Serbia’s telecom market in 2011 was one of the few in Europe to show significant revenue growth. Although investment in the sector has fallen steadily since the GFC erupted in 2008, and the economy as a whole is being hit by its poorly performing key trading partners Italy and Greece, there is much work to be done and investment will need to be a priority in coming years.
Significant developments in Serbia’s telecom sector in recent months will have a bearing on telcos’ strategies for the rest of the year and into 2013. Firstly, the introduction on mobile number portability in mid-2011 has encouraged MNOs to step up their efforts to retain customers. Secondly, internet connectivity and computer use remain relatively low, particularly in rural areas, and considerable potential lies in upgrading networks to attract customers to IP-delivered content.
MNOs are at the forefront in these developments: mobile penetration is among the highest in Europe, and while upgraded HSPA+ networks are now available nationally operators are looking to convert LTE trials into commercial launches. Two of the MNOs can benefit from the experience and launches of their parent companies Telenor and Telekom Austria.
The cancelled privatisation of Telekom Serbia (when earlier this year Telekom Austria’s revised offer was rebuffed as being too low) may yet be revived: the government has been under significant pressure to balance the country’s books under the terms of an international bailout plan, and the sale of Telekom Serbia would have helped meet the requirements. These financial pressures remain, and having recently bought out the cash-strapped OTE of its 20% holding in the incumbent the government now has a freer hand to sell the company.
Telecom sector regulatory reform has also continued apace, as Serbia’s application to join the EU plods through the required processes. However, some hiccoughs may be expected in coming months following recent elections: the replacement of the pro-EU President Boris Tadic in favour of the Progressive party’s Tomislav Nikolic may rattle some EU mandarins. Though committed to EU membership, the Progressive party appears less likely to make the concessions on Kosovo which the EU considers necessary for continuing negotiations, and this will have a knock-on effect in a range of sectors including telecoms.
For further analysis on Serbia’s telecom market, see the update report Serbia – Telecoms, IP Networks, Digital Media and Forecasts.
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