Megafon group

Country

Tajikistan

Year of entry

2001

Industry/ business area

telecommunication

Entry mode

Subsidiary with “TT-Mobile”. CJCS “TT- Mobile” was offering its services under the brand “Mobile Lines of Tajikistan”. After Subsidiary agreement it took a new name “Megafon- Tajikistan”. 75% of “TT-Mobile” is owned by Megafon. At the same time 25% of “TT-Mobile” is owned by the governmental company JSC “Tochiktelecom”. Mainly a brown field strategy.

Motives

• A huge competition on the market of telecommunication in Russia (Megafon is a part of “the big three” operators of telecommunication in Russia: MTS, Beeline and Megafon);

• Desire to broaden the business by attracting new customers;

• CIS is a post-Soviet territories which usually make Russian companies to go international starting with CIS;

• A lot of CIS citizens live and work in Russia which means that it is reasonable to establish its services also in CIS countries for these citizens to feel comfortable while spending time in CIS countries;

• Desire to implement and develop new techniques which can make telecommunication better, faster and cheaper.

Firm specific advantages used on the foreign market

Implementing of modern technologies while installing and providing people with mobile telecommunication and other services.

It is a popular company which people trust to.

It has a reputation and special offers for different regions of Russia and CIS.

It has a lot of opportunities to improve technologies and services.

It has a good support from shareholders.

First mover or follower

Among “the big three” of Russian telecommunication operators Megafon was the first to enter the market of Tajikistan. Also, Beeline entered this market four years later in 2005. The company LLC “Takom” is a part of VympelCom Ltd.

Type of state involvement in the process of internationalization

75% of “TT-Mobile” is owned by Megafon. At the same time 25% of “TT-Mobile” is owned by the governmental company JSC “Tochiktelecom”. That is why the government of the country interfered into TT mobile’s business.

Evaluation of the success of the internationalization

• it was a good experience for the company in establishing subsidiaries;

• it was a good experience for the company to transfer its business and equipment abroad. For example, in case of goes international in Georgia it took a lot of time, money and strength to transport all the necessary equipment;

• Megafon acquired so many new clients as it started to have problems with providing services for clients in Russia and abroad. After having such problems Megafon decided that the quality is more important than the quantity and decide to stop goes international.

Country

Abkhazia

Year of entry

2009

Industry/ business area

telecommunication

Entry mode

Subsidiary with “Aquaphon- GSM”. Megafon bought 100% of shares of Debton Investment which had owned 51% shares of “Aquaphon-GSM”. Megafon used both brown field and green field strategies. Green field was a prevailed one because they had to transport many necessary equipments to make quality of telecommunication better.

Motives

• A huge competition on the market of telecommunication in Russia (Megafon is a part of “the big three” operators of telecommunication in Russia: MTS, Beeline and Megafon);

• Desire to broaden the business by attracting new customers;

• CIS is a post-Soviet territories which usually make Russian companies to go international starting with CIS;

• A lot of CIS citizens live and work in Russia which means that it is reasonable to establish its services also in CIS countries for these citizens to feel comfortable while spending time in CIS countries;

• Desire to implement and develop new techniques which can make telecommunication better, faster and cheaper.

Firm specific advantages used on the foreign market

Implementing of modern technologies while installing and providing people with mobile telecommunication and other services.

It is a popular company which people trust to.

It has a reputation and special offers for different regions of Russia and CIS.

It has a lot of opportunities to improve technologies and services.

It has a good support from shareholders.

First mover or follower

Megafon is a first mover on the market of Abkhazia. At least according to official information on Abkhazia market there are no MTS or Beeline.

Type of state involvement in the process of internationalization

Georgian government was involved in Megafon’s business in Abkhazia. It accused Megafon in leading illegal business in republics which Georgian government counted to be as a part of Georgia. In 2008 a new law “About occupied territories” was accepted. After acception of this law Megafon might have some problems in leading business in Abkhasia.

Evaluation of the success of the internationalization

• it was a good experience for the company in establishing subsidiaries;

• it was a good experience for the company to transfer its business and equipment abroad. For example, in case of goes international in Georgia it took a lot of time, money and strength to transport all the necessary equipment;

• Megafon acquired so many new clients as it started to have problems with providing services for clients in Russia and abroad. After having such problems Megafon decided that the quality is more important than the quantity and decide to stop goes international.

Country

South Osetia

Year of entry

2010

Industry/ business area

telecommunication

Entry mode

Subsidiary with “Ostelecom”. Megafon bought 100% of shares of Debton Investment which had owned 51% shares of “Ostelecom”. Megafon used both brown field and green field strategies. Green field was a prevailed one because they had to transport many necessary equipments to make quality of telecommunication better.

Motives

• A huge competition on the market of telecommunication in Russia (Megafon is a part of “the big three” operators of telecommunication in Russia: MTS, Beeline and Megafon);

• Desire to broaden the business by attracting new customers;

• CIS is a post-Soviet territories which usually make Russian companies to go international starting with CIS;

• A lot of CIS citizens live and work in Russia which means that it is reasonable to establish its services also in CIS countries for these citizens to feel comfortable while spending time in CIS countries;

• Desire to implement and develop new techniques which can make telecommunication better, faster and cheaper.

Firm specific advantages used on the foreign market

Implementing of modern technologies while installing and providing people with mobile telecommunication and other services.

It is a popular company which people trust to.

It has a reputation and special offers for different regions of Russia and CIS.

It has a lot of opportunities to improve technologies and services.

It has a good support from shareholders.

First mover or follower

Megafon is a first mover on the market of Abkhazia. At least according to official information on Abkhazia market there are no MTS or Beeline.

Type of state involvement in the process of internationalization

Georgian government was involved in Megafon’s business in South Osetia. It accused Megafon in leading illegal business in republics which Georgian government counted to be as a part of Georgia. In 2008 a new law “About occupied territories” was accepted. After acception of this law Megafon might have some problems in leading business in South Osetia.

Evaluation of the success of the internationalization

• it was a good experience for the company in establishing subsidiaries;

• it was a good experience for the company to transfer its business and equipment abroad. For example, in case of goes international in Georgia it took a lot of time, money and strength to transport all the necessary equipment;

• Megafon acquired so many new clients as it started to have problems with providing services for clients in Russia and abroad. After having such problems Megafon decided that the quality is more important than the quantity and decide to stop goes international.