Serbia Communication Profile 2012

Telecoms, Mobile, Broadband
Since the fall of the Milosevic regime in 2000 Serbia has focused on rebuilding its economy and its relations with Europe. Real GDP levels increased almost six fold during 2000-2008, elevating the country to middle income status as defined by the World Bank.

Despite the fact that its financial system was not exposed to the financial instruments that are at the heart of the recent global financial turmoil, Serbia's economy has suffered due to its reliance on external funding to support its external trade deficit, resulting in IMF assistance totalling $2.9 billion as May 2009.

Recognising the potential socio-economic advantages of integration with the European Union, Serbia signed a Stabilisation and Association Agreement (SAA) with the EU in April 2008, a concrete step towards joining the EU.

The SAA 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. 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 (IPA). Under the IPA, Serbia is expected to receive $194.8 million during 2009, $198.7 million during 2010, $202.7 million during 2011 and $206.8 million during 2012.

EU reforms have found their way into Serbia's telecom industry, which has adopted the EU's regulatory framework for communications, which promotes competition as the most efficient way to offer communications products and services while ensuring universal access. Total telecom market revenue is expanding although growth is not uniform, with the Internet and mobile markets recording the strongest growth, a trend that is set to continue due to increasing broadband and mobile take up and usage.

A considerable amount of network investment has been undertaken by incumbent and alternative operators to offer broadband services, which are available via ADSL, cable and wireless. Internet usage in Serbia is growing due to rising income levels and improved affordability, with broadband representing an increasing proportion of Internet subscriptions as subscribers upgrade from dial-up services, a trend that will continue in 2009 due to significant number of users still on dial-up services.

Serbia boasts an extensive broadcasting market, with programming available via radio and TV programme distribution via cable, wireless cable (MMDS), terrestrial FTA and broadband TV (IPTV). Digital TV programming is available and triple play offerings have been introduced. Serbia's mobile market boasts penetration levels indicative of saturation although multiple SIM card ownership is high.

With a new mobile network operator resulting in increased competition, the established mobile network operators have focused on lifting ARPU levels by encouraging prepaid subscribers to migrate to postpaid plans as well as promoting increased spending on mobile broadband/content services, which are supported by widely accessible 3G/HSDPA networks. Key highlights: Data from the regulator showed that broadband subscriptions surpassed those of dial-up for the first time in 2008. Future growth will be centred on dial-up users upgrading to broadband. Behind the rise in broadband has been the incumbent, with ADSL connections doubling in 2008 alone.

A similar rate of growth can be expected in 2009 given the significant number of remaining dial up users and strong competition from other platforms, notably cable, with a major cable operator expanding its broadband offering to include 100Mb/s fibre-based offerings.

A healthy pay TV market is evident as indicated by growing subscriber levels and cable TV market revenue. Serbia's dominant cable TV operator accounts for over half of the market although its position may be threatened by the launch of IPTV services by the telecoms incumbent, given the reach of the latter's network and rapidly growing broadband subscriber base. DTTV developments are progressing after the MPEG-4 and DVB-T2 standards were chosen in early 2009 for Serbia's migration to digital terrestrial TV.

Analogue switch off is scheduled for April 2012 rather than the 2015 date suggested by the ITU to synchronise Serbia with neighbouring countries. Competition is shaking up a previously cosy duopoly in the mobile market, leading to increased take up and penetration levels indicative of maturing market. Future revenue growth is expected to come from increasing ARPU levels by encouraging prepaid users to take up postpaid offers, increasingly segmented offerings and encouraging take up of mobile broadband services based on expanding WCDMA/HSDPA networks.