One of Serbia’s most profitable medium-sized businesses, Telekomunikacija, is seeking a strategic partner.

Development of telecommunications has been slow, but there are signs of change as private mobile operators set up to challenge state-owned Telecom Serbia

SERBIA has a lot of catching up to do in its telecommunications sector, where there are 36 telephone lines per 100 people—well below the European average. Many people share double-user lines, and only 60 percent of the networks have been digitalized.

State-owned Telecom Serbia lost its eight-year monopoly in June 2005, and the National Telecommunications Agency has been established as an independent regulator, although the government’s Telecommunications Development Strategy takes a cautious approach to change up to 2010, opting for “more methodical and gradual” liberalization to avoid damaging Telecom Serbia as the market opens up.

Nevertheless, things are set to become more competitive in mobile telephony with the recent acquisition of Serbia’s third mobile telephony license by Austrian mobile operator Mobilkom. The new arrival will be up against Telecom Serbia’s mobile arm, MTS, which currently has a market share of around 60 percent, and launched its 3G WCDMA network last December. The other competitor, Telenor Serbia, which was acquired by Norwegian telco Telenor last year, made its 3G network services commercially available in March.

ZORAN NJEGOVANOVIC General Director of Telekomunikacija

A notable example of a success story in Serbia’s telecom sector is Telekomunikacija, a company that constructs and maintains telecommunication networks. Established in 1987, the firm has been achieving growth levels that have made it one of Serbia’s most profitable medium-sized businesses.
General Director Zoran Njegovanovic believes Telekomunikacija – which also builds gas distribution networks – still has plenty of potential for development, but needs help to exploit it. “It is clear we cannot achieve a bigger profit rate without significant investment, and we would like to find a strategic partner that has the financial means, and if possible the knowledge and technology, to enable us to develop further,” he says.

“With our knowledge, experience and skilled labor, we could become regional leaders in constructing telecommunication and gas infrastructure.”

Mr. Njegovanovic says there are plenty of opportunities for developing business in the telecommunication sector, and urges investors to enter the market. “Investing in fixed telephony, not only in mobile telephony, is a good platform for future investments. Cable TV is still underdeveloped, and internet use is a growing trend. Investors should take their place in the market as soon as possible, because now is the time to do it.”