Russian mobile operators Megafon and Vimpelcom end retail partnership (updated)

VEON

12/07/2017 10:24

* Megafon to buy out Veon's Vimpelcom from Euroset venture 
    * Vimpelcom to receive half of Euroset's stores 
 
 (Adds context, Megafon and analyst comment) 
    MOSCOW, July 12 (Reuters) - Russia's second and 
third-largest mobile telecoms operators Megafon  MFON.MM  and 
Vimpelcom will end their Euroset retail joint venture to focus 
on their own distribution channels in an increasingly 
competitive market, they said on Wednesday. 
    The Russian telecoms market has become saturated in recent 
years, with stalling revenue growth prompting operators to cut 
handset prices and tariffs to win subscribers. That has led to 
steady declines in profitability and a shift in focus to 
customer retention rather than contract sales. 
    Megafon, part of billionaire Alisher Usmanov's diversified 
USM holding, and Vimpelcom, a subsidiary of Amsterdam-based Veon 
 VEON.O , said they will split Euroset, with Megafon assuming 
complete ownership of the business and Vimpelcom acquiring half 
of its retail outlets. 
    "The transaction will allow Megafon and Veon to pursue their 
independent retail strategies and optimise mobile distribution 
in Russia," Megafon CEO Sergei Soldatenkov said in a statement. 
    The deal follows the move by MTS  MBT.N  MTSS.MM , Russia's 
biggest mobile operator, to end its partnership with Euroset and 
another retailer, Svyaznoy, to focus on its own network. 
    "In an environment where maintaining loyalty of high-paying 
subscribers prevails over new subscriber additions, monobrand 
(retail) networks can be more attractive than those deemed 
independent," Uralsib analysts wrote in a note. 
    The financial details of the transaction between Megafon and 
Vimpelcom, which has yet to be approved by regulators, were not 
disclosed. 
 
 (Reporting by Maria Kiselyova; Editing by David Goodman) 
 ((maria.kiselyova@thomsonreuters.com; +7 495 775 1242; Reuters 
Messaging:  maria.kiselyova.thomsonreuters.com@reuters.net)) 
 
Keywords: RUSSIA MEGAFON/EUROSET