Apple, Megafon Sign Deal to Sell 750,000 iPhones in Russia

Reuters has reported that Megafon, Russia's second biggest mobile phone operator, has signed an agreement with Apple (NASDAQ: AAPL) guaranteeing it will purchase 750,000 iPhones over the next three years.

Apple makes deal with Russia's Megafon

According to Reuters, the agreement was originally struck in January between Megafon and Apple's Russian subsidiary, though details were not released until this week. In addition to purchasing the 750,000 iPhones, Megafon committed to

spending a billion rubles (around $28 million USD) on marketing Apple's smartphones over the three year period, which ends at the end of 2016. Reuter's quoted Raiffeisen Research analyst Sergei Libin saying, "Based on MTS' estimates, in the fourth quarter alone around 650,000 iPhones were sold in Russia. If the smartphones sales' dynamics and iPhone's share of this market do not change dramatically, around 8 million iPhones could be sold in Russia during the next three years." MTS refers to Mobile TeleSystems, Russia's largest mobile provider. If these estimates are accurate, Megafon's 750,000 phones would represent just over 9% of total expected sales, which certainly seems to be an attainable goal for the nation's second biggest provider.

This deal comes after a a breakdown in relations between the two companies in 2009, due to Megafon's inability to guarantee the sales numbers Apple was looking for. Vimpelcom, Russia's third largest mobile operator and competitor of Megafon, signed a deal with Apple last year, but hasn't released the terms of the agreement. MTS is currently in negotiations with Apple.

As noted by Reuters, in 2013 just 9% of mobile phones sold in Russia were Apple branded, though this amounts to a 20% share of the $5 billion market.