Page 40 - bneMag Dec22

40 I Cover story bne December 2022
presidential administration. While
the other tech companies, including Yandex, have been scaling back their investment programmes since the war started, VK has gone on a buying spree, snapping up distressed bargains like Yandex:News, leading some to specu- late that the Kremlin is using VK as a vehicle to increase its control over the Internet, something that the Kremlin has always ignored until recently, and leaving online news as a major hole in its ability to control the information flow for regular Russians.
The Kudrin connection
Many commentators have remarked on the possible significance of Kudrin’s appearance in the Yandex saga. The day before Yandex announced it would possibly sell its Russian assets, Kudrin met with Putin and approved the scheme for dividing Yandex’s assets into Russian and international parts, two sources familiar with the talks told the Russian news outlet The Bell.
While most of the details of what the new Russian Yandex will look like remain vague, according to The Bell the domestic part will be headed by
a new structure headed by Kudrin and those members of the original Yandex management team that chose not to leave the country. Shares in
the Russian Yandex will be offered to leading local businessmen, and
oligarch Vladimir Potanin who owns NorNickel has been named as one possible investor, according to The Bell. The new Russian Yandex will also have some international projects, including an African version of its leading Yandex:Taxi service.
The Bell reports that Kudrin, who quit his job as head of the Accounts Chamber at the end of November in preparation to take up his new role at Yandex, helped Volozh to agree on a plan to cut Yandex’s
nesses have seen a bump in demand from the war in Ukraine.
Despite the fallout from the military invasion of Ukraine, both Yandex and VK have seen their revenues boosted this year and Yandex’s profits tripled. Yandex maintained a high top line from its anchor Search & Portals segment
in 3Q22. VK was supported by its social network and media assets. “Yandex and VK showed continuation of very strong ad revenue trends in 3Q22. Yandex’s
“In gratitude for his services, Kudrin will receive a position at Yandex and about 5% of the company's shares”
business up with the Kremlin. On the night of November 25, he had a final meeting with the president to sort things out. In gratitude for his services, Kudrin will receive a position at Yandex and about 5% of the company's shares, worth several tens of millions of dollars.
Business is good
Despite the geopolitical machinations, business is flourishing for the Russian part of Yandex’s business. Earlier this month, Yandex reported third-quarter earnings of $2.02 per share on $2.32bn in revenue as all of Russia’s online busi-
Search & Portal revenue (a key source of its ad revenue; 46% of Yandex’s top line in 3Q22) grew 45% year on year, even accelerating from 29% in 2Q22 and
24% in 1Q22,” BCS GM analysts said in
a note last week. “VK’s ad revenue (60% top line after the announced sale and deconsolidation of the gaming busi- ness) was up 29% excluding the gaming business versus a total growth of 28% in 2Q22 and 6% in 1Q22,” BCS GM wrote.
“We note that such a positive impact is a one-off, and, assuming status-quo in competition, the companies’ ad revenue should return to a more normalised growth pattern in 2Q23-3Q23 (as compari- son base evens out), back to tracking GDP performance,” BCS GM believes.
Russia’s largest e-commerce operator Wildberries also posted 95% year- on-year growth in gross merchandise volume (GMV) in 3Q22 and 9M22, with the GMV recording RUB420bn ($7bn) in the reporting quarter.
Major Russian e-commerce marketplaces streamlined their supplies of the so-called “parallel imports” for goods that are no longer officially distributed in Russia. As a result, Russians have turned to e-commerce sites to buy now hard-to-find foreign brands, and e-commerce sales volumes expanded 1.5-fold y/y in 1H22 to RUB2.2 trillion ($36.4bn).
Alexei Kudrin, former Chairman of the Accounts Chamber of the Russian Federation.
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