Russia’s second largest mobile phone operator Megafon has applied to the country’s anti-monopoly watchdog to acquire the consumer electronics retailer Euroset.

The detail of the application has been kept secret as the Federal Antimonopoly Service (FAS) has described the deal as ‘complicated in nature’.

If the deal goes ahead, Megafon and its main shareholder USM Advisors, a company owned by Alisher Usmanovr, would share ownership of Euroset with another mobile player Vimplecom which already has a 49% stake in the retailer.

FAS chief Igor Artemyev said the service would carefully analyze the deal. "Such vertical integration is always a serious matter. When vertical companies grow too large, that's bad for competition," he said.

"That is why we will be looking closely at the deal. The answer here is not unequivocal, and could be different. We will be working with the applicants and figuring out the coefficient of economic concentration,” Artemyev explained.

Euroset could be valued at $2.5-$2.7bln, the business daily Kommersant calculates, meaning that the deal could cost Megafon around $1.25-$1.35bln.

At theend oflast year,Euroset commanded 32% of theRussian cellphone market by unit sales and had 4,700stores. Its closest competitor, Svyaznoy, has around 24% of that market.

The main market rivals to Megafon are MTS (Mobile TeleSystems), Vimpelcom, and Rostelecom.