Yota Devices CEO - about working with the new co-owner and YotaPhone 3

Yesterday, October 21, Megamind wrote that the Chinese investment holding REX Global Entertainment acquired a controlling stake in the Russian manufacturer of dual-screen smartphones YotaPhone. Sergey Adonyev and Albert Avdolyan, co-owners of Telconet Capital, sold their share for $ 100 million. REX bought back their 64.9% stake.

At the first stage, REX Global will invest $ 50 million in the Russian smartphone manufacturer. The funds received will go to the release of YotaPhone 3 in the first half of 2016.

Other shares of the company remain with the previous owners - Rostec state corporation (25.1%) and company management (10%), among which is Yota Devices CEO Vladislav Martynov.

He told RBC about the details of the transaction and further plans for the development of the company.

"Megamind" gives the most interesting statements from the interview .

About Telconet Capital leaving Yota Devices

Telconet helped Yota Devices at the initial stage of the company’s development and provided financing for the business for four years from the day the company was founded. During this time, two generations of YotaPhone were created in Russia, the process of development, production, distribution was established. The conditions have been created for building an international business with high growth potential.

The investment for Telconet turned out to be profitable, but since the fund is private, we do not disclose the details. For any business, as you develop, you need different types of investors. Today we have crossed the venture stage of the company’s development, and we need a new investor who will support and ensure the development of Yota Devices in global markets.

On the impact of the new shareholder structure on the work of the company

The development team and headquarters will remain in Moscow. I will remain the CEO of the company and enter the management bodies of Rex Global. The new shareholder structure should have a positive effect, as we have access to financial resources on one of the largest world exchanges [the holding is traded on the Hong Kong exchange]. As well as business relations of REX shareholders in the Asian region.

The key markets for us will remain Russia, China and the countries of the Asian region. This is a consensus of all shareholders. 35% of the company remains under the control of Russian shareholders - Rostec and management. Rostec provides us with support at the state level. This is important for the further development of the business. Becoming a global company, we retain Russian roots and Russian management.

About your attitude to the project and work plans in it

YotaPhone is a project of my life. Four years ago, I had a dream that moved me and my team: the dream was to create a Russian smartphone that would be competitive in the international market, and build a company that would become a global player in the consumer electronics market. Despite the fact that few believed in this, the project was completed, and it has a future, and a new stage begins.

On revenue for 2014 and results of work

About $ 30 million. The figure is not very indicative, since sales of YotaPhone 2 started only in December 2014, and in many countries at the beginning of 2015.

We managed to build an asset worth $ 150 million in a short time from scratch. Now YotaPhone is a Russian brand that is recognizable all over the world, almost like Kalashnikov.

In four years, two generations of the innovative YotaPhone smartphone have been created. Received more than 150 patents and 10 international awards. A unique team of Russian specialists has been formed and trained that can solve the most complex technological problems in the field of consumer electronics. International cooperation of suppliers of components and a network of distributors in more than 20 countries of the world has been established. Almost from scratch we came to building a global business.

About the search for new investors

Eighteen months ago, Telconet and Rostec asked me to find an investor. We have done a great job with a large number of investors from different countries, including from Russia, Europe, America and Asia. Given the market conditions and the sanctions imposed, it was not easy to find an investor who believes in the team and in the idea of ​​YotaPhone, who will give a fair assessment of the company and help not only access to financial resources, but also business connections and expertise in important markets for us.

We had a list of potential investors, we started talking with everyone, making presentations, signing the NDA [non-disclosure agreement - non-disclosure agreement]. At the beginning of the year, we met with Rex Global through our partners who sell YotaPhone in China. In order for the deal to take place, I had to spend six months in China, since personal contact is very important here. It was the most difficult year and a half in all my 20 years of career. The structure of the transaction is quite complex, since it was necessary to take into account the interests of all shareholders.

About REX Global targeting the Asian market

The scale of the Asian market makes it one of the key in our joint strategy. But sales in other regions are equally important. One of the reasons why investors from REX Global bought a stake in the company, in addition to the uniqueness of the product and the presence of a team that is able to quickly create new ones for a minimal budget, is also because we have built a sales infrastructure in different countries. Among our partners there are companies such as Vodafone [the world's largest telecom operator from the UK], Ingram Micro [the world's largest distributor of information technologies], MegaFon, which know our company and are ready to continue working with it.

China is a familiar market for REX Global: they understand how they can make money there. But to increase the capitalization of the company and to build a reputation, they want to develop in other countries, including Russia. For a public company it is important to show not only profit, but also be present in several markets.

About transferring the release date of YotaPhone 3 from 2015 to 2016

This is mainly due to the fact that we changed the factory before launching YotaPhone 3. We needed a partner who could produce and deliver phones on time, in the right amount, according to our requirements for price and quality. As a result, we signed an agreement with the ZTE factory. We set ourselves the task of making YotaPhone 3 with the most powerful specifications, but at the same time making its price significantly lower than that of YotaPhone 2.

ZTE as a global company can buy components cheaper and produce smartphones in the millions. Prior to this, global players refused to cooperate with us because of small volumes. The first and second YotaPhone we made with a small Hi-P factory. To launch the large-scale release of YotaPhone 3, we had to change the factory.

We focus on $ 550 in retail.