Russia's Megafon to buy 750,000 iPhones in 3 years

MOSCOW, March 5 Wed Mar 5, 2014 8:41am EST

MOSCOW, March 5 (Reuters) - Russia's second-biggest mobile phone operator, Megafon , said it would buy at least 750,000 iPhones from Apple Inc over the next three years for resale through its retail network.

Megafon signed an agreement with Apple's Russian subsidiary in January, returning to a direct partnership with the U.S. company after a break of several years, but did not disclose the contract terms at the time.

Apart from guaranteeing purchases, the Russian company also committed to spending around 1 billion roubles ($28 million) on marketing, advertising and promotion of Apple smartphones over the three-year period to the end of 2016, it said in a 2013 financial report released on Wednesday.

Sergei Libin, an analyst at Raiffeisen Research, said the volumes agreed by Megafon and Apple were reasonable.

"Based on MTS' estimates, in the fourth quarter alone around 650,000 iPhones were sold in Russia. If the smartphones sales' dynamics and iPhone's share of this market do not change dramatically, around 8 million iPhones could be sold in Russia during the next three years, and Megafon's share will be just over 9 percent ... I would not say it could sell much more than this," said Libin.

Rival Vimpelcom, which signed a direct contract with Apple last year, declined to comment on its terms. MTS has been buying iPhones from distributors and is currently negotiating a deal with Apple.

"At the moment, we are discussing the terms of cooperation that would be acceptable for both sides," MTS' spokesman said on Wednesday.

Apple had a 20 percent share of a more than $5 billion Russian smartphones market in money terms, or 9 percent of units sold in 2013, according to cellphone retailer Euroset. Apple also sells in Russia through its online store and electronics retailers.

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