The Balkan newcomer has Europe on the agenda.



Podgorica, August 3rd 2003

Q1. Could you tell us how the evolution of telecommunication sector went after the adoption of the new law and the establishment of the new regulatory body?

A1. We have already had a regulatory body since 2001, for more than three years, but let me say that we are very satisfied, even though we are approaching the end of our monopoly. January 1st 2004 will be the first day of the liberalized market in Montenegro. Of course, we are not expecting for an immediate competition, but we are ready for it. I believe this because for the last 2 years we have strongly improved our infrastructure, and this improvement is growing constantly. However, we are not only focused on infrastructure. First, we wanted to prepare ourselves for the new competition, and second, to be a more customer-oriented company, and in this regard we made three separate projects during the last two years. The first one was the implementation of the new management information system, SAP. By the end of this year the implementation of the financial module will be finalized, and by next year we will use the best management information software. Of course, there will be many changes in the organizational structure according to the rules of implementation within this sector. These days we will start the implementation of our second project, a new data network. We signed a contract with CISCO-systems, something for which I am particularly proud of, because there is no other small telecom company, like we are, that has a partnership with CISCO-systems. The third project is the creation of a new billing system. We will offer our customers' new packages and new products by the end of this year. New packages include the possibility for the customers to choose different ways of using voice in the fixed net, as they have it in mobile already. All these projects during the last 2 years are a proof that we have done a lot of things to change the image of the company and to be more customer-oriented. We already had a very strong ISDN campaign, using all media, which allowed us to sell more ISDN-connections in the few months of the campaign, than during the last 2 years. In the mobile sector, we took more than 45% of the market share. We are very proud, because we started four years after the other competitor. In fact, we are one of the best second mobile operators in Europe.

Q2. The traffic in fixed phone calls increased by 7 % during the last year. What does this percentage mean in terms of number of customers, and do you believe that you will maintain, or even increase this figure in spite of the new competition?

A2. In fixed net, I think that a 7% increase is natural, because, as I told you, we did a lot of improvements concerning infrastructure. Now, we provide new telephone lines in many new areas, especially in suburban areas, and the increase in phone calls is a direct result of this activity. We believe that we will have a 30% market penetration for the fixed net, and our target is to have around 200,000 subscribers. However, we still have to put some kind of connection in, for example, high mountain villages. In urban areas we use the new GSM technology.

Q3. Financially, you had a total income of EUR 70 million euros in 2002, and a net profit of EUR 4.1 million. What are your financial expectations for this year?

A3. Our expectation is to not have less than 2002, because it was our most successful year so far concerning the fixed net. Regarding profit, we expect to have a slight increase, of approximately EUR 5 million, although it is very hard to make concrete estimations. In 2002 we started using international accounting standards for the first time, but it was only partly, and this year we will use these standards completely. Revenue figures are done with the old standards, and talking about other figures like profit, amortization or taxation, is a little bit different. This year we'll be able to show an accurate situation of the company to potential investors, because it will be the year of full implementation of international standards.

Q4. You mentioned 2 years ago that you were not satisfied with Telekom's marketing strategies. Do you believe that there has been an improvement in this area? Are you satisfied with the company's marketing?

A4. Although I am still not fully satisfied today, I must say that there has been a great improvement in these last two years. For example, the ISDN campaign was very good. In addition, we changed the company image. We have a new logo with more effective colors.

Q5. The Minister if Economy, Darko Uskokovic, said that "Telekom is one of the best telecommunication companies in South-Eastern Europe", and you agreed that the company "is in the family of Western European telecommunication". Why do you think that the tender launched in 2001 was unsuccessful having such high standards?

A5. The problem was the entire situation, not just the company. Even now the telecom sector is not in such a good position in Europe. All the main companies are having problems and they decided not to invest in the near future. Furthermore, two years ago we lacked the political stability, something that we absolutely have today. We now have a stable Government, and this situation will not change for at least three years, a period of time that is long enough for reaching the full stabilization of the company. 2004 will be the year of the privatization of Telekom Crne Gore. That is the decision of both - the Government and the Privatization Council.

Q6. Don't you think that 2004 is too soon for achieving privatization?

A6. I think that we have to try. They decided to open the tender, to try within the mobile sector. We will see, and I hope we will be successful, because we are not so big and do not need such huge investments by the main players in the telecom market.

Q7. Why should foreign investors be interested in your company?

A7. You have already seen that Jugopetrol is privatized. I think that it has been the best privatization compared to all companies in the region. Montenegro is really an interesting country for foreign investors. We are a tourism destination, and that is always interesting for investors because the season effects are very important. We are small, but our position is not bad- we have the coast, we are bordering with Croatia, Bosnia, Serbia, Kosovo and Albania, and we also have Italy just across, so I think that we are an interesting country. As far as Telekom is concerned, we prepared everything to sell this company. We have a good price, so we only need to find a good strategic investor.

Q8. You are mentioning tourism, a sector that is among the top priorities of the Government. Do you think that Telekom is ready cope with the expected large increase of tourists?

A8. The main issue is how the mobile operators care about the telecom sector during the season. We have a lot of roaming tourists during the season and the 2 existing networks have to provide a good service for them. As far as international traffic is concerned, they are using our network when they use the fixed net, and we are absolutely prepared. Last season was the best one so far. The situation completely changed during the last 2 years. Before, we sent all the international traffic through the Belgrade international switch. Yugoslavian PTT used to be the carrier of all international traffic. However, the situation in Telekom Serbia and Telekom Montenegro changed, and they started to be recognized international operators. We now have 10 direct links with European telecoms. In other words, concerning international traffic, Telekom Crne Gore is much stronger than it was a year ago, and this has had a very big impact during the tourist season. I think that our tourists were very satisfied with the services provided by the telecom sector. We did a very good job.

Q9. As President of this company, what is your biggest challenge when the market is concerned?

A9. The first challenge is to maintain the position as the first leading telecom company in Montenegro. I am sure it will be that way. Secondly, we hope to have a successful privatization.

Q10. I suppose that the best partner for your company would be a telecom company. But, do you have any priority concerning potential partners?

A10. Personally, I am not selling the company. The government have to decide about it. My job is to have a good product. Telekom is a really good product, the best one in Montenegro, I am sure.

Q11. How would you like to see Montenegro in 5 years' time? Not only regarding the telecom sector, but the country as a whole?

A11. I would like to see Telecom privatized, with a good strategic partner. The best thing would be to have a lot of foreign satisfied tourists during the summer season, because it will ultimately bring prosperity to Montenegro.

Q12. Would you like to see Montenegro as a member of the European Union?

A12. Of course, but it is not realistic to think this could happen in just five years. My wish is to have an independent Montenegro in the EU, so when we will have the referendum in 3 years, we will see what steps should be taken next. I hope that our Government will do everything in order to establish good environment for foreign investors and living.

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