The picturesque Montenegro in town of Buda was the site of important telecommunications negotiations between the governments of Montenegro, Serbia, Bosnia and Herzegovina and Macedonia in September 2014. These meetings produced a historic agreement which called for 50% discount on roaming calls and reduced rates for texts messaging between countries as well. Roaming calls will cost EUR 0.29 as opposed to 0.62 and incoming calls will drop from EUR 0.33 to EUR 0.08. SMS messaging rates will drop from EUR 0.19 to Eur 0.10. Finally, mobile roaming internet prices will drop 89% as well. At a second December 2014 meeting between the representatives of the same Balkan telecom regulators this time Belgrade agreed that the new pricing scheme would go into effect in June 2015.

The BiH government continues to improve its governance of the ICT sector. These efforts have not gone unnoticed. The 2014 United Nation's E-government Survey E-Government Development Index (EGDI) hailed BiH for providing downloadable government forms and its comparatively high level of human capital. The BiH began the process of liberalizing its telecommunications sector in 2006. Additionally, the bundling of services phone, internet and cable television have been present in the market for the past half-decade. Like other European countries, there are no laws in BiH restricting internet usage or providing for censorship. The primary regulatory authority for the sector is the Communications Regulatory Agency (CRA). At present the government’s goals for the sector are enumerated in the 2014-2017 Telecommunications Policy Framework. One of the key goals of the network is the issuance of LTE licenses by the end of 2015. Toward that end the relevant channels have already been cleared.

At present, the telecom market is dominated by three companies Serbia's Telekom Srbija, Croatia's T-Hrvatski Telekom, and Bosnia’s on BH Telecom.

At present, the telecom market is dominated by three companies Serbia's Telekom Srbija, Croatia's T-Hrvatski Telekom, and Bosnia’s on BH Telecom. Two newer entrants’ Izi Mobil and Blicnet together have less than one percent of the nation’s market share. According to data published by RAK in December 2014, BH Telecom held 46.54% of market share. A percentage that increased from 44.66 percent on a year on year basis. The next largest provider in the market is Telekom Srpsket (40.38%), HT Eronet (12.77%), Izi Mobil with (0.27%) and Blicnet (0.04%).BH Telecom is the incumbent telecom company and is state owned. It continues to enjoy strong recognition across Bosnia, as social media statistics suggest. The company was ranked the 29th most popular brand in Bosnia according to Social Bakers, a social media consultancy. The company’s economic performance tells a similar story. In December 2014, the company projected its annual profit had reach 113.4M marka ($70.93M, the company projected that in 2014 its revenues reach 580M marka).

Rising Opportunities

At a height of 2,386 meters Mt. Magli? along the Montenegrin border is the highest peak in the country. As imposing as the mountain is it is one of many peaks which rise above 2,000 meters in the mountainous country. Historically, Bosnia’s mountains have served as an impediment to telecom technologies, the continued advancement of emerging wireless and broadband technologies means new technologies and services are available to reach customers in country’s rural and mountainous areas. With the customer base in the country expanding average rates per user (ARPU) in monthly term have dropped in recent years. Averaging 11.7 BAM in 2013 a decrease from 11.9 BAM in 2012.

However, the total numbers of mobile phone subscribers continues to grow. Mobile subscriptions increased 4.1% in 2014 measured on a year on year basis. After single growth in the 2012 and 2013. As of 2014 the mobile phone penetration rate of 87.85% according to Business Monitor International. The government telecom regulator figures penetration had reach 90% by the start of the fourth quarter of 2014 aided by 2.91% increase in penetration during the third quarter of 2014. Given these figures, the BiH will likely reach 100% mobile phone saturation at some point before the close of the decade.

Currently, smartphones penetration stands at 15.5% of all subscribers and overall 47.5% of users are making use of 3G services. The unveiling of 4G LTE service could also boast smartphone uptake which remains low.

New speeds are also making new services available. In the fall of 2014, Bosnia and Herzegovina's first over the top (OTT) television system began operations. The service, called Tivi, can be viewed free of charge on smartphones, tablets and Smart TVs. The service is limited to devices with either Apple or Android operating systems. Tivi offers content that is exclusively local content to anyone with a Facebook, Twitter or email. Conversely, IPTV has been available to BiH Telecom users since 2009. In July 2015 will switch from analog television to DTT a plan first launched by the government in 2009. In March 2014, Odasiljaci i Veze, a Croatian WiMax and DDT operator signed a €3.4 million deal with the BiH’s Ministry of Transport and Communications for the first phase of the Digital Terrestrial Television (DTT).

Smartphones penetration stands at 15.5% of all subscribers and overall 47.5% of users are making use of 3G services.

Another factor driving growth in the market is the relatively late introduction of mobile number portability which was first introduced into the BiH in 2013. The first quarter of 2014 saw a 34.78% increase in total ported mobile numbers as 8,778 numbers switched provider during that period.

The Fix is In

In keeping with global trends fixed line telephony continues to decline albeit slowly, the sector contracted by 1.4% in the first quarter of 2014 to 876,687. Yet, alternatively broadband subscriptions rose by 11.4% in 2013 to 670,000. Business Monitor International projects that broadband penetration in BiH will reach 20% by the end of 2015. In the fixed line sector the largest player remains BH Telecom with 412,463 fixed line internet users (both POTS and ISDN) a figure equal to a market share of 47%. During 2014, the broadband sector of the market experienced double digit growth. According to Business Monitory International the broadband market grew by 11.4% year-on-year in 2013 as more mobile users use data and the rise of cable broadband connections. The growth in broadband services has been boasted by the liberaliation of fixed line telephone services.

Fixed line telephony has been liberalized since January 1, 2006 for both domestic and international calls and the CRA continues to introduce new reforms. New CRA mandated connection fees became effective on January 1, 2015. While the highest monthly fee of 20 BAM remains unchanged, other price ceilings were set for individual monthly subscription (13.65 BAM), for monthly business customers (16.40 BAM) and a more affordable package for social users (4.20 BAM). The CRA further mandated that a 60 minutes free on-net bonus also to be included in all packages. As of December 2014 the nation’s three largest telecom operators had submitted monthly prices in line with these price ceilings. While HT Mostar has announced that new monthly subscription of 13.00 BH Telecom (BAM 12.82) and Telekom Srpske 12.95 BAM opted for slightly more competitive rates.

IIG Comment

With five telecom provider the BiH market is admittedly a crowded field. The introduction of mobile number portability has increased competition and the overall health of the sector. For broad line and fixed services the bundling of cable television, broadband internet and telephone services is increasingly the preferred option for consumers and also providers in the Bosnian market. Privatization or the issuing of new mobile licenses particularly if linked to 4G/LTE technologies could help encourage more international players to enter the market. In the past Deutsche Telekom, Telekom Slovenije and Telekom Austria and Turkcell have expressed interested in the market.