MTS expands retail presence through acquisition

MTS, the largest mobile operator in Russia and the CIS has bought high street retail chain Telefon.Ru outright for $60m. Telefon.Ru operates 512 stores in 160 Russian cities, selling airtime contracts, handsets and other consumer electronics.

The $60m price tag includes $25m for inventory reserves, MTS said, and will be supplemented by a further $25m in 12 to 18 months should the chain meet performance criteria.

“Combining the reach of Telefon.Ru with our existing retail network will enable MTS to more effectively service our clients, provide a more robust product offering to new customer segments and overall bring the MTS brand closer to our population. The profitability leader in the Russian mobile distribution, Telefon.Ru will bring added retail insight and experience to MTS,” said Mikhail Gerchuk, chief commercial officer, MTS.

MTS has a massive customer base, though penetration varies across its six territories. In Russia and Ukraine teledensity stands at 123 and 109 per cent respectively, according to Informa Telecoms & Media, while in Belarus, Armenia, Uzbekistan and Turkmenistan it is 74, 72, 31 and 11 and per cent respectively.

The carrier’s network sits comfortably in an area larger than the entire continent of South America with a total population of over 230 million. In the last quarter alone the firm gained an additional two million subscribers.