AH YotaPhone 2-17

Yota’s Acquisition Promises to Improve Company Fortunes

October 24, 2015 - Written By Fernando Bonilla

Russian smartphone maker Yota Devices is seeking a larger audience for its products. The company has accepted a buyout from investment company REX Global who will fund Yota in an attempt to spur growth and fuel international interest in the company’s handsets.

Earlier this year, Yota turned to crowd-funding site Indiegogo for investments. The company was promoting its YotaPhone 2, a unique device with two full sized screens. Along with the usual LCD, the YotaPhone 2 boasts a fully functional E-Ink display on its back. Although only one screen can be active at a time, the use of two touch screen enabled displays makes the YotaPhone 2 an engineering marvel in a class of its own. Despite its premium price tag, Yota’s Indiegogo campaign was successful and almost 450 backers spent enough for a new device. However, unexpected issues with Yota’s manufacturer caused significant delays for certain variants of the dual-screened smartphone. Yota decided to scrap its plans for the U.S. after “unforeseen delays including both production and delivery of the North American variant of YotaPhone 2 from our manufacturer.” The company’s new device was well-received, but it remains an international niche device, and never really found a mainstream audience to send Yota up the list in market share.

However, Yota’s new majority shareholder REX Global is looking to change the company’s luck. The Hong Kong-based investment firm now holds 64.9% of Yota stock, and it plans to provide substantial funding for the Russian smartphone maker. REX will provide $50 million to help increase Yota’s fortunes in the short term, but Vladislav Martynov, CEO of Yota Devices, has said REX will keep the money flowing. Yota agreed to the acquisition after realizing it needed “not just a one-time investment, but long-term access to financial resources.”

Yota Devices is still a smaller sized company with only 100 employees, and it operates out of Russia. Martynov has said that Yota could serve a limited niche market with its devices and remain profitable, and that prior to the REX Global buyout the company “was not in a financial crisis.” The remaining 35.1% of shares not owned by REX are held by Rostec investors and Yota Management.

Yota has tapped ZTE to manufacture the next generation YotaPhone, which is expected to launch early next year. Martynov has also said Yota Devices is looking to launch a series of devices aside from the YotaPhone, and that REX’s investment will help them send their brightest ideas out into the international market.