “in response to the moves of competitors,” he said. MTS develops only its own retail and not involved in multibrand. In 2014 the operator has stopped cooperation with “Euroset” in 2015 – has terminated the contract with “Connected”.

The Fate Of “Euroset”

After the transaction, “the Euronetwork” will continue to operate in the market as an operating company and will continue to grow as the retail network. President “Euroset” Alexander Malis also said that “the Euronetwork” will continue to develop as an independent company in the market of mobile electronics and portable equipment, as well as financial services and additional services. The company will continue cooperation with its partners in fulfilling its obligations”, – he said.

At the same time, “VimpelCom” explained TASS that the transaction has not closed, and to discuss the future of the brand “Euroset” prematurely. In a press-service of the operator added that at the moment, “can’t make any additional comments on the value,” the financial performance of the company’s transactions is not disclosed.

Malis said that VimpelCom was a shareholder of “Euroset” for almost 9 years, and MegaFon – the shareholder of the company for 5 years. “This was a very interesting collaboration. Recently, however, shareholders had seen our future. Now the situation is resolved, and open for us new opportunities for development,” he said.

According to Malis, the transfer of part of the premises of “Euroset” to “VimpelCom”, “will be continuous and uniform, so it doesn’t cause problems for the company.” “We will not reduce staff – on the contrary, we will open new shops and hire people,” he added.

According to Soldatenkov, the agreement will allow the parties “to exercise their independent retail strategy and optimize the distribution network in Russia”. “The transaction with “the Megaphone” enhances the single-brand strategy “Vympelcom” and will double our retail network in Russia”, – noted in turn Johnsen.

The Story Of “Euroset”

“Euroset” until 2008, belonged to its founder Yevgeny Chichvarkin. In the fall of 2008, he sold it to Alexander Mamut, who in turn, sold 49.9% of the company to VimpelCom for $226 million In December 2012, Mamut sold a controlling stake in 1.07 billion dollars for 25% of the shares received MegaFon and Garsdale holding, 0,1% bought VimpelCom. In the summer of 2014 the share of Garsdale moved “to the Megaphone” now operators own the “Euroset” on a parity basis – 50% of the shares.