Report: Russia’s MegaFon, VimpelCom seen in talks to divide Euroset

MOSCOW, May 19 (PRIME) -- Russian mobile operators MegaFon and VimpelCom are studying an option of splitting handset retailer Euroset, which they own on a parity basis, into two parts by some 2,000 stores each and merge them with their own chains, and the Euroset brand could disappear, business daily Vedomosti reported Thursday, citing sources.

A person close to Euroset confirmed the information, but said there is no final decision yet, and it could be made public shortly.

Euroset’s spokeswoman Ulyana Smolskaya said there is no decision on a split by the board of directors, and she is not authorized to comment on shareholders’ discussions.

One of the sources said that the Euroset brand will cease to exist after the split.

Another source attributed the possible decision to financial reasons: the operators find it more effective to work with monobrand retail business, and maintenance of the so-called independent chain makes no sense any more.

Otkritie’s analyst Alexander Vengranovich said that the ownership structure on a parity basis failed to prove its effectiveness. The operators still compete with each other and could have arguments about the development strategy of Euroset.

It is possible that the operators’ monobrand stores attract subscribers of a higher quality than the retailer, the analyst said.

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