CPU: A positive solution for the largest telecom operator in BiH needs to be found as soon as possible

The financial profit of BH Telecom from 2010 to 2015 has almost halved, announced the Center for Policy and Management (CPU), reports the Patria News Agency.

The CPU report states that “the net profit of the 'golden goose' of Bosnian society, as this company is often called, was 154.11 million KM in 2010, and 80.17 million in 2015. The decline in profit has also led to a decrease in the value of shares, from 17.55 KM in 2011 to 16.81 KM per share in 2016. Specifically, as a consequence of the declining financial profit, the Government of FBiH is receiving less and less revenue from BH Telecom through taxes. In 2013, BH Telecom paid 13.3 million KM to the Government of FBiH through profit tax, and by 2015, that figure was 9.7 million KM.”

On the other hand, the CPU further states, there have been no significant differences in BH Telecom's market share over the years. In the fixed-line telephony market, BH Telecom held 46.63% in the first quarter of 2014, and 41.08% in the first quarter of 2017. In the mobile telephony sector, there was a slight increase in market share, from 44.87% in the first quarter of 2014 to 47.31% in the first quarter of 2017.

“The reason for such a large market share is the oligopoly, which, along with HT Eronet and m:tel, BH Telecom maintains through its infrastructure,” the CPU believes.

“The slight increase in market share of new operators, thanks to the de jure liberalized market, was sufficient to reduce the prices of telecommunications services offered to citizens of BiH. However, the oligopoly has done its part, so BiH still has the most expensive services of this kind in the region. Furthermore, it lags behind in the development of modern technology, so BiH is not on OpenSignal's list of the top 75 countries by 4G mobile network availability, while Croatia is in 43rd, Albania in 46th, and Serbia in 47th place,” the report from this non-governmental organization further states.

All the aforementioned data was presented by the Center for Policy and Management in its analysis “Perspectives of BH Telecom Development”. The analysis concluded that a deeper investigation into the operations and value of the largest telecom operator in BiH could indicate the need for changes in its business.

The CPU points out that the Government of FBiH committed to such research, specifically a “financial and operational valuation,” i.e., due diligence of BH Telecom, when concluding the credit arrangement between Bosnia and Herzegovina and the International Monetary Fund. However, the CPU further adds, although the original deadline for the due diligence analysis was October 2016, nothing has been done to date.

FBiH Prime Minister Fadil Novalić announced that there will be no sale of BH Telecom shares during his term and that the company needs restructuring, not selling.

“What remains clear for now is that a positive solution for the country's largest telecom operator needs to be found as soon as possible. Therefore, the Government of FBiH should, even regardless of the outcome of the credit arrangement with the IMF, start working on a deeper analysis as soon as possible, and make conclusions and recommendations that will help with the eventual restructuring or sale of BH Telecom shares,” the CPU states.