Russia's MegaFon to buy 51% in mobile retailer Euroset for $1.33 bn

MegaFon, Russia's second-largest mobile phone operator, yesterday said that it will buy a 51-per cent stake in the country's leading cellphone retailer Euroset Holding NV, for $1.33 billion.

In a regulatory filing, MegaFon, which is preparing to list on the London Stock Exchange, will buy 25 per cent of Euroset's shares and has secured an option to buy another 25 per cent from billionaire Alisher Usmanov, taking the deal value for the combined 51 per cent stake to $1.33 billion.

Founded in 1997 by Yevgeny Chichvarkin, Euroset is Russia's largest handset retailer with a 32 per cent market share.

It has 4,700 stores in 12 countries of the CIS including Ukraine, Belarus, Moldova, Estonia, Latvia, Lithuania, Kazakhstan, Kyrgyzstan, Armenia and Azerbaijan.

Chichvarkin sold the company to billionaire Alexander Mamut and mobile operator VimpelCom for around $400 million and fled to London in 2008 after a criminal investigation was opened against him for allegedly kidnapping, illegal imprisonment and extortion of a former employee. All the charges were later found to be baseless and were dropped.

VimpelCom, the sixth largest mobile network operator in Russia, will continue to own the remaining 49.9 per cent of the Amsterdam, the Netherlands-based retailer.

Moscow-based MegaFon is the second largest mobile operator in Russia in terms of number of subscribers and revenue with 62.1 million subscribers in Russia and 1.6 million in Tajikstan, Osetia and Abkhazia.

It posted net income of $1.5 billion in 2011 on revenues of $8.3 billion.