MTS moving in to mobile finance

One of Russia’s largest operators has announced its plans to acquire a stake of over 25% in one of the country’s leading banks. MTS has signed a non-binding agreement to purchase up to 25.095% of MTS Bank, previously known as the Moscow Bank for Reconstruction and Development (MBRD).

The transaction would greatly enhance MTS’s ability to offer financial products and services to its nearly 70 million customers in Russia. The proposed terms would see MTS acquiring the stake through a share issuance by MTS Bank for up to 5.09 billion roubles

The acquisition can be seen as part of MTS’s 3i strategy, which will see the firm moving into lines of business that can make use of its telecoms network. The operator launched a mobile payment service in 2010, allowing customers to transfer funds and make payments using money in their mobile accounts using SMS, mobile applications or via the internet.

In April 2011, MTS, in partnership with MBRD, launched the MTS Dengi (MTS Money), a project aimed at providing customers throughout Russia with payment tools, including credit cards, near-field communications-enabled SIM cards and PoS (point-of-sale) credit. By the end of the year, MTS expects to enrol over 1 million customers to MTS Dengi services and help build a credit portfolio of 10 billion roubles.

Mr. Andrei Dubovskov, the President and CEO of MTS, highlighted: “Russia...remains one of the largest ‘unbanked’ markets in the world. Deeper cooperation with MTS Bank allows MTS to stimulate sales of smartphones in the retail network, increase customer loyalty and reduce churn through joint bonus programs with the bank. At the same time, we can further enhance our capabilities to develop mobile payments and mobile commerce platforms.”

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