MegaPhone

"Megafon is a Russian telecommunications company providing cellular services (GSM, UMTS, LTE and LTE Advanced), as well as local telephony, broadband Internet access, cable TV and a range of related services. It owns a virtual mobile operator Yota, a telecom company NetByNet and an online cinema theater Start. Belongs to the USM holding company[5][6]. It operates in 83 regions of the Russian Federation, in Tajikistan, as well as in partially recognized Abkhazia and South Ossetia. The number of mobile subscribers at the end of 2015 was 100.8 million[7]. The company under the current brand name was formed in May 2002. Its full name is Public Joint Stock Company Megafon. It was originally founded under the name ZAO North-West GSM (in St. Petersburg).

1993, June 17 - the date of registration of CJSC North-West GSM (St. Petersburg). The first general director is Alexander Malyshev. The largest foreign investors were the Scandinavian companies Sonera (Finland), Telia International AB (Sweden) and Telenor Invest AS (Norway). Telecommunications equipment was purchased from Nokia[8].

May 7, 2002 - North-West GSM was renamed to Megafon. On April 28, 2002 the rebranding and change of logo began. At that time the number of regional companies joined North-Western GSM.

On October 2, 2007 MegaFon launched the first fragment of IMT-2000/UMTS (3G) network in St. Petersburg and part of Leningrad region. UTRAN (UMTS Terrestrial Radio Access Network) subsystem, including 30 base stations, was put into trial operation in the country for the first time[9]. Already on October 24, 2007 Megafon announced the launch of 3G cellular services in St. Petersburg and Leningrad Oblast. For the first time in Russia the following services became available for a wide range of users: Internet access at ten times the speed of data transfer with the use of all the technologies (GPRS/EDGE) of the second and second and a half generations (2G and 2.5G), high quality "Mobile TV", video communications[10].

In May 2008, Alisher Usmanov acquired a stake in MegaFon from the Danish lawyer Jeffrey Galmond. The approximate amount of the deal was at least $5 billion[11][12].

On April 23, 2012, Megafon provided access to the fourth generation (4G) mobile communication services[13].

April 24, 2012 - MegaFon's shareholder structure changed, resulting in Usmanov's AF Telecom receiving a controlling stake (50% and one share)[14].

October 16, 2012 - launch of MegaFon's distributed CDN software and hardware platform to provide CDN services in cooperation with CDNetworks.

December 19, 2014, the company's largest shareholder Alisher Usmanov transferred a controlling stake in MegaFon to Russia from offshore companies[15].

On February 25, 2014, MegaFon launched LTE-Advanced network in Moscow inside the Garden Ring.

On August 31, 2015, Megafon launched test voice calls on the LTE network[16].

At the end of April 2018, cellular operator Megafon, which owns 100% of Euroset, and Svyaznoy Group announced the merger of the retail networks. As part of the deal, MegaFon's subsidiary Lefbord Investment Ltd. transferred 100% of its shares to Euroset N.V. (owns the operating companies of Euroset) to the Cyprus company DTSRetail LTD (currently in charge of the operating business of Svyaznoy). As a result, the MegaFon structure received 25% plus one share and two seats on the board of directors.[17]

In May 2017, the company's development strategy until 2020 was updated, focusing on creating an ecosystem of digital solutions in partnership with Mail.ru Group. It was planned to work "on brand differentiation" of MegaFon, Yota and VKMobile, and changes were also made to the dividend policy and the size of the optimal debt ratio[18].

In 2018, MegaFon adopted a program from Gemalto that allows you to use an NFC chip to quickly pay for public transportation fares.[19]

On November 16, 2018, Megafon and Mail.Ru Group became co-owners of Citimobile. Mail.ru Group and Megafon received about 18% and 16% of the shares of the cab order service "Citimobile" according to the results of the first round of investment. However, as part of this deal, the operator and the Internet company act as independent investors and do not plan to consolidate the acquisition[20].

In March 2019, MegaFon was the first of the "four" to introduce 20% cashback on telecom payments[21].

On March 21, 2019, the Russian Football Union (RFU) and MegaFon entered into a new cooperation agreement. The agreement will be valid until 2021. Under its terms, the company will be a telecom partner of the Russian national team and a strategic partner of Russian soccer[source not shown 929 days].

According to the results of the third quarter of 2020, the company's net profit increased by 308.7 % compared to the same quarter last year, up to 13 billion rubles, and for the first nine months - by 167 %, up to 22.2 billion rubles. At the same time, revenue for the period decreased by 3.9% compared to the third quarter of last year to 86.5 billion rubles.[22]

In June 2021, the company launched mobile phone showrooms.[23]

In the second quarter of 2021, MegaFon increased revenues by 7.1% year-on-year to RUB 84.1 billion. Net profit for the quarter tripled, to RUB 12.7 billion.[24]

The company's largest shareholder is USM Group (70.32% of shares). The remaining 29.68% of the shares are owned by MegaFon Finance, a subsidiary of MegaFon itself[25].

Chief Executive Officer

2003-2012 - Sergey Soldatenkov;

2012-2016 - Ivan Tavrin[26];

2016-2018 - Sergei Soldatenkov[27];

2018-2021 - Gevork Vermishyan[28];

2021-n. - Khachatur Pombuhchan[1].

Chairmen of the Board of Directors

2012-2016 - Sergey Soldatenkov[29];

2016-present - Vladimir Streshinsky.

Scandals related to the IPOC Foundation

In the early 2000s, the media reported that the actual owner of the company was allegedly Minister of Communications Leonid Reiman[30]. 30] A number of media outlets called Leonid Reiman the beneficiary of the IPOC fund (the largest shareholder of MegaFon until 2008). Leonid Reiman himself repeatedly denied this information, while the owner of the fund was Danish lawyer Geoffrey Galmond, who subsequently sold his stake in MegaFon to Alisher Usmanov's AF-Telecom holding[31]. Upon completion of the deal, Usmanov would gain control of 39.3% of the mobile operator's shares. The estimated amount of the deal is at least $5 billion[32].

In spring 2008, representatives of the IPOC fund, which owns 8% of MegaFon shares (as well as its affiliated offshore companies), acknowledged the company's involvement in money-laundering operations in the courts of Virgin Islands and Bermuda. In accordance with the settlement agreements reached between the local authorities and IPOC affiliated structures, its owners agreed to liquidate all of their 12 Caribbean offshore companies, reimburse the costs of the investigation and court hearings and pay a fine of $45.45 million[33].

Going public

At the end of April 2012 it was announced that the shareholders of Megafon had reached an agreement to have the company listed on the stock exchange (IPO), the last of the "Big Three" of the Russian cellular operators. Also, on April 24, 2012, the shareholder structure was changed, as a result of which Altimo withdrew from the company (receiving $5.2 billion for its shares) and AF Telecom of Alisher Usmanov received a controlling stake (50% plus one share) and the stake of TeliaSonera was reduced to 35.6%[34].

On July 10, 2012, the shareholders of Megafon and Skartel announced the completion of the deal, which changed the ownership structure of both operators. The owner of 50% plus 1 share of "MegaFon" and 100% of "Skartel" became the holding company "Garsdale Services" (British Virgin Islands), 82% of which were owned by Alisher Usmanov, and 18% of which were divided between Telconet Capital of businessman Sergey Adoniev and the state corporation "Russian Technologies" in proportion to their shares in "Skartel"[36].

Megafon's IPO on the London Stock Exchange and the Moscow Exchange was held in late November 2012, at the end of which the company was valued at $12.4 billion. 13.6% of the company's share capital was sold to investors, with 9.63% sold by TeliaSonera, earning $1.2 billion, and 4% by Megafon Investments (Cyprus) Limited, a subsidiary of Megafon[37][38].

On July 16, 2018, the company announced its decision to buy back all of its free float for $1.26 billion and its subsequent delisting from the London Stock Exchange (LSE)[39].

In December 2018, it became known that a subsidiary of MegaFon Finance announced its intention to buy back 131.2 million common shares of MegaFon[40][41]. In March 2019, MegaFon conducted a mandatory buyback of its shares and brought its stake to 99.2%[42]. In July 2019, it became known that MegaFon finally left the Moscow Exchange[42]. The operator's subsidiary bought 0.8% of shares from the remaining investors. Now the company's shares can no longer be bought on any exchange in the world[42].

Mergers and acquisitions

With the acquisition of one of the leading Russian backbone operators, Synterra Group, in June 2010, MegaFon entered the market of fixed-line communications for large government and corporate clients, as well as fixed broadband access (broadband) services. On the basis of the joint infrastructure it operates GSM 900/1800, 3G, VSAT, IP/MPLS, MG/MN, DPC and DPC networks.

In 2010, it acquired 100% of CJSC Metrocom, the largest fixed-line operator in St. Petersburg, a major Internet provider and owner of fiber-optic network in the St. Petersburg Metro for 2 billion rubles[43]. In the spring of 2011, MegaFon acquired NetByNet, one of the leading players on the Moscow broadband market (315,000 subscribers). The amount of the deal was estimated at $350-360 million[44]. In April 2011, it acquired 100% of the shares of one of the oldest Internet providers in St. Petersburg, Web Place[45].

In October 2013, MegaFon acquired 100% of the Skartel/Yota group from Garsdale Holding. The transaction amounted to $1.18 billion, excluding debt[46].

In September 2015, MegaFon acquired the assets of GarsTelecom for 2.2 billion rubles[47] to strengthen its position in the fixed-line market and in the B2B segment