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. Last Updated: 07/27/2016

Cell Phone Giant Aims to Cut Out Middlemen

Russia's largest mobile phone retailer, Yevroset, plans to begin directly importing phones before the end of the year, company spokeswoman Tatyana Guliayeva said Thursday.

Its decision to cut out intermediaries comes less than two weeks after authorities closed down a major electronics smuggling ring, causing panic on the country's $4 billion mobile phone market. Cell phone prices have risen sharply since authorities made the haul, experts say.

Yevroset Logistik, currently in charge of logistics for more than 1,800 Yevroset stores in Russia, Ukraine and Kazakhstan, is set to import about 1 million cell phones monthly, Guliayeva said. "This [volume] will fulfill our own demand," she said, "but we may also start selling phones to other retailers if they show interest."

Yevroset declined to name the intermediaries with which the company currently worked.

Yevroset's move is their "signal to the authorities" that they will sell only legal imports, said Mobile Research Group senior analyst Eldar Murtazin. Illegal importers use various schemes to lower the required 5 percent customs tax levied on cell phones at the border or bypass customs entirely.

Around 5 percent of phones brought into Russia enter illegally. Last year, some 1.4 million cell phones were smuggled into the country, out of 25.7 million total imports, according to Mobile Research Group's estimates.

In the coming weeks, Yevroset is set for negotiations with all of the country's major cell phone vendors regarding imports, Guliayeva said.

"Other large cell phones retailers will follow suit," Murtazin projected.