Serbia - Penetration Rises to 88%

Serbia has ended March 2007 with almost 7.2m mobile customers and a penetration rate of 88% - an increase of 1.8m customers and 22pp of penetration in the year. Market leader Telekom Srbija accounted for 71% of these net additions, with its only competitor Mobtel - now owned by Telenor - picking up the 29% remainder. At the end of 2004 the two Serbian operators had almost identically sized customer bases, but since then steady growth from Telekom Srbija has contrasted with uncertain progress from Mobtel.

Things certainly now look more stable under the new Norwegian owners, but the company still lost another 0.3pp of market share in Q1 2007, leaving it with 36.8% of the total market at the end of the quarter. Net additions at the market level in Q1 2007 were in excess of 0.5m for the third time in the last four quarters, down 7% on 567k in Q4 2006 at 528k.

The two incumbents are to get a new competitor in the form of Telekom Austria later in 2007, after the company's Mobilkom subsidiary won the third mobile licence last year. The entry of Telekom Austria, following that of Telenor, should precipitate a greater level of competition in the Balkans' largest market, although penetration will be through the 100% barrier by the time the duopoly is broken.

We suspect that there is already significant degree of both inactivity and dual-SIM ownership in the market, which is 83% prepaid, and the launch of service by Mobilkom is likely to inflate the national customer base and penetration rate still further. Meanwhile Telekom Srbija has furthered its own international ambitions by winning the third licence in Montenegro, a market in which Telenor also operates, along with T-Mobile.

Of the states which made up the former Yugoslavia, all now have a third operator or licensee, with the exception of Kosovo which has yet to see a first competitor to PTK, the incumbent."

Posted to the site on 13th June 2007