Executive summary
Following an economically and politically turbulent period during the 1990s, Serbia started the first decade of the new millennium with strong GDP growth until the economic crisis of 2008 restricted both growth and investment. Nevertheless, growth had recovered by 2010, and has continued in 2011 though a further recession is likely to 2013 in response to the general economic malaise within Europe. Economic difficulties prompted the government to adopt a range of fiscal measures to raise revenue, including the imposition of a 10% tax on telecom services. The tax was revoked in early 2011, though it had a significant effect on revenue for telcos. Similarly, the economic difficulties, compounded by a range of regulatory measures, has seen a steady fall in telecom market revenue suffered due to the recent adverse economic conditions although not all markets were affected equally.
Serbia’s integration with the European Union (EU), formalised by the Stabilisation and Association Agreement in 2008, has meant that the government and regulator have adopted measures aimed at promoting telecoms reform to prepare the country for the market-led competitive area that characterises Europe’s telecom sector. The Agreement oversees closer integration with the EU and covers commitments to political, economic, trade, or human rights reform in a country in exchange for tariff-free access to some or all EU markets, financial or technical assistance. In addition, as part of the EU pre-accession process, Serbia has received financial aid to build public institutions and improve cross-border co-operation under EU funding mechanism Instrument for Pre-Accession Assistance. Under the funding, Serbia received about €400 million between 2010 and 2011, and is expected to receive a further €207 million in 2012.
EU reforms have been fundamental to Serbia’s telecom industry. The EU’s regulatory framework for communications (the NRF), adopted in mid-2010, promotes competition as the most efficient way to offer communications products and services while ensuring universal access. Further reforms are ongoing as Croatia, as a candidate country, adopts the measures of the new NRF brought in during 2011.
A considerable amount of network investment has been undertaken by incumbent and alternative operators to offer broadband services, which is available via DSL, fibre, cable and wireless. Internet usage in Serbia is growing due to rising income levels and improved affordability, with broadband representing the majority of internet connections.
Serbia boasts an extensive broadcasting market, with programming available via radio and TV programme distribution via cable, wireless cable, terrestrial free-to-air and broadband TV. An analogue switch off (ASO) plan has been adopted and digital TV is widely available.
Serbia’s high mobile penetration, the result of multiple SIM card use, has seen lower revenue in recent years, placing further pressure on operators to develop business models which encourage consumer use of mobile data services as also the continued substitution of fixed-line for mobile voice calls.
Serbia - Key telecom parameters – 2010 – 2012
Sector
| 2010
| 2012 (e)
|
|---|
Subscribers to telecom services:
|
|---|
Fixed-line telephony (thousand)
| 3,100
| 3,125
|
Mobile phone (million)
| 9.92
| 9.99
|
Broadband (thousand)
| 995
| 1,530
|
Penetration rate of telecoms services:
|
|---|
Fixed-line
| 41%
| 41%
|
Broadband
| 13%
| 17%
|
Mobile penetration
| 132%
| 133%
|
(Source: BuddeComm)
Market highlights:
- The 2010 Telecommunications Law transposed the EU’s 2003 regulatory framework for communications into national law, promising improved market prospects for competitors. Further amendments were required to keep in line with the revised NRF which came into force in mid-2011.
- All sectors of the communications market with the exception of mobile recorded annual growth despite adverse economic conditions, highlighting the resiliency of communications spending.
- DSL still accounts for the majority of fixed broadband subscriptions. Fibre developments remain nascent, and so the onus is on the regulator to develop an appropriate access regime sympathetic to investment.
- Growing usage of e-commerce, e-government and e-education services by both individuals and businesses characterises the nascent information society in Serbia. Future growth will depend significantly on user friendly and useful applications as well as fast broadband connectivity.
- The introduction of mobile number portability has gone some way to promoting competition in the mobile market. Although less than 2% of numbers are now ported per month, the number has grown quickly since the regulator ironed out teething problems among operators in late 2010.
- Future mobile market growth primarily depends on the continuing substitution of fixed-line for mobile voice calls, as also on the promotion of mobile data. To this end, MNOs must further develop attractive offers for consumers, and invest in network upgraded capable of managing the anticipated growth in data traffic.
- Telekom Serbia’s trial of LTE in mid-2011 anticipates the regulator’s implementation of a suitable regulatory framework, and will go far to promoting the nascent market in coming years.
Henry Lancaster
November 2011
Data in this report is the latest available at the time of preparation and may not be for the current year.
This report provides a comprehensive overview of trends and developments in Serbia’s telecommunications market. The report analyses the mobile, internet, broadband, digital TV and converging media sectors. Subjects include:
- Market and industry analyses, trends and developments;
- Facts, figures and statistics;
- Industry and regulatory issues;
- Infrastructure;
- Major players, revenues, subscribers, ARPU, MoU;
- Internet, VoIP, IPTV;
- Mobile voice and data markets;
- Broadband (FttH, DSL, cable TV, wireless);
- Convergence and digital media;
- 3G subscriber and mobile ARPU forecasts to 2015;
- Broadband market forecasts for selective years to 2020.
