Mail.ru Group and MegaFon buy 55% of CityMobil for $ 35 million.

City Mobil
City Mobil

It is $35 million for which the controling stake in CityMobil will be purchased. MegaFone will receive about 30% of CityMobil, and Mail.Ru Group, about 25%.

MegaFon and Mail.ru group deal with CityMobil is “an experiment in which companies could test the market for taxi aggregators. It is not yet clear whether it is about the interaction of taxi service with the resources of both companies or separate investment plans,” says expert familiar with situation. MegaFone and Mail.ru the Group do not plan to consolidate CityMobil, he stressed. Several investment funds and global companies, he said, are also considering joining the CityMobil investment round.

The CityMobil business is managed by LLC “City-Mobil” which has a license including the operation of the taxi. It is also developing an Android app that has more than 1 million downloads, as well as an iOs app.

According to State register “City-Mobil” belongs to Aram Arakelyan (47,5%), OOO “A. V. A” Vladislav Abrahamian (35,84%) and Felix Vardanyan (16,66%). In 2016, City-Mobile revenue amounted to 387 million rubles, net profit-52 million rubles.

CityMobil has been looking for investors since at least last year, said fund manager, who was offered to invest in this aggregator.

In October 2017, MTS became a partner of CityMobil, which created its own MTS Taxi application on the basis of the aggregator. Cooperation made it possible to carry out 10 thousand orders a day in Moscow and St. Petersburg, reported MTS then. At the end of March it became known that MTS refused to develop MTS Taxi. “We do not see the prospects for the development of the MTS Taxi project in this format, so we decided to close it,” MTS explained, adding that the project did not require significant investment.

MegaFon also indicated interest in the taxi market. About a year ago, this was stated by the operational Director of MegaFon Anna Serebryanikova at the presentation of the operator’s strategy for 2017-2020.

Mail.ru Group has been watching the market for online taxi for a few years as its competitor  “Yandex” has been working successfully in this market. About four years ago Mail.ru Group offered to buy the Gett service, and in 2016 Mail.ru Group discussed partnership with InDriver service, both deals were not made.

“We really thought about the taxi business for a very long time. But at the moment we came to the conclusion that the market is now oversaturated with players, ” – said the CEO Mail.ru Group Boris Dobrodeyev in June 2017.

In July of last year “Yandex.Taxi ” and Uber agreed to merge business in Russia and neighboring countries. Association ” Yandex.Taxi “and Uber” improved the online taxi market”, and Mail.ru Group again thought about entering it, explained the interlocutor familiar with the position of the group. Mail.ru Group was in talks with several companies about joining their capital, the subject of conversation was also taxi service “Vezet”.

Partnership with Mail.ru Group may be a new digital channel for audiences of cab aggregator, for example, if the function of taxi ordering is added to the interface of the social network “Vkontakte”, said the analyst of “Sberbank CIB” Svetlana Sukhanova. “The business model of a taxi aggregator with a mobile operator is less obvious, because, for example, unlike a social network, there is no single entry point or an application that subscribers use every day,” she concluded.

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