Euroset had more than 5,000 sales outlets, and its revenue for 2007 was $3.6 billion. The deal was officially announced; Alexander Mamut's new acquisitions, the newspaper suggested, could signal the start of a whole series of deals to sell mobile retailers.
Yevgeny Chichvarkin told Kommersant that he would remain with the company: "I will continue to sell mobile phones and will stay at Euroset as chairman of the board of directors." He did not specify where he would direct the proceeds. Timur Artemyev said he would leave the company once the deal closed and planned to invest the money from the sale of his stake "in science, biotechnology and the development of anti-aging drugs (the so-called anti-ageing)."
A Market for Sale
A number of investors had shown interest in Euroset. In early September, banking sources said that the second-largest mobile retailer, Svyaznoy, had given investment bank KIT Finance a mandate to organize a deal. The owners of Dixis (800 own salons at the end of 2007) had also declared their readiness to sell the business. According to a source in the mobile market, a month earlier Svyaznoy had been in talks to buy Tsifrograd (560 own sales outlets at the end of 2007); Vladimir Volpert, director of the investment department at Russkiye Fondy (which owns 40% of Tsifrograd), confirmed the possibility of selling a stake in the capital.
The entire mobile phone market in Russia in 2008 was valued at $8.5–9 billion, while retailers' profitability remained extremely low—2–5% in net profit, whereas the big three operators had around 50% and fixed-line operators 20–30%.
Own Interests or Resale
Experts believed that further developments would depend on whether Alexander Mamut had acquired Euroset in his own interests or had acted as a financial investor—as he did with the purchase of Corbina Telecom, which he bought in 2005 in partnership with Viktor Vekselberg and later resold to Golden Telecom and VimpelCom. Mamut himself told Kommersant that "Euroset was acquired with own funds in his own interests."
Kirill Dmitriev, managing partner of Icon Private Equity, called the deal a landmark for the entire market and warned that a large number of deals should be expected in the near future: "In the current market situation, companies urgently need to refinance their debt burden."
A source in investment circles believed that mobile operators seeking to expand channels for selling contracts would be the first to lay claim to the retailer: AFK Sistema (the main shareholder of MTS), Altimo (which owns 44% of VimpelCom) and Alisher Usmanov (who controls 31.1% of MegaFon). "Now they need to understand how to refinance part of the debt: the cost of equity is $400 million, but it is obvious that this amount will not be enough to refinance the debt burden. A strategic investor is needed who will take on the management of the business," the Kommersant source explained, adding that he "had no doubt: Alexander Mamut acquired Euroset for subsequent resale."
MTS public relations director Yelena Kokhanovskaya claimed that after the change of owner at Euroset, the situation for MTS had not fundamentally changed: "If we decide to go into retail, nothing prevents us from starting negotiations with Mr. Mamut, since he is most likely a financial investor." A representative of Alisher Usmanov declined to comment on interest in Euroset, and Altimo vice-president Kirill Babayev refused to comment.
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