Samsung Wins Round in Yearlong Clash With Russian Phone Carriers

  • VimpelCom resumes Samsung sales after dropping boycott
  • MegaFon discusses co-operation as Galaxy S7 sales surge

Samsung Electronics Co. has cracked a yearlong boycott by one of Russia’s largest wireless carriers and is in talks with a second, bolstered by rising demand for its Galaxy S7 handsets.

VimpelCom Ltd., the country’s third-largest wireless carrier, said Tuesday it resumed sales of Samsung products, citing the brand’s popularity among data-consuming users. No. 2 MegaFon PJSC, which joined VimpelCom in a boycott last year, hasn’t made peace but told Bloomberg News it’s discussing co-operation with Samsung and other vendors.

The boycott began in May 2015, shortly after Russia’s biggest mobile carrier, Mobile TeleSystems PJSC, began selling Samsung phones at lower prices, taking advantage of volume discounts the others couldn’t match. VimpelCom’s Russian unit, which operates more than 3,000 stores in the country, stopped buying Samsung devices, as did MegaFon and a retailer jointly owned by the two carriers, Euroset.

Samsung only got stronger. The company, already the biggest by unit sales, overtook Apple Inc. to lead in revenue as well during 2015, according to researcher IDC. Samsung said demand for the Galaxy S7, released in March, is running 80 percent higher than for the S6 model a year earlier, and said its lead over Apple held up in June. Samsung drove a 63 percent increase in Mobile TeleSystems smartphone sales in the first half.

For the second quarter, “we are expecting expecting Samsung to be the value as well as volume leader, with a bigger margin over Apple in value than in full year 2015,” Simon Baker, an IDC analyst, said by e-mail.

VimpelCom, MegaFon and their Euroset venture operate a total of more than 10,000 retail locations in Russia. Handset sales, which have traditionally relied on independent stores, have been gradually moving toward a market dominated by the carriers. Euroset, which sells mainly VimpelCom and MegaFon service, declined to comment on whether it would begin carrying Samsung again.

Samsung sold 26.6 million smartphones in Russia last year, valued at about $4.4 billion, IDC estimates. That’s below the totals of 27.5 million units and $6.3 billion in 2014. (The market shrank in dollar terms in 2015 because of the ruble’s depreciation, while rising slightly in the Russian currency.)

Samsung’s market share expanded in the first quarter to 25 percent of units sold from 18 percent in the fourth quarter, according to IDC.

Mobile TeleSystems said it welcomed VimpelCom’s decision.

“The Russian market of selling devices and wireless contracts is now transforming towards a carrier-led model,” Mobile TeleSystems spokesman Dmitry Solodovnikov said by e-mail.

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