January 24, 2021

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HOME REGIONS Russia & CIS › Megafon deal values Euroset in excess of US$2 billion

Megafon deal values Euroset in excess of US$2 billion

by Stuart Wilson, Monday 10 December 2012

Russian mobile operator Megafon has completed its deal to acquire an indirect 25% stake in Russian mobile retailer Euroset. The deal values Euroset at US$2.14 billion. Megafon hopes that its investment in the largest Russian mobile retailer will enhance the quality of its subscriber base, reduce churn and will result in broader marketing of Megafon products through Euroset’s outlets.

Under the terms of the deal, Lefbord Investments, owned equally by Megafon and Garsdale Services Investment, has acquired 50% of Euroset Holding, the owner of the retail chain, for US$1.07 billion. An additional payment of up to US$100m may be made if Euroset meets certain targets in the first half of 2013.

One year after closing, Megafon is expected to buy Garsdale’s 50% stake in Lefbord to take control of the entire 50% interest in Euroset. The remaining 50% of Euroset is owned by Vimpelcom, the third largest mobile operator in Russia.

Ivan Tavrin, CEO of Megafon, said: “For Megafon, the acquisition of shares in Euroset is an investment in a strong and successful company. As an investor we will support the growth of Euroset’s business and its further development, through effective implementation of a competitive strategy. Naturally, we are planning to expand our cooperation with Euroset and make its services even more available for our clients.”

Russian authorities cleared Megafon to buy a stake in Euroset in November, but insisted the retail chain sold products supplied by multiple operators. Once the deal is complete Megafon and Vimpelcom will each own a 50% stake in Euroset and be equal partners in the business. Both operators will look to use Euroset’s retail strength to challenge MTS, the leading telecom operator in Russia.

Euroset was established in 1997 and is now the largest mobile retailer in Russia. The company operates more than 5,000 outlets across Russia and Belarus.

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