BH Telecom - Q1 2013

SWOT Analysis


  • Fully integrated service provider offering fixed-line, mobile, data and internet services.

  • High levels of digitalisation within network.

  • Number of postpaid subscribers as a percentage of total subscriber base is estimated to be increasing.

  • Awarded 3G licence in Q109; had already begun deploying HSPA network, which should pave way for speedy commercial launch.

  • Introduction of a number of value smartphone handsets gives operator the tools to serve the nascent Bosnian 3G market.

  • Dominant across all of Bosnia's telecoms markets.


  • Continued delay in privatisation affects development of growth strategy.

  • Fixed-line customer base continued to decline in 2010, despite the introduction of a bundled service offering.


  • Appointment of a supervisory board, led by Samir ?auševi?, could lead to better monitoring of company activities.

  • 3G network deployment creates opportunity for data service and advanced value-added services (VAS) offering.

  • Internet user base now over 30% of the population; ADSL will be an important source of future revenue growth.

  • Launch of IPTV service in 2009 should help make BH Telecom's ADSL offerings more attractive relative to cable broadband as it looks to offer bundled services.

  • The likelihood of a major international operator taking a stake in BH Telecom is strong. This could provide much-needed resources.

  • Introduction of mobile broadband services and mobile video services provides potential source of revenue growth for underserved broadband and VAS market.


  • Increased liberalisation of local market likely in the long term, leading to reduced market share and revenue.

  • Introduction of national mobile roaming will bring new source of competition from mobile market rivals.

  • If Deutsche Telekom ups its stake in HT Mostar when privatisation takes place, this will create a powerful competitor.

  • Telekom Slovenije's acquisition of Netkom and Aneks, and the subsequent merger of the two entities, has created serious competition in the fixed-line market.

Company Overview

Established in 2001, BH Telecom is the incumbent operator across much of Bosnia, offering fixed telephony (local, domestic long distance and international long distance) via BH Line, mobile services (via BH Mobile), internet services (via BIHnet) and data transmission (via BIHpak).

PTT Bosnia & Herzegovina was formed in 1992, but the war in the first half of the decade has a significant impact on telecoms infrastructure. In 2001 PTT was split into two bodies, JP BH Pošta (postal services) and JP BH Telecom. The telecoms arm was transformed to a joint-stock company in March 2004.


BH Telecom states that its primary strategic goal is to retain leadership of the market through capacity development, investment in new technologies and human resources. The key emphasis in terms of investment and service delivery is through the creation of convergence services. It plans to promote triple-play services using existing infrastructure it owns across the fixed voice telephony, mobile and broadband markets. In addition to commercial strategy, the company states that it is cooperating with Croatian Telecommunications Mostar and Deloitte to improve management structures and determine the real market value of the company. Another facet of the stated intention of a shift towards openness and modernisation is the improvement in relations with domestic and foreign telecoms operators.

Corporate Structure

Still 90% owned by the state (the remaining 10% is held by a group of small shareholders), the Bosnian government has suggested that it will privatise the operator in several phases. There have been a number of delays to the long overdue privatisation, and the government missed its 2008 target. However, recent developments do look promising. Despite the current global financial crisis, the government moved to assure markets that it intended to proceed with planned privatisations. In October 2008 the Sarajevo Stock Exchange (SASE) held an international conference to discuss the privatisations. The main interested parties in BH Telecom's privatisation look like Mobilkom, a Telekom Austria subsidiary, and Telekom Slovenije, although a number of suitors are likely to come out of the woodwork once details of the privatisation are finalised. The government has put off the privatisation of BH Telecom until after the general elections in October 2010.

In December 2010 Bosnia's Securities Commission warned BH Telecom of a forced shutdown if it did not comply with legal provisions governing the structure of its supervisory board. The operator has elected only six members to its supervisory board, while the company by-law requires seven supervisors to be elected. BH Telecom was directed to hold a meeting of its shareholders by December 23 2010 and elect a supervisory board in line with the regulations. The Securities Commission also stated any decisions taken by the curr ent board could be re-examined.

Financial Performance

BH Telecom reported a 3% y-o-y increase in revenue at the end of H111 (latest data at time of writing). In a brief statement, the company also disclosed that the number of IPTV subscribers increased 15,000 to a total of 35,000 at the end of H111. The number of active mobile subscribers reached 1.35mn at the end of the same period.

In December 2011 BH Telecom said 2011 pre-tax profit fell 2.4% to BAM134.3mn (EUR68.7mn), although revenue rose by 2.5% to BAM615mn. In June 2012 it was reported at the Sarajevo stock exchange that BH Telecom was set to pay annual dividends of BAM110mn from its profit of BAM134mn. Following a BAM130mn network investment in fixed and mobile network infrastructure, the operator saw the number of internet subscribers increase to 125,000, while the number of mobile subscribers increased by 90,000 to 1.7mn. BH Telecom also reported that its Moja TV service won 30,000 new subscribers during 2011.

In December 2010 BH Telecom general manager, Nedzad Residbegovic, said BH Telecom generated BAM603.4mn of revenue, a y-o-y decrease of 0.5%. Further, he stated that costs remained stable at BAM448.3mn. Net profit decreased by 3.1% to BAM155mn, a result affected by a BAM30mn tax imposed by the authorities. BH Telecom has stated that it intends on appealing the BAM30mn charge which it considers to be illegal.

At the end of 2009, BH Telecom reported revenue of BAM606.5mn, down by 3.3% y-o-y (it is noteworthy that this figure is up by 0.5% in US dollar terms; the difference is attributed to fluctuations in foreign exchange rates). Net profit increased to BAM160.1mn, an increase of 12% y-o-y. Revenue growth is being driven by rising demand for mobile and broadband services, as well as rapid uptake of IPTV services. Meanwhile, as a quadruple-play operator, the company is using its bundled package offering to increase its revenue and maintain a loyal customer base.

Operational Developments

Fixed- Line

By the end of 2007, BH Telecom's transmission network was fully digitalised, while 98% of the switching infrastructure had been converted to digital technology. The company is now in the process of upgrading its traditional PSTN with an NGN platform. BH Telecom does not publish fixed-line data on a regular basis. However, at the end of 2007, it claimed operating 568,341 active phone points throughout its network, up by 4.4% from 544,278 a year earlier. Meanwhile, the number of installed access points had risen by 1.6% to 739,020. BH Telecom was serving 1,427 public payphones at the end of 2007, slightly down on the previous year's 1,465. Based on data published by the regulator, it appears BH Telecom had just 502,000 direct fixed lines in service at the end of 2010, giving it a market share of around 50.7%.

In September 2009 BH Telecom signed new contracts amounting to HRK32mn (US$6.5mn) with Croatia-based Ericsson Nikola Tesla. The contracts were related to the extension of a 3G network, as well as to the upgrade of the core network of BH Telecom.

In April 2010 both companies signed another deal, this time a two-year agreement that will see Ericsson provide support services for BH Telecom alongside taking responsibility for the maintenance of the operator's entire network. The deal is believed to be worth about HRK54mn (US$9.93mn).

In August 2010 Ericsson Nikola Tesla signed a new contract worth EUR6.9mn (US$8.8mn) to upgrade BH Telecom's 2G/3G mobile radio and core networks. The upgrades, which will be implemented on a turnkey basis, will enable seven-digit numbers in the operator's mobile network and facilitate improvements in management of post- and prepaid consumer databases.

In July 2011 BH Telecom signed a deal with Ericsson Nikola Tesla, according to which the latter will upgrade and expand BH Telecom's fixed-line network. The contract is understood to be worth around HRK10mn (US$1.93mn) and Ericsson Nikola Tesla will begin work on the upgrades immediately, and will aim to finish the project by the end of 2011.


BH Mobile has introduced a number of services, including a WAP portal-info service, TV programmes for eight TV stations, premium SMS coverage and GPRS/EDGE data transfer. A pilot Wi-Fi service began in 2007, making wireless broadband services available initially from six locations in Sarajevo. The service has now been expanded into a full commercial offering, and, although no mobile broadband data is released by the operator, we believe consumer demand exists for the service, particularly in urban areas.

BH Telecom ended 2010 with an estimated 1.263mn mobile subscribers, reflecting an increase of just 1% y-o-y. However, given the 12.3% y-o-y decline in subscriptions to YE09, this result is viewed positively. We believe the large decline in 2009 was largely due to a massive discounting of inactive SIMs by the operator combined with poor macroeconomic conditions.

In July 2009 BH Telecom continued its relationship with Ericsson Nikola Tesla (ENT) by awarding a US$10.2mn contract for the expansion of the operator's 2G and 3G networks. The contract is also expected to prepare BH Telecom to transfer to an all IP-network upon delivery. This followed December 2007 and November 2008 contracts worth BAM23mn and HRK20mn respectively for projects on BH Telecom's mobile and fixed infrastructure.

In September 2011 BH Telecom signed a deal with Ericsson Nikola Tesla, which will result in the latter upgrading and modernising BH Telecom's wireless infrastructure. The deal has been valued at HRK15mn (US$2.84mn). Work on BH Telecom's network was completed by the end of 2011. BH Telecom states that it has expanded its GSM/EDGE network with 64 new base stations, taking the total to 547. With this expansion the operator's network reached 97.2% population coverage. According to the vendor, the contract will allow for faster and easier network administration, which will also improve service quality.

In September 2012, BH Telecom announced plans to launch HSPA+ services in north and eastern areas of the country. The completion date for the rollout was mid-2013 and is to include 100 new base stations. The equipment vendor for the roll-out is Nokia Siemens Networks.


BH Telecom launched dial-up internet services under the BIHnet brand in 1997. A number of PSTN and ISDN dial-up services are offered, with prices based on a monthly subscription fee, plus per minute usage billing. Broadband ADSL services were launched in mid-2003, with BIHnet currently offering several ADSL services, ranging in price and supporting a wide range of transmission speeds. At the end of 2008, BH Telecom had 50,480 ADSL subscribers, up by 135.6% y-o-y from 21,613 at the end of 2007. This increased to 90,000 at the end of 2009, a 78.3% y-o-y increase.

In addition to ADSL services aimed at business users, BIHnet offers leased line and web hosting services to its corporate customers. Additional business services, including frame relay and X.25 data services, are offered by BH Telecom subsidiary BIHpak.

In November 2008 BH Telecom announced it would launch an IPTV service in early 2009, and in January 2009 it signed a EUR2.47mn contract with Slovenia's Smartcom. The contract includes equipment delivery, installation and triple-play launch. In April 2012 BH Telecom said it has surpassed 50,000 subscribers for its IPTV service, Moja TV. The services, which uses xDSL-based infrastructure, has more than 80 TV channels, numerous radio stations and a large number of video titles on demand.

In September 2011 BH Telecom launched WebTV, a service that allows customers to use their computer, laptop, tablet or smartphone as an extra TV screen. To use the WebTV service, clients need an internet connection to the portal A total of 13 Bosnian TV channels were initially available, but this increased to 24 by March 2012. In 2012, BH Telecom extended the trial period of its WebTV services, which had been due to end on March 31.

BH Telecom signed two fibre licensing agreements with Sokol from Vinkovci (Croatia) and Sat Trakt from Backa Topola (Serbia), offering 15-year leases of fibre-optic infrastructure in September 2012. This offers the company direct connection to a European connectivity hub, boosting its backhaul and overall infrastructure.

Financial Data

  • Annual revenue (2010): BAM603.4mn

  • Annual revenue (2011): BAM615mn

  • Net profit (2010): BAM138mn

  • Net profit (2011): BAM134mn

Operational Data

  • No. of fixed-lines in service (December 2010): 502,000

  • No. of mobile subscribers (December 2010): 1.263mn

  • No. of mobile subscribers (June 2011): 1.35mn

  • Year established: 2001

Company Details

  • BH Telecom

  • Obala Kulina bana 8


    Bosnia & Herzegovina

    Tel: +387 33 232 651

  • +38/Tel: +387 33 232 651



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