Telekom Srbija at the end of acquisition cycle; accused of overpaying for cablecos

19 Aug 2020

Serbian state-owned telecom group Telekom Srbija is at the end of its current cycle of acquisitions, Kurir writes, citing DG Predrag Culibrk. Discussing the company’s 2019 results, the official noted that the Telekom Srbija’s strategy in recent years has been to expand its user base in the internet and multimedia segments through a combination of organic growth as well as acquisitions in its domestic market and in Bosnia-Herzegovina. Alongside these expansion efforts, the company has also invested in its infrastructure development programmes, including a now-completed multi-year deal signed with Chinese vendor Huawei in 2016 for the installation of fibre-optic cables. According to the official, the telco has installed over 5,000km of fibre and has connected 650,000 households to its fibre-to-the-home (FTTH) network. The executive went on to note that the company has already begun to reap the rewards of these efforts, with the group recording a 6% year-on-year increase in its customer base to 10.4 million by end-2019, a 7% increase in annual revenue to RSD133.7 billion (USD1.35 billion) and a 25% increase in operating profit to RSD48.4 billion.

In a related development, meanwhile, Serbian opposition MP Miroslav Aleksic has filed a criminal complaint with the Prosecutor’s Office for Organised Crime against several individuals responsible for Telekom Srbija’s acquisitions of several Serbian cablecos, claiming that they vastly overpaid for the companies. Serbian news portal Beta cites the politician as saying that the company paid over ten times their market value for the operators, noting that the state-owned firm paid around EUR195 million (USD232 million) for Kopernikus when the company’s estimated value was just EUR10 million. ‘On the proposal of the Ministry of Economy, the Supervisory Board of Telecom made a decision to buy a company of dubious creditworthiness for half a billion of state money, with large debts and a continuous drop in income,’ Mr Aleksic added. The accusations spilled into another controversy surrounding Telekom Srbija and the Belgrade government, with Mr Aleksic pointing out that Kopernikus’ erstwhile owner went on to buy Serbian TV stations Prva and B92 for EUR180 million. The Serbian government and Telekom Srbija are currently embroiled in a row over the state’s control over news coverage, with the telco involved in an acrimonious feud with the nation’s second-largest ISP Serbia Broadband (SBB) over – amongst other things – the rights to broadcast channels owned by the latter.

Bosnia-Herzegovina, Serbia, SBB, Supernova (incl. Kopernikus), Telekom Srbija (MTS), Telekom Srpske (m:tel)