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.