MegaFon has taken part in an investment round for Citymobil as rival MTS revealed it had shuttered its six-month old taxi offering with the same company.

The Russian operator’s digital services division MegaLabs has spent $14 million on acquiring 31 percent of the taxi firm from existing shareholders.

In total, Citymobil raised $35 million from new investors as it looks to continue its transformation from a traditional taxi business to an online service similar to Uber.

Explaining the move, Gevork Vermishyan, Executive Director of MegaFon, said: “We believe that this investment is a promising opportunity both financially and strategically.

“The ride-hailing market is developing very rapidly, and is ripe for a new wave of disruption by fast moving players with interesting ideas in technology and marketing.

“As a further step in the implementation of [MegaFon’s] digital strategy, we aim to expand the ecosystem of our digital services and products, and to create opportunities for our subscribers to explore new customer experiences.

“We believe that our subscribers will enjoy the convenience of using convenience of using this popular service, and that this new addition to our product offering will improve loyalty and increase the LTV of our subscribers.

“And at the same time this investment may provide additional ways to monetise our data traffic."

MegaFon’s investment comes six months after rival MTS teamed up with Citymobil.

The two companies signed a revenue-sharing deal that saw MTS take a cut from each ride its subscribers booked with the taxi service.

However, an MTS spokesperson revealed that the company had shuttered the service when asked by European Communications for comment on the news of MegaFon’s investment.

“MTS has recently made a decision to close MTS Taxi project as we don’t see project development prospects in the current format,” the spokesperson said.

Last month, MTS’s VP of Marketing Vyacheslav Nikolaev told European Communications that moving into areas such as this was needed if telcos wanted to grow revenues faster than inflation.

Read more: Stick or twist? Operators split on whether non-telco services strengthen their hand

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