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Apple Inc. (AAPL): No Love From Russia for iPhone

Anybody who wants to buy an iPhone in Russia needn’t bother going to any of the Russian mobile operators. VimpelCom Ltd (ADR) (NYSE:VIP), the last Russian telecom offering the iPhone, has just hung up on Apple Inc. (NASDAQ:AAPL), according to Russian language website Hi-Tech Mail.

Apple Inc. (AAPL)VimpelCom Ltd (ADR) (NYSE:VIP), a joint venture of Norwegian telecom Telnor and the Russian Alfa Group, operates under the BeeLine brand in Russia. BeeLine has joined the two other ex-iPhone carrying Russian heavyweight mobile carriers, Megafon and Mobile TeleSystems OJSC (ADR) (NYSE:MBT), and not renewed its iPhone contract with Apple Inc. (NASDAQ:AAPL).

The three Russian carriers all had signed up to carry the iPhone in 2008, but high import taxes pushed the price of the iPhone above $900 in a country that bans subsidies. And Apple Inc. (NASDAQ:AAPL) wouldn’t cut any special deals with the operators.

“Apple Inc. (NASDAQ:AAPL) wants operators to pay them huge money, subsidizing iPhones and their promotion in Russia,” MTS CEO Andrei Dubovskov told the Seattle Times in an interview. “Now it’s not beneficial for us. It’s good we stopped selling the iPhone as these sales would’ve brought us a negative margin.”

Mobile TeleSystems OJSC (ADR) (NYSE:MBT) (MTS) stopped selling the iPhone at the end of 2012, and began promoting the Nokia Corporation (ADR) (NYSE:NOK) Lumia smartphones in its stores. Those phones use Microsoft Corporation (NASDAQ:MSFT)‘s  Windows Phone OS, which has seen a rise in Russian market share from 5.1% in the first quarter of 2012, to 8.2% in this year’s first quarter. That’s right up there with the iPhone, which has seen its market share drop in Russia, from 9%, to 8.3% for the same periods.

VimpleCom has signed a deal with Samsung to provide smartphones directly to its Russian carrier, according to Hi-Tech Mail.

The iPhone is not forbidden in Russia; it will still be available through Apple Inc. (NASDAQ:AAPL)’s online store and from Svyaznoy, a mobile phone retail chain, along with other Apple products. If someone wants to buy an iPhone and bring it to a Russian mobile network, no problem. Just don’t expect the carrier to help pay for it.

The article No Love From Russia for iPhone originally appeared on and is written by Dan Radovsky.

Fool contributor Dan Radovsky has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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