BELARUS NEWS AND ANALYSIS

DATE:

26/07/2007

Euroset is tired of Byelorussia

Euroset is going to leave Byelorussia because of unprofitability resulted from high taxes and high illegal import share, Evegeny Chichvarkin, the Company's CEO and President told CNews. Euroset earlier left the Azerbaijan market, having hardly entered it.

According to Evgeny Chichvarkin, Euroset CEO and President the Company might soon decide to leave the Byelorussian mobile retail market. "The taxes there have grown by 10% and we are moving towards losses", - he explains.

Euroset refused to give any details concerning its Byelorussian market plans. However, the Largest Cellular Retailer Press Service in Russian and CIS stated, optimization of the Company's subdivisions started with Alexey Chuikin appointment as the Company's President, and by Q III, 2007 there should be left no unprofitable units".

Euroset opened its first retail outlet in Byelorussia in September, 2005. In May, 2007 the number of retail outlets reached 100. However, the taxes for cellular retailers also grew, which immediately affected the business profitability. Besides, according to the specialists, the illegal import also negatively affects the profitability. The illegal import market share in Byelorussia is still very high, and according to some estimates amounts to 70-75%. In June-July, 2007 some of Euroset retail outlets were closed.

According to Evgeny Chichvarkin and industry analysts, Svyaznoy, having entered the Byelorussian market not long ago is sure to incur losses. However, the specialists believe, if the tax legislation is to be revised and the illegal handsets share to be reduced, then operating the market might become interesting, as its saturation with tubes is very low.

Evgeny Chichvarkin: we incur losses in Byelorussia, so the Company might leave the market soon

It should be note, Euroset left the Azerbaijan market, having spent only a month there and opened only five retail outlets. "We are to close all the unprofitable units this year", - Evgeny Chichvarkin promised, making a speech at the St. Petersburg Economic Forum.

Having changed his company's President, Evgeny Chichvarkin told CNews, the company's main aim was then not to develop, but to raise the business efficiency.

Euroset is the largest mobile handset retailer in Russia and one of the Russia's leading dealers for major mobile network operators. The main business activity of the Euroset Group is the retail sale of mobile handsets, digital cameras, CD, MP3 players and DECT-phones, mobile handset accessories and subscription to mobile network operators. In the first half of 2005, the Group estimated its share of the mobile handset retail market in Russia to be 23%. As of 31 October 2005 Euroset has outlets in 626 Russian cities, as well as in 25 cities in Kazakhstan, 19 cities in Ukraine and one city in Belarus. Euroset's nest goal is to further develop its business in the Commonwealth of Independent States and the Baltic States.

Svyaznoy is a federal cellular retailer, specializing in the sale of the cellular operators' services, personal communication devices, accessories, portable digital audio and photo techniques. The company is the official distributor of the GSM and DECT handsets main producers. It is also the largest cellular operators' dealer. The number of Svyaznoy retail outlets is 1183, Svyaznoy 3 - 113, and Svyaznoy Discount - 45.

Source:

http://eng.cnews.ru/news/top/indexEn.shtml?2007/07/25/260309