Serbia’s potential integration with the European Union (EU), formalised by the Stabilisation and Association Agreement in 2008, has encouraged the government and regulator to adopted measures aimed at promoting telecoms reform. The Agreement oversees closer integration with the EU and covers commitments to political, economic, trade, or human rights reform. 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. 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.
Serbia had an Internet penetration rate of 72.4% by the end of 2018. DSL accounts for the majority of fixed broadband subscriptions. Serbia’s high mobile penetration, being the result of extensive use of SIM cards, has experienced lower revenue in recent years, placing further pressure on operators to develop business models which encourage consumer use of mobile data services. Network investment has been increased by the incumbent operator and alternative players in recent years.
Prior to Montenegro’s independence, three separate telecommunications markets existed for Serbia, Montenegro and Kosovo (legally part of Serbia) that separately administered the telecoms sector. Regulatory progress includes market liberalisation and partial privatisation of the Serbian fixed-line incumbent. The fixed-line network has been steadily increasing, and broadband penetration has grown dramatically. Mobile penetration is high in the country, as a result of the utilization of multiple SIM cards per user, although revenue has also decreased in recent years. This fact has forced operators to develop new business models which encourage the use of mobile data services and has given new momentum to the substitution of fixed-line for mobile voice calls. The Agency for Electronic Communications (RATEL) was established as an independent organization for the regulation and encouragement of competition on the market of electronic communications in Serbia.
Serbia has a transitional economy largely dominated by market forces, but the state sector remains significant in certain areas. The economy relies on manufacturing and exports, driven largely by foreign investment. In the last years, Serbia has made progress in trade liberalization and enterprise restructuring and privatization, but many large enterprises – including the power utilities, telecommunications company, natural gas company, and others – remain state-owned. Serbia has made some progress towards EU membership, gaining candidate status in March 2012. The government has shown progress implementing economic reforms, such as fiscal consolidation, privatization, and reducing public spending. Serbia is slowly implementing structural economic reforms needed to ensure the country’s long-term prosperity. Major economic challenges ahead include: stagnant household incomes; the need for private sector job creation; structural reforms of state-owned companies; strategic public sector reforms; and the need for new foreign direct investment.
Telekom Srbija is the incumbent operator in Serbia. The Serbian government currently owns 58.11% of the operator’s overall shares, while 20% of shares are owned by the company, 14.95% by the citizens of Serbia and 6.94% by current and former employees. The company is expected to be privatised in the coming months after a long process plagued with different problems and failed bids. Founded in 1997, Telekom Srbija provides fixed and mobile services as well as broadband and multimedia services. Through its subsidiaries, Telekom Srbija also has operations in Bosnia and Herzegovina and Montenegro.