TELECOM’S DOMINANCE! Vladimir Lučić’s New Year’s interview: ‘The company’s net profit exceeds €300 mil for the first time’

‘Bank of America, Deutsche Bank, The World Bank, and EBRD have become Telekom’s partners. Our expansion will include over 500 million users, from the US to Turkey. When you’re number one and your userbase is increasing, the trust of the big telecommunications actors and financial partners increases as well,’ Vladimir Lučić pointed out.

The last two years were very difficult for business and, more generally, for companies across the globe. How has Telekom Serbia fared in such circumstances?

“According to the results, very well. Telekom’s profile has changed completely, given that its value at the present moment exceeds five billion euros, and when there was talk of privatization, it stood at less than 1.5 billion. In Serbia alone, we have had a profit of over 1.4 billion euros, the operating profit of over 800 million euros, and the net profit way over 300 million euros, for the first time in history. Like never before, on 31 December, Telekom Serbia will have over 120 million euros in its account. We have achieved all this without stopping investments and without the funds from selling the antenna towers, which will be paid into our account in Q1 of next year. It is therefore clear that in 2024 we will be financially at our strongest in the history of Telekom and capable of accelerating our progress. In 2023, we mounted a record number of 4G network base stations – as many as 2,200 – and we take pride in the fact that, according to the Ratel report, the quality of this network is in the 5G band. We have continued building the optical network, so we have as many as 1.4 million households with optical cables running by them, of which 450,000 are connected to it. All this is important not only for the development of the company but also for Serbia. In this way, we have achieved the most important goal – being operator number one in all domains, mobile, internet, and landline – in places where we have the biggest network.”

In 2023, Telekom cooperated with some of the most important global financial institutions. What does that mean in terms of the trust that your company enjoys in the business world?

“When you are number one and when your userbase is increasing, the trust of the big telecommunications actors and financial partners increases as well. In one year alone, amid the biggest financial crisis, we became partners of four major institutions – The Bank of America, Deutsche Bank, The World Bank, and EBRD. Together with EIB, we have practically received the support of the biggest financial institutions in the entire world.

“The banks finance us with grace periods of up to three and a half years without any guarantees, and I can say with pride that we are the only company that does not provide any guarantees. The only thing they have is our business plan. They believe in our sustainability and that we will grow stronger in the future. This is also a sign of strong corporate governance because they certainly wouldn’t work with companies that don’t have such governance transparency. Furthermore, it is important for them to see investments bringing benefits to the society at large.”

What is Telekom’s place at the present moment with respect to the other telecommunications operators in the region?

“The market situation is such that in the next ten years no one in the region can take the leadership position away from us, or even in the next two decades, I dare say. We will keep growing in the meantime. The result of the sudden increase in Telekom’s profit lies in an ever-increasing number of users of television and the internet. Specifically, between 2017 and the present day, it has increased threefold. Telekom had 120,000 TV users, and now has 1.2 million. In addition, each year we have a great increase in profit in mobile telephony as well.

“If you take a look at the stocks of the six biggest operators in the world, only Deutsche Telecom stocks have been on the rise in recent years, and the rest are steadily falling. In order to survive on the market, we have to transform, and we do that by adapting to the big digital platforms.”

What is the strategy that you have chosen for the company transformation?

“Telco operators, us included, need to transform. To focus more on the user, as well as to remove the work that is not the so-called core activity.

“Our transformation project is based on two main ideas. Firstly, being leaders in all the services where we have a telecommunications network. Secondly, becoming a global leader through the diaspora project and to generally be expanding throughout the world based on media content and digital services. Therefore, our strategy is a combination of the classical telecommunications strategy and the strategies of big digital platforms such as Amazon, Google, Facebook, and others.

“Today we have a large-scale production of digital services by funding start-ups, as well as films and TV series intended not only for our users, but also for export and sales in the entire world.”

This transformation seems to have entailed the expansion of Telekom Serbia. You have a presence in ten countries today – not only in the region, but also in Austria, Germany, North Macedonia, etc. What is the plan for the upcoming period in this area?

“Today we have a network in Serbia, Montenegro, and Bosnia & Herzegovina, where we are absolute leaders, and a presence in seven more countries, including, from next year, the US. We have not spent money building our own network in these countries.

“Through this expansion, we will be covering over 500 million users, from the US to Turkey, by using other operators’ networks and investing in services through which we will reach a considerable number of new users in these countries. For example, in Austria and Switzerland alone we have 210,000 users, and we have started to break into Germany and Turkey as well. Our idea is to invest in media content and digital services that users in other countries like to watch too. There is great interest in Telekom’s services not only on the part of our diaspora, but also on the part of those who are originally from this language area. Moreover, we offer channels from Croatia and B&H, and we take pride in the fact that 15 percent of our users are Austrians. We have big plans for Germany because it is a huge market on which more money is spent on telecommunications services than on ours.”

You have announced that the 5G network would be available next year to users in Serbia too. How has the company prepared for this, and who will be your partners in developing the digital services?

“Two years ago, the EIB decided to invest in the 5G network with us because we are considered the biggest operator in the Western Balkans. As for the development of the digital services, there our partner is Vodafone. I pride myself on the fact we have been strategic partners with Vodafone for three years now, given that Vodafone is the fastest growing 5G network in Europe.

“The 5G network and artificial intelligence will change the world in ten years. The essential advantage of the 5G network with respect to the others is that its signal delay is negligent, which will allow RPA, automatic car driving control, and the commercial use of billions of sensors. By using a range of cameras and sensors in a vehicle and on a highway, it will be possible for cars to move by themselves, as well as to have robots in, for example, agriculture, where they can drive trucks… In phase one, we will rapidly cover the four biggest cities and highways. The first large-scale application will be in the industry, and we already have requests by serious companies in Serbia. They will have private 5G networks using which they will be able to introduce robots and optimize their own processes.”

Despite the evident successes, the competitors allege that you are over-indebted, and criticise you for selling the infrastructure. What lies behind these attacks?

“In the past five years, since we started developing, all attacks have been coming from a single centre – United Group. All these years, it has been more concerned with stopping us than focusing on its own development. First they went through the media, then the media and politics, and eventually we have had lobbying attacks against us. When we took over the Premier League, it all intensified, so they lobbied from Washington to Brussels to humiliate our company and to pressure the financial institutions not to work with us. They sent letters to many addresses, but serious institutions do not respond to competitors’ letters. In 2023 alone, we had 1,130 negative statements against us coming from them. United Group was very close to achieving an absolute cable and media monopoly in the entire region in 2018. At that moment, we had fewer than 500,000 television users. It is interesting that a company that in fact created a media monopoly is attacking us for having a monopoly, but today, unlike in 2018, the competition is at its most intense. In addition to us and SBB, many buildings now have Yettel and Orion as well, so users have a much wider choice.”

Can these attacks damage Telekom’s position on the market?

“Their strategy was to disrupt us and gain the trust of the financial institutions by saying that we are over-indebted and that our main goal is suppressing the media. They use these few slogans in order to stop our work. The very fact that this year we will have the biggest profit so far tells a different story. They have been repeating the same sentence for five years – Telekom is over-indebted, it takes out bank loans to pay out salaries, it will not be left standing in three months, etc., I tell them now that the next year will be so triumphant that even the most suspicious analysts will be convinced that we have been right all these years.”