BMI View: Serbian market is not as developed as many of its Eastern European peers despite its high level of saturation. Serbia's mobile penetration peaked in 2008 at 142.9% and has been in decline since. BMI does not believe that the market has much scope in terms of new customers, instead value-added services, such as access to high speed mobile data can raise the average revenue per user for mobile operators. This is already evident by an increasing ARPU in 2014. BMI has identified mobile data as a potential area for growth, but the lack of legal framework has meant that Serbia is still taking its first steps in developing 4G. The introduction of fixed number porting option in 2014 will increase competition in the fixed-line segment.
The mobile market returned to growth in 2013, following discounting inactive users in 2012. BMI estimates Serbia added 37,370 new customers in 2013 - an increase of 1.4% y-o-y.
The mobile broadband market, however, grew rapidly in 2013, up by 15.1% y-o-y to reach 4.218mn 3G subscriptions.
Vip Mobile continued to make the most gains in terms of market share by subscriptions, adding 158,000 net users in 2013.
Pay-TV users grew by 7.6% to reach 1.552mn at end-2013, while penetration rate increased to 21.62% up from 19.92% in 2013.
Key Trends And Developments
The Serbian government ratified an amendment to the Serbian telecoms law in July 2014, which places great emphasis on network neutrality. BMI believes that this is greatly welcome by Telenor Serbia that has been calling for the amendments to be made to the telecoms law. The new law amendment will also regulate network neutrality, which Telenor has been calling for. BMI believes this to be the first step for possible auction for 900/1800/2100 MHz bands which in turn would allow for 4G networks to be developed.
In May 2013, it was announced that, barring further delays, fixed telephony users in Serbia will be able to change operators and keep their existing number from April 2014. This is already possible for mobile services. Following a decision by the Agency for Electronic Communications (Ratel), fixed telephony operators in Serbia should start preparations for number portability from October, which will enable the liberalisation of the local market. The previous deadline for number portability, December 2012, was postponed due to claims from incumbent operator Telekom Srbija it was not ready because of 'complicated administrative and technical issues.' Serbian cable operator SBB expects to get the most users among the 3 million current fixed telephony customers of Telekom Srbija. Following delays, fixed-number portability was introduced to the market on 1 April 2014. Following the announcement, Telenor introduced a service offering integration of fixed and mobile networks for its business customers.
Telekom Srbija was due to go on sale in September 2013, with privatisation plans expected to be published in late June 2013. The Serbian government is considering its options after the company improved its financial performance. The state could divest as much as 100% of its holding in the company, raising about EUR2bn (USD2.67bn) in the process. Negotiations with potential bidders have reportedly already gotten under way. However, the Serbian government is struggling to determine the valuation of the company due to conflicting views. The company is expected to sell for EUR2bn (USD2.64bn) as the government aims to reduce its rising financial deficit. The Serbian government expects the privatisation programme to be resolved by June 2014. However, as of October 2014 no further details of the sale have emerged and some sources suggest the sale will be postponed as far as 2017.