CEO Yota Devices - about working with a 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. Sergei Adonyev and Albert Avdolyan, co-owners of the Telconet Capital fund, sold their shares for $ 100 million. REX bought out 64.9% of the shares from them.

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

Other stakes 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.
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He told RBC about the details of the transaction and future plans for the development of the company.

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

About leaving Telconet Capital from Yota Devices

Telconet helped Yota Devices at the initial stage of the company's development and provided business financing for four years from the day the company was founded. During this time, two generations of YotaPhone were created in Russia, and the process of development, production, and distribution was adjusted. Created conditions 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 it develops, different types of investors are needed. Today we have stepped over the company's venture capital stage, 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 company's work

The development team and headquarters will remain in Moscow. I will remain the CEO of the company and go into the management of Rex Global. The new shareholder structure should have a positive effect, as we have access to financial resources on one of the world's largest exchanges [the holding is trading on the Hong Kong stock 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 single opinion of all shareholders. 35% of the company remains under the control of Russian shareholders - Rostec and management. Rostec supports us at the state level. This is important for further business development. Becoming a global company, we preserve 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 is to create a Russian smartphone that will be competitive in the international market and build a company that will become a global player in the consumer electronics market. Despite the fact that very few people believed in it, the project took place, and it has a future, and a new stage begins.

About revenue for 2014 and performance

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. More than 150 patents and 10 international awards received. A unique team of Russian specialists who are able to solve the most complex technological problems in the field of consumer electronics has been formed and trained. An international cooperation has been established between component suppliers and a network of distributors in more than 20 countries of the world. Almost from scratch we have come to building a global business.

About finding new investors

A year and a half ago, Telconet and Rostec asked me to find an investor. We have done a lot of work with a large number of investors from different countries, including 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, which 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 began to communicate with everyone, make presentations, sign the NDA [non-disclosure agreement - non-disclosure agreement]. We met Rex Global at the beginning of the year through our partners who sell YotaPhone in China. For the transaction to take place, I had to spend six months in China, since personal contact is very important here. These were the most difficult years and a half in all my 20 years of career. The structure of the transaction is quite complicated, since it was necessary to take into account the interests of all shareholders.

On the orientation of REX Global to the Asian market

The scale of the Asian market makes it one of the key to 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, besides the uniqueness of the product and the presence of a team capable of quickly and creating a new budget for the minimum budget, lies in the fact that we have a distribution infrastructure in different countries. Among our partners there are such companies as Vodafone [the world's largest telecommunications operator from the UK], Ingram Micro [the world's largest distributor of information technology], MegaFon, who know our company and are ready to continue working with it.

China for REX Global is a familiar market: they understand how they can make money there. But in order to increase the company's capitalization and 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 moving the release date of YotaPhone 3 from 2015 to 2016

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

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

We focus on $ 550 in retail.