Russian Operator Discounts Smartphones As Sanctions Bite

Russia’s largest mobile operator Mobile TeleSystems (MTS) on Tuesday reportedly began selling discounted and second-hand smartphones as a measure to help Russian consumers deal with the impact of inflation and Western sanctions.

Since the country’s invasion of Ukraine on 24 February Western tech companies have largely pulled out or suspended operations in Russia, with Apple halting all sales of its iPhones and other products there in early March.

At the time the Kommersant newspaper reported that sales of Chinese smartphones doubled in the first two weeks of March.

MTS has now begun offering devices from China’s Huawei, Honor and Xiaomi, as well as South Korea’s Samsung, for up to 50 percent lower prices than new units in its Moscow stores and online, according to Kommersant and other local media.

Sanctions impact

MTS said it planned to expand the brands offered and the locations where discounted models were sold.

The models on offer include those returned within two weeks or items with a packaging defect. All units come with a 90-day warranty.

“This is a good opportunity for our company to offer consumers an additional way to save on purchases of quality gadgets,” said MTS head of retail network development Pavel Sukhovarov, according to Reuters.

Inflation is at about 17 percent in Russia, although the central bank said reduced consumer demand and a more stable rouble are helping to slow the pace.

MTS earlier this month reported a 75.2 percent year-on-year decline in first-quarter net profits to 3.9 billion roubles ($62.9m, £50m) which it said was in part due to higher interest rates.

‘Challenges’

Russia raised interest rates to 20 percent after the imposition of Russian sanctions before cutting the key rate to 14 percent.

MTS said group revenues increased by 8.5 percent to 134.4bn roubles with operating income up 2 percent to 56.5bn roubles.

President and chief executive Vyacheslav Nikolaev said the results were solid and the company remained confident in its ability to navigate challenges.

MTS has expanded beyond its core business into areas such as banking, with MTS Bank, e-commerce and streaming service KION, as well as agreeing in December to buy biometrics company VisionLabs.