Yota Devices

Yota Devices is private company which primary activity was development and production hi-tech subscriber LTE- the equipment (modems, routers smartphones). The company was widely known in Russia thanks to release smartphone YotaPhone with two screens. Stopped activity in 2019.

History

2019: Yota Devices was declared bankrupt

The Supreme Court of the Cayman Islands declared bankrupt the offshore Yota registered in this jurisdiction which is head structure of smartphone manufacturer of Yota Devices. The adequate notice was published in April, 2019 in the local^[1].

Staff of FTI Consultings company is appointed liquidators of the company: David Griffin from the Cayman Islands and Joshua James Taylor from Singapore. Creditors of Yota have 21 days to achieve inclusion of in the register of creditors.

2018: Rostec sold the share in Yota Devices to the Chinese consortium

Rostec announced on July 24, 2018 completion of the transaction selling the share in Yota Devices to consortium led by the Chinese investment group Trinity World Management (TWM). The transaction was initiated by Rostec within the option agreement with TWM. Rostec will receive for the packet in 25.1% money and liquid securities for the amount more than 3 billion rubles.

Sale of a packet is connected with Yota Devices exit to a scaling stage in international markets and completion of a mission of Rostec as the strategic investor who supported the project at an early stage of development. Significant growth of cost of business was possible thanks to our harmonious work with a project team, with the investor founder of Telconet and the Chinese partner of China Baoli. We are satisfied with that assessment which the market gave — the representative of Rostec commented on the transaction.

China Baoli since 2016 is a partner of State Corporation Rostec in the Yota Devices project where the Chinese company possessed 40% of stocks. Third generation of smartphones with two screens was developed and brought in close partnership on the market.

As a result of the transaction the consortium, the including Trinity World Management and China Baoli, will receive a controlling stake — its share in Yota Devices will exceed 50%. The structure of the transaction assumes calculation in the form of money and a share block of China Baoli, further participation of State corporation in Yota Devices will purchase the nature of the portfolio investment. At the same time Rostec will reserve crucial elements of technology and a possibility of their use in the directions, strategically important for State corporation.

The commercial interest of global manufacturers and investors in Yota Devices says that the project took place. According to the updated development strategy support of similar projects — one of the key areas of work of corporation. Rostec is going to aim the means obtained from the transaction at the development of hi-tech civil products for the Russian business and public sector — reported in the press service of Rostec.

For July, 2018 owners of the company were among:

• Avdolyan Albert - 34.9%
• China Baoli Technologies Holdings - 40%
• Trinity World Management (TWM)

2017

Martynov sold all shares to Chinese

On February 21, 2018 it became known of the redemption of 10% of the stocks Yota Devices belonging to the former CEO of the company Vladislav Martynov, the Chinese China Baoli Technologies group.  The last as a result became the largest shareholder of smartphone manufacturer.

According to Kommersant referring to materials of the Hong Kong stock exchange, China Baoli will pay Martynova to $500 thousand money and $15 million in the form of the actions. The edition specifies that it is about a 2.4 percent share of China Baoli.

Vladislav Martynov

According to the results of the transaction China Baoli increased a share in capital stock of Yota Devices from 30 to 40% that it is more, than at Telconet Capital fund (34.9%). Another 25.1% remain at [[Rostec, however, as told the newspaper in corporation, by February 21, 2018 Rostec completes the statement of terms of transaction selling a share to partners. At the end of the 2017th it was announced plans of Rostec to sell a share in Yota Devices for 3 billion rubles to consortium of the Chinese investors.

Acquisition of a share in Yota Devices will allow to increase its financial performance and to have a greater influence on business development, said in the documents China Baoli.

The company management is optimistic and with enthusiasm treats perspectives of business and future potential of growth" a brand — reported in the Chinese company.

Also China Baoli is going "continue to expand business in the field of mobile technologies for the purpose of strengthening of positions in the industry". Besides, she invests in the real estate, entertainments, tourism, mobile technologies, games and other directions.

The last for February 21, 2018 the Yota Devices smartphone which is available on sale is  the YotaPhone 3 model. However it did not appear in the Russian shops yet though in China is on sale since October, 2017.^[2]

Rostec leaves Yota Devices

Rostec decided to exercise the option for sale of the share in 25.1% of stocks in Yota Devices company, the developer of mobile devices, including YotaPhone, told RBC the source familiar with plans of state corporation. According to him, Rostec will receive for the packet money and shares for the amount of nearly 3 billion rubles. Names of buyers, as well as what shares will be received by Rostec in exchange for the share, the interlocutor of RBC did not specify^[3].

The representative of Rostec confirmed to RBC that the corporation agreed about sale of the stocks Yota Devices and transaction amount, but refused further comments.

The option for sale of a packet appeared at Rostec in 2016. Then the Telconet fund of businessmen Sergey Adonyev and Albert Avdolyan owning control in Yota Devices sold 30% of shares of the company of the Chinese China Baoli Technologies Holdings Ltd, having reserved 34.9%. As told the source of RBC close to one of the parties of the transaction, the option had "a limited window of action in a year, and it will end soon". Another 10% of stocks are at management of Yota Devices through MTH company.

According to the director of the company of Marsfield (manages assets of Telconet) Ekaterina Lapshina, the option agreement was signed with private investors from China, but she did not specify their names. "As buyers of a packet private investors, as far as I understand also acted" — she told.

According to a source of RBC close to other shareholder of Yota Devices company, the offshore company of Trinity World Managment registered on the British Virgin Islands can act as the buyer — its owner is the minority shareholder of China Baoli Winston Xi.

Rostec is going to sell the share in the company. Card of owners

On September 26, 2017 it became known of plans of Rostec state corporation to sell a blocking stake of smartphone manufacturer of Yota Devices.

The company concluded the put-option for sale of this share to Winston Xi - to the chairman of the board of directors of Yota Devices and the shareholder of China Baoli, the Chinese co-owner^[4].

Rostec owns 25.1% of stocks in Yota (Cayman Islands) through the offshore Yota Devices registered on BVI. In this jurisdiction the offshore Trinity World Managment (TWM) with which at the end of 2015 Yota Holdings concluded the put option for sale of the share in Yota (Cayman Islands) is registered.

The put option means that "subsidiary" of Rostec can oblige the partner to redeem her share in Yota Devices. According to the statement from the register of BVI, within performance guarantee of the obligations of TWC provided Yota Holding ("subsidiary" of Rostec) pledge in the form of 99% of stocks of Ocean Yield Global company.

Scheme of ownership Yota Devices, (2017)

The owner of TWC is other offshore from BVI - Sino Advisor International. According to the agreement on a purchase - sales of shares of Yota Devices between Telconet and China Baoli (is available at the disposal of CNews), the offshore Sino Advisor International owns 8.8% of stocks of the Chinese corporation. A beneficial owner of this offshore is Winston Sie who in total possesses 9.8% of the stocks China Baoli.

After China Baoli was among shareholders of Yota Devices, Winston Xi became the chairman of the board of directors of smartphone manufacturer. While China Baoli redeemed a share in Yota Devices from Telconet, Rostec had an opportunity to sell the share in Yota Devices to the co-owner of China Baoli Winston Xi.

According to the statement of Rostec, existence of the put-option for sale of a share in Yota Devices does not mean intention to sell this packet. The option - only a condition of arrangements with the Chinese partners, so-called protection against project risks.

The offshore MTH related to Vladislav Martynov has the put-option with TWC for sale of 10% of the stocks Yota Devices owned by it.

Failure from YotaPhone 3 and transfer of product development to China

The China Baoli company, the Chinese co-owner of Yota Devices company, in July, 2017 decided to transfer product development from Russia to China and refused release of the YotaPhone 3 model which is already developed by Russians.^[5]

China Baoli also refused the agreement with the Chinese corporation ZTE on release which is earlier signed by Yota Devices smartphones YotaPhone. Instead of this China Baoli created joint venture with the smartphone manufacturer of Coolpad entering into the Chinese group LeEco.

The announcement of YotaPhone 3 in Harbin (China). Photo: www.ferra.ru

Minority shareholders of China Baoli, as it appears from their open address which came to edition CNews require from the company to provide the distinct strategy of promotion of YotaPhone and to call specific terms of start of the third model of the device. According to them, delays with a release of the new version of the smartphone lead to the fact that consumers forget the Yota Phone brand. It, in turn, depreciates the asset cost of Yota Devices which at the time of the transaction with China Baoli were estimated at $154 million.

Minority shareholders are dissatisfied with a rupture of the contract with ZTE and its replacement on less known producer Coolpad. As it is specified, the financial statements Coolpad are still not published, and assets Jia Yueting, the founder of LeEco (it includes Coolpad), were arrested in China. Also the fate of the agreement with E-link concerning deliveries of the second display for Yota Phone is unclear.

In the address the discontent and to Winston Sie appointed by China Baoli the chairman of the board of directors of Yota Devices expresses. Instead of it authors of the letter require to appoint the head of Yota Devices of the professional having experience in production of smartphones and also to enter into Board of Directors of the independent director.

At last, to minority shareholders the fate of intellectual property and the Yota Devices patents is unclear. After entry into the capital of China Baoli it was left by development team, and the main developments began to be conducted in Coolpad. Because of it there is also a question of rather intellectual property Yota Devices.

YotaPhone 3 is postponed indefinitely: There is no money

The Chinese company Rex Global Entertainment, the owner of 30% of the stocks Yota Devices, does not allocate funds for production smartphone YotaPhone 3. Because of it the device which release was planned for the middle of 2016 still did not enter the market. As well as all YotaPhone, third generation will be had by two screens, one of them – as at the e-book.

2016

Moiseyev releases Martynov from the CEO's duty

At the end of July, 2016 it became known of Vladislav Martynov's leaving from a post of the CEO of smartphone manufacturer of Yota Devices. This position will be held by the operating officer of the company Dmitry Moiseyev.

About change of the head of Yota Devices wrote Vedomosti with reference to the letter sent to the staff of the company by the member of its Board of Directors Ekaterina Lapshina. She reported that Martynov will continue to cooperate with the company, participating in strategic management as the board member. Read more here.

The Chinese Rex Global redeems only 30% in the company instead of 64.9%

On February 9, 2016 mass media reported that the Yota Devices company can be sold in parts. Terms of transaction at which 64.9% of smartphone manufacturer of YotaPhone had to pass from Telconet Capital Limited Partnership to  the Hong Kong holding Rex Global Entertainment for $100 million changed.

At this time, a major shareholder of the company is the Telconet Capital investment fund (belongs to businessmen Sergey Adonyev and Albert Avdolyan), which owns 64.9% of securities of producer.

Another 25.1% belong to Yota Holding Limited (structure of Rostec) and 10% – MTH Limited (belongs to Vladislav Martynov).

According to Vedomosti with reference to the reporting of Rex Global, listing committee of the Hong Kong exchange on which shares of this company are traded, suspected that purchase of Yota Devices can represent a so-called reverse takeover when subject to purchase costs more, than the buyer.

Chinese will take twice less stocks Yota Devices, than wanted

As a result of Rex Global 30% for $46.2 million talk about purchase not of 64.9% of the stocks Yota Devices, but. Also the company is ready  to undertake a part of debts of Yota Devices to  Telconet: $7 million on  the credit of the Cyprian Yota Devices (afterwards the amount can grow still  —  to  $15 million) and  $ 27 million which were borrowed by other "daughter" registered on  the British Virgin Islands.

Having received even 30% of Yota Devices, the Hong Kong company will be able exclusively to use patents of the bought producer and the YotaPhone trademark in the territory of continental China within seven years, reported in Rex Global.

Rex Global estimates the cost of all Yota Devices at $154 million. The analyst of Raiffeisenbank Sergey Libin considered such assessment adequate, despite losses of the company which in 2014 grew to $42.3 million from $19.9 million the previous year. For the technology companies in the nature of things long to pay back investments, Libin notes.

According to the source of Vedomosti close to shareholders Yota Devices, this company and Rex Global conduct several months active preparation for an output of new generation of YotaPhone to the Chinese market. The interlocutor of the edition says that Yota Devices sees high potential in China and creates around itself "a pool of large strategic partners".^[6]

2015

The number of the smartphones sold by the company reached 96 thousand pieces

In March, 2016 it was reported that by the end of 2015 the YotaDevices company implemented 96 thousand YotaPhone smartphones.

Yota Devices stakes on China

On November 2, 2015 the Bloomberg agency published some excerpts from an interview with the CEO of Yota Devices Vladislav Martynov who told about priority provision of the Chinese market. There the Russian company is going to generate more than a half of the international revenue.

"We pay attention both to China, and to the USA, and at the same time we realize that we have more chances of success of YotaPhone 2 in China, than in the USA" — Martynov said.

According to him, after Vladimir Putin's meeting with Xi Jinping during which the Russian president presented to the Chinese YotaPhone the number of admirers of this smartphone among residents of the People's Republic of China considerably increased in social networks.

Vladislav Martynov says that China will generate Yota Devices more than a half of the international revenue

Martynov said that at the expense of Celestial Empire Yota Devices expects to increase the annual sales volume of smartphones to 1 million pieces. By estimates of analysts of IDC, in 2014 the company produced only 100 thousand devices.

Yota Devices is going to perform more than 50% of foreign sales in China, Martynov without refining of terms of achievement of this purpose told. The share of the Chinese business in total revenue of the company by the beginning of November, 2015 is unknown.

The Hong Kong investment holding Rex Global Entertainment Holdings knew that Yota Devices pins great expectations on China later few weeks after the declaration of sales plans 64.9% of stocks of the company for $100 million. Under the terms of the transaction of Rex Global had to invest $50 million more in  further business development of the producer, including in China.

In addition to REX Global, one more strategic Chinese partner of Yota Devices is the ZTE company. Production of the YotaPhone smartphone of third generation which exit is planned for the middle of 2016 is entrusted it. Thanks to this cooperation of Yota Devices she intends to reduce the cost of the devices and to offer YotaPhone 3 at the price about $550, transfers the edition.

The founder of the Chinese research firm China Skinny Mark Tanner considers that Yota Devices will be complex to save uniqueness of design of the smartphone, considering desire and capability of the Chinese producers to issue the "cloned" copies of popular products. At this Yota Devices it is ready to share the technologies within license agreements, Vladislav Martynov noted.^[7]

Sales plan to Chinese of a controlling stake of Yota Devices

In October, 2015 the Chinese investment holding Rex Global Entertainment Holdings Limited announced plans of purchase of a controlling stake of Yota Devices. The new shareholder will provide a financial support to business of smartphone manufacturer of YotaPhone.

Under the terms of the agreement, Rex Global had to purchase from the Russian investment fund Telconet (belongs to businessmen Sergey Adonyev and Albert Avdolyan) 64.9% of the stocks Yota Devices for $100 million, and all company was estimated at $154 million. Taking into account this transaction the joint-stock structure of vendor would be following: 64.9% – Rex Global, 25.1% – Yota Holding Limited (structure of Rostec) and 10% – MTH Limited (belongs to Yota Devices management). Two last companies can ask Rex Global to redeem their shares entirely.

The controlling stake of smartphone manufacturer of YotaPhone is sold to the Chinese investor

The CEO of Yota Devices Vladislav Martynov saved the post and headed Rex Global. The headquarters and R&D-активы the Russian producer will remain in Moscow.

Rex Global undertook to invest $50 million in Yota Devices business development. In particular, money will go for continuation of global expansion of Yota Devices and release of new smartphones. Besides, the new shareholder will help examination and knowledge in the perspective markets of Asia that will allow Yota Devices to develop successfully in this region.

According to Martynov, Yota Devices looked for the investor within one and a half years, and after the transaction with Rex Global the company will be able to become the platform for creation of telephone business as a part of holding.^[8]

The release of YotaPhone on the Sailfish platform is postponed

On July 6, 2015 the Yota Devices company declared lack of release schedules YotaPhone under control of Finnish operating system Sailfish within import substitution^[9].

Vladislav Martynov, the CEO of Yota Devices, reported: "We have no plans for development of the version of YotaPhone on the basis of a system from Jolla now. I cannot tell how the situation in the future will turn — can be, Sailfish also will receive some market share of mobile operating systems. Now we are completely committed to Android. Recently we transferred our users to version 5.0 of this system and now we work on the next generation of Android OS".

Rumors about creation of YotaPhone 2 on the operating system Sailfish appeared after the meeting of representatives Finnish Jolla Sailfish (developers) with the Russian companies STC OF ROSA and Alt Linux. According to information Vedomosti, the parties discussed at a meeting creation of the protected device for needs state agencies — such device could become YotaPhone with the Finnish operating system.

However, the version of YotaPhone 2 on the Sailfish platform exists. Nikolai Nikiforov, the Minister of Telecom and Mass Communications uses it. According to him, the smartphone "normally works, but so far, probably, it is not ready to be on sale in shops".

Nikolai Nikiforov shows YotaPhone 2, 2014

Rumors about release schedules of electronic textbooks

On May 29, 2015 it became known that Yota Devices shortly should release own tablets and electronic textbooks. It is not necessary to doubt reliability of data though in the company this information do not comment^[10].

Yota Devices found the partner for entry into the Chinese market

The company notes that it "one of the largest in the history of transactions on delivery of the Russian hi-tech equipment in the field of consumer electronics to China". The Russian smartphone manufacturer of Yota Devices whose co-owners are Rostec and Telconet fund and the Chinese distributor of Potevio signed the contract on sale of the YotaPhone 2 smartphones, Kommersant^[11] writes].

The first batch will make one million devices YotaPhone 2, is going to sell it within one and a half years. Contract amount does not reveal. Under the terms of the contract Potevio will also perform marketing support of YotaPhone 2 in all territory of the country.

To China, according to the plan of Yota Devices, 50% of the general sales of the smartphone is necessary, the CEO of the company Vladislav Martynov in May, 2015 reported in an interview to the Kommersant Money magazine. The Chinese version of YotaPhone will have two features — support of local 4G-frequencies and adaptation of ten the most popular Chinese applications under the second YotaPhone screen, including the WeChat messenger, the Sina Weibo microblogging service, Taobao marketplace, the application for Qunar travel. By the end of the year the company will enter also the markets of Indonesia, Turkey, India, South America and the USA, Martynov told.

According to Martynov, the first batch of YotaPhone 2 in number of 150 thousand devices already dispersed: a part is sold, a part is at distributors and partners. Sales of first generation made about 40 thousand devices. Martynov also told that Yota Devices began development of the new smartphone which will be provided in 2016.

2014

Revenue of $30 million

From financial performance for 2014 Yota Devices opened only revenue — $30 million. By May, 2014 the company sold 40 thousand smartphones, Interfax with reference to the CEO of Rostec Sergey Chemezov reported.

Rostec takes 25% of shares of YotaPhone company

In March, 2014 it became known that the Rostec State corporation takes 25% of shares of the manufacture of the Russian YotaPhone smartphones, Financial Times reported^[12].

The CEO of YotaPhone Vlad Martynov confirmed that Rostec performed the option for acquisition of a quarter of the company which, according to him, is heritage of participation of Rostec in restructuring of the Russian Internet service provider "Skartel", the former owner of Yota.

YotaPhone combining advantages of phone and electronic "eReader" went on sale in Great Britain in March, 2014 at the price of 419 pounds, in April sales started in the Middle East. The company opened office in China and was going to present the next version of the gadget at the Asian markets until the end of 2014.

In January, 2014 owners of Yota Devices purchased a share in the British Formula 1 Lotus F1 Team. Rostec reported to Vedomosti that they did not participate in the transaction.

Opening of development center in Canada and plans of the IPO

In August, 2014 it became known that Yota Devices is going to open the first representation in North America until the end of 2014. The office was going to be placed in Canada, however at that time in the company did not decide on the city: Waterloo or Toronto.

It is interesting that the day before in the press there was information that Yota Devices transfers from the headquarters from Moscow to Toronto. In Canada the company intended to fill up the state with developers from BlackBerry, to receive $100 million financing and to come to the Canadian exchange in 2015. About it the Canadian business publication financialpost.com was told by Vlad Martynov, CEO Yota Devices.

In Yota Devices considered transfer to the USA or Canada, and selected the last because of lower costs, tax eases, support of the state and opportunities to employ personnel from the experiencing difficulty of BlackBerry. Besides, Vlad Martynov emigrated to Canada earlier, and Yota Devices has top managers in this country^[13].

Yota Devices opens representation in Dubai

The office was created for the purpose of development strategy for strengthening of a brand of the company in the region, to formation of demand and increase in a share of YotaPhone 2 in the growing market of smartphones in Gulf States. The representative office of Yota Devices in Dubai was headed by Abdul Karim Savan, the vice president of Yota Devices company for Middle Eastern and African regions.

Yota Devices intends was going to continue cooperation with the largest distributors of consumer electronics in the region. Now Yota Devices develops strategic partnership with the chief telecommunication operator of the region of Etisalat.

The office in Dubai began to control sales processes, execution of marketing policy of the company and formation of YotaPhone 2 sales channels in the markets of the countries of the Middle East.

12 thousand smartphones for the first month of sales are sold

For the first month of sales (from December, 2013 to January, 2014), according to official figures the companies, 12 thousand YotaPhone were sold.

2013: The first Russian smartphone

Yota Devices promised to begin sale of "the first Russian smartphone" in November, 2013 — in three years after the first public announcement of this device.

Why development lasted long so, Vedomosti took an interest at the CEO of the company Vladislav Martynov (September, 2013).

— The concept of YotaPhone was shown to the president Dmitry Medvedev in 2010. Why sale was postponed for the whole three years?

— First, the fastest cycle of creation of any device — from the idea before mass production — three years. We create from scratch not only phone, but also all company. Also we manage to make all this slightly less than in three years. Secondly, it is the LTE phone, and then, in 2010, LTE in Russia was not. Invest in creation of LTE phone in the absence of the [working] LTE networks would be wrong. And at last, creation of this phone is a business project which should pay off. We spent several months for creation of a business case that it was not "phone for the sake of phone", and business which will pay for itself.

It is a lot of time and resources left also on convincing suppliers of components for YotaPhone, which for today the best in the area, that this revolutionary device. Only after key suppliers understood and were hooked for the idea, we managed to convince them to work with us.

— Initially basic function of phone was to provide voice communication. And today 80% of our communication with phone are an interaction with content which volume doubles every year. Creating such devices as YotaPhone, we believe that smartphones go to the fact that the screen should be always switched on, and the method of consumption of content should be more convenient and simple^[14].

For the end of 2013 the model of the company is similar to models of the leading brands in the field of consumer electronics — Blackberry, Nokia and Apple. They develop devices, but they have no factories, they are not engaged in production of chipsets, displays and other component parts unlike the vertically integrated Samsung, LG or Sony.

As for the software, specialists in Russia are, and very good including [in the field of software] for mobile devices. Almost all largest software developers for Android phones have R&D-подразделения in Russia. For example, Symphony Teleca has a strong center in Nizhny Novgorod. And according to Google, up to 40% of applications are written to Google Play by the Russian, Ukrainian or Belarusian developers. Yota Devices actively uses this base: the company has the command, plus it works with children from Nizhny Novgorod.

As for "iron", in Russia there are practically no smartphones specialists. Therefore we find talented, young, keen people in Russia and we send them to adopt experience at experienced Finnish engineers. We opened small R&D-офис in Oulu and attached young people from Russia to this command. We calculate that we thus will be able to train the specialists who when developing the next generations of our phones will undertake more and more responsibility for architecture of devices.

2012: 6% of the world market of LTE products in a segment of modems and routers

By the end of 2012 the company implemented more than 3 million communication devices of generation 4G. For 2012 Yota Devices produced 1 million LTE devices thanks to what occupied 6% of the world market of LTE products in a segment of modems and routers.

2011: Yota Devices becomes separate company

Since 2011 Yota Devices exists as separate company. It was selected from structure telecommunication operator "Skartel" (Yota brand). Initially controlling stake of Yota Devices — 64.9% of stocks — belonged to the Telconet fund created by Albert Avdolyan and Sergey Adonyev. 25.1% of stocks of the company belong to Rostec state corporation, another 10% of stocks are at the menedzhement.

2006: In mobile operator Yota the division of Yota Devices is created

Since 2006 Yota Devices exists as division then still of Yota WiMax-operator (Skartel). WiMax devices which then existed in the market did not satisfy Yota neither in terms of convenience to the user, nor in terms of opportunities for the operator. Also it was decided to form a small team which will create WiMax-devices.

Notes