BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications sector of Serbia

We have made comprehensive revisions to forecasts for Serbia and Montenegro, although these have not had any impact on the country’s ranking in our telecoms regional business environment overview. Serbia and Montenegro continue to languish in 15th place, although their composite score is only half a point behind Romania and considerably ahead of bottom-ranked Bosnia-Herzegovina. The countries will likely improve their combined score in 2007 due to increased market maturity levels, although this could bring about a reduction to their growth potential score. It is doubtful whether this would be enough to move them further up the ranking as other countries in the region have witnessed similar or higher levels of growth in 2006. However, improvements to the scores on regulation and competition could come when the third mobile operator enters the Serbian market, and if the Serbian government makes any progress in reducing its 80% stake in incumbent operator Telekom Serbia.

Subscriber data released by Telenor Serbia, the new owner of second-ranked Mobi 63, indicates that the Serbian mobile market is not as strong as anticipated by BMI, although we expect at least some of the shortfall is due to discounting of inactive subscribers. While this has compelled us to downgrade forecasts for YE06, we expect the market will have picked up in Q4 due to Telenor’s launch of new prepaid packages and an anticipated strong performance from both Montenegro’s mobile operators. These factors, combined with the planned May 2007 launch by newly-licensed Mobilkom Austria, have led us to revise forecasts for future growth upwards, and we now expect mobile penetration will exceed 80% in H207 and near 100% by 2010.

We have also revised forecasts for broadband growth upwards, in light of data showing cable modem take-up has been far greater than we realised, accounting for around 62% of the broadband subscriber base. Although still below 1% in 2005, we now forecast broadband penetration will climb to 3.3% by 2010. We have maintained forecasts for the internet market despite a small adjustment to our estimate for YE05 showing penetration was slightly higher than was previously thought, at 14.1%. In the fixed-line market, Serbia and Montenegro both continue to record increasing subscriber numbers, in contrast with much of the rest of Europe. The inclusion of ISDN channels in Telekom Serbia’s fixed-line user base leads us to expect fixed-line penetration will rise to 28.7% by YE06. We expect further – but slower – growth in 2007 before the market begins to stagnate in 2008 and decline from 2009.

Competitive Landscape for Europe Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of European Telecommunications Sources

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BMI's European Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include:.