IPhone Moscow Comeback Boosts VimpelCom: Russia Overnight
VimpelCom Ltd. (VIP) and OAO Mobile TeleSystems rallied in New York after agreeing to sell iPhones, ending a dispute with Apple Inc.
American depositary receipts of MTS, as Mobile TeleSystems is known, climbed to the highest level since 2008, while VimpelCom jumped to a two-year high yesterday, leading gains on the Bloomberg Russia-US Equity Index. The measure for the most-traded Russian companies in New York rose 0.7 percent to 105.45. RTS stock futures slipped in U.S. hours.
VimpelCom and MTS said yesterday that they will sell Apple’s latest iPhone models in Russia this week. MTS stopped selling iPhones in its shops at the end of 2012. VimpelCom’s Russian unit failed to agree to favorable terms after a previous distribution contract with Apple (AAPL) expired, Vedomosti newspaper reported in July, citing people it didn’t identify. Russia’s mobile sales climbed 9 percent last year as data revenue surged 33 percent, according to AC&M Consulting.
“This is really promising,” Anna Milostnova, an analyst at UFS Investment Co., said by phone from Moscow yesterday. She has a buy recommendation on VimpelCom and hold on MTS. “Selling iPhones will help to attract new customers and increase revenue.”
Apple’s latest iPhones, the 5s and 5c, will be available in Russia on Oct. 25, the Cupertino, California-based company said earlier this month. Apple sold a record 9 million iPhones in the weekend debut of the two new models in September.
MTS, the biggest wireless carrier in Russia, last year criticized Apple for not cutting the device’s $1,000-plus price in the country and being too strict about how it was sold. Apple would get a larger share of the Russian market by reducing the iPhone’s price or helping subsidize it, Michael Hecker, MTS’s vice president for strategy and corporate development, said in July 2012 in New York.
Apple’s press service did not immediately return an e-mailed request for comment on iPhone sales in Russia. MTS will buy new iPhones from Apple’s newly selected distributors Merlion and diHouse, MTS’s spokesman Dmitry Solodovnikov said by phone in Moscow yesterday. VimpelCom will have a direct contract to sell iPhones in its retail outlets, spokeswoman Anna Aybasheva said by phone in Moscow yesterday.
VimpelCom decided to sell the iPhone because it remains one of the “most popular” smartphones in Russia, Artem Minaev, head of media relations at VimpelCom in Russia, said by e-mail from Moscow yesterday.
“Apple has a huge army of fans in Russia,” Evgeny Golosnoy, analyst at IFC Metropol in Moscow, said by phone from Moscow yesterday. “High prices have been restricting its products from spreading further throughout the country as most customers in the regions prefer cheaper smartphones.”
MTS climbed 1.3 percent to $23.92, the highest level since September 2008. VimpelCom rallied 4.6 percent to $13.78 in New York yesterday as trading volume exceeded an average daily level for the past three months by six times.
VimpelCom, Russia’s third-largest mobile carrier, also advanced after the announcement that it will join the Nasdaq-100 Index on Oct. 29, according to a statement from the Nasdaq OMX Group Inc.
The “inclusion will give it a boost and the iPhone news also helps it gain,” Luis Saenz, head of equity sales and trading at BCS Financial Group, said by phone from London. “VimpelCom has been an overlooked orphan in the market and that is changing now. Many more eyes will be on the stock now.”
The Market Vectors Russia ETF (RSX), the biggest U.S.-traded exchange-traded fund that holds Russian shares, increased 0.5 percent to $30.10, the highest level since Feb. 19. The RTS Volatility Index, which measures expected swings in the index futures, rose 1.2 percent to 20.83. RTS stock-index futures decreased 0.2 percent to 151,650.
United Co. Rusal (486), a Moscow-based aluminum producer, advanced 3.8 percent to HK$2.47 in Hong Kong trading as of 10:32 a.m. local time, poised for the highest close since Aug. 23. The MSCI Asia Pacific Index gained 0.5 percent.
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