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ANNUAL REPORT FOR THE BUSINESS YEAR 2018
Annual Report 20181
LETTER TO THE SHAREHOLDERS
MTEL, AD BANJA LUKA
1.1. MAIN BUSINESS INDICATORS IN 2018
1.2. CORPORATE PROFILE
1.3. ENVIROMENT AND REGULATORY FRAMEWORK
1.4. CORPORATE SOCIAL RESPONSIBILITY
1.5. SERVICES AND SERVICE USERS
1.6. FINANCIAL REVIEW OF 2018
1.7. CAPITAL INVESTMENTS
1.8. HUMAN RESOURCES
1.9. INFORMATION TO THE INVESTORS
MTEL GROUP
2.1. MTEL GROUP STRUCTURE
2.2. FINANCIAL INDICATORS OF THE MTEL GROUP
BUSINESS OPERATIONS
2.3. LOGOSOFT, DOO SARAJEVO
2.4. MTEL AUSTRIA GmbH
CONTACTS
3
4
5
6
20
28
37
46
56
60
63
65
66
67
68
70
72
Annual Report 20182
Dear Shareholders,
The business year behind us has been marked with
good decisions and good results, which is best shown
in the financial indicators but, also, in the customer
number rise, having always been the most adequate
proof that the business framework was well and
carefully laid against all business-related parameters.
Last year required our full attention since we saw our
business focus, among other things, in the strategy
for acquisition of the cable operators. Definition of the
new strategy and realization of its aims, related to the
acquisition of two operators, has brought new values
to the Company, however, new challenges as well.
Extending the business and investing into significant
Company’s value increase is one of the key factors
on which the Company’s long-term future relies upon.
Allow me to say that presently, the Mtel Company -
namely Mtel Group, which includes Mtel Austria GmbH
with the seat in Vienna, Logosoft d.o.o. Sarajevo and,
since 2019, Blicnet d.o.o. and Telrad Net, is the most
serious market player in the BiH telecommunication
industry. Our vision is to persist staying focused on
investing our knowledge and resources in the strategic
projects and closely following all trends at the global
telecommunications market.
Along with these big business moves we have
successfully realized, the business results for 2018
show the rise of customer base in almost all segments.
This is the sign that the Mtel Company, in a very
demanding business environment, adapts to the
market needs thus directing the business to the point
dictated by the era of swift changes and expansion of
the cutting edge services in the telecommunications
industry.
Optic infrastructure development has been one of the
primary goals in 2018 as well, and the results of this
network, and the other market demands realization,
are also shown in the integrated services revenues
increase of even 14,2%, relative to the previous
year. With this investment, we have provided our
customers with the state-of–the-art technology, not
only those who live in the urban areas, but also those
in the smaller towns and rural areas, which makes
an important advantage over the competition.
In the mobile telephony segment, in 2018 we have
managed to stabilize the customer base. This step
forward is the result of a carefully considered response
to the general trend of decreasing communications
through traditional services in the global scene. Close
following of the regional and local trends in this field,
as well as timely reaction to them, will certainly be
one of the primary goals of the Company in the
oncoming period.
It is important to say that Mtel has been fully prepared
for introduction of the 4G LTE mobile network since
2013, in terms of both technical capacities and human
resources. This way, Mtel will provide all the benefits
of this contemporary network to the customers, as
soon as necessary regulatory requirements are meet
in BiH, which has been expected for years. Along with
faster data and multimedia contents transmission,
this network will certainly provide for development
of new, more improved services that will be at our
customers’ disposal throughout BiH.
We have finished last year with net profit increase
of BAM one million, relative to the previous year. We
commence this year enriched with the experience
in good business moves, namely acquisitions, rise
of the customer base, positive financial results, with
refreshed existing and introduced new services that
follow global trends, and good communication with
our business partners as well as the community in
which we operate.
In the oncoming period, we will continue to realize
the goals we have set, as well as the new ones, in
line with the market demand, with a single focus
– step ahead of the others, we wish to be the first
customer’s choice in the digital world of services.
I would like to thank our customers, employees and
the shareholders for putting your trust in us year after
year, creating the climate of trust, understanding and
mutual respect.
Marko Lopičić, CEO
LETTER TO THE SHAREHOLDERS
Annual Report 20183
MTEL, AD BANJA LUKA
1.
1.1. MAIN BUSINESS INDICATORS IN 2018
1.2. CORPORATE PROFILE
1.3. ENVIRONMENT AND REGULATORY FRAMEWORK
1.4. CORPORATE SOCIAL RESPONSIBILITY
1.5. SERVICES AND SERVICE USERS
1.6. FINANCIAL REVIEW OF 2018
1.7. CAPITAL INVESTMENTS
1.8. HUMAN RESOURCES
1.9. INFORMATION TO INVESTORS
Annual Report 20184
INTEGRATED SERVICES Integrated services revenue
+7,4 BAMm
REVENUES
+12.408
USERS
52,259,7
2017 2018 2017
97,1
109,5
2018
BA
Mm
Integrated services users
MOBILE TELEPHONY Revenue from mobile telephonysubscription
+2,7 BAMmREVENUE FROM
MOBILE TELEPHONY
SUBSCRIPTION
NET PROFIT
+1,0 BAMm
NETPROFIT
+14.486NUMBER OFPOSTPAID
USERS
71,1 73,7
2017 2018 2017
364,6
379,1
2018
BA
Mm
thou
sand
thou
sand
EBIT margin
Net profit
15,15%
60,161,0
15,81%
2017 2018
BA
Mm
INVESTMENTS
+14,4 BAMmINVESTMENTS
IN ACCESSNETWORK
Investments in access network
16,2
30,5
2017 2018
BA
Mm
Numbers of postpaid users
MAIN BUSINESS INDICATORS IN 2018
1.1.
Annual Report 20185
1.2.
CORPORATE PROFILE
1.2.1. BACKGROUND AND ORIGIN
1.2.2. ACTIVITIES
1.2.3. MANAGEMENT BODIES
1.2.4. MISSION, VISION AND STRATEGY
1.2.5. STATEMENT ON THE CORPORATE MANAGEMENT STANDARDS APPLICATION
1.2.6. CORPORATE VALUES
Annual Report 20186
The Public State Enterprise for Telecommunications
of the Republic of Srpska, Banja Luka, registered on
20 December 1996, pursued the activities as a fully
government-owned company until 12 December 2002.
Then it was performed the ownership transformation
into a joint stock company, and the name changed
into Telekomunikacije Republike Srpske a.d. Banja
Luka.
Until late 1996, the postal, telegraph and telephony
services in the Republic of Srpska were performed
within a single enterprise Public State Enterprise for
PTT Traffic of the Republic of Srpska.
Since 1 January 1997, pursuant to the provisions of
the Communication Systems, Radio-traffic and Postal,
Telegraph and Telephony Traffic Law, the Company
divided into two new enterprises – Telekom Srpske,
Public State Enterprise and Srpske pošte, Public State
Enterprise.
In the course of 2002, pursuant to the Law on
Privatization in the Republic of Srpska and the
Republic of Srpska Government’s Decision, 20% of
the government share in the Company was privatized
through vouchers, out of which 10,5% related to the
privatization-investment funds, and 9,5% to physical
persons. The remaining 80% share (government
capital – 65%, Pension and Disability Insurance Fund –
10% and Restitution Fund – 5%) was privatized under
the Special Privatization Program of the Republic
of Srpska Government, pursuant to the Law on
Privatization of the Government-owned Capital in
the Companies.
Pursuant to the Basic Court Decision, dated 12
December 2002, it was registered the change of
name into „Telekomunikacije RS”, a.d. Banja Luka, as
well as the status change. Pursuant to the Decision
of the Basic Court in Banja Luka, dated 28 June
2007, it was registered the status change – ownership
transformation through sale of the total government
share to the Telekom Srbija, a.d. Beograd.
Having purchased 65% of the government capital,
Telekom Srbija became the major owner of Mtel. As
at 31 December 2018, the ownership structure of
Mtel is as follows:
• Telekom Srbija, a.d. Beograd, Srbija – 65,01%;
• Penzijski rezervni fond, a.d., Banja Luka (Pension
Reserves Fund) – 8,92%;
• Fond za restituciju Republike Srpske, a.d. Banja
Luka (Restitution Fund) – 5,03%;
• DUIF Kristal invest a.d. – OMIF Future Fund – 3,18%;
• Other shareholders – 17,86%.
•
As at 31/12/2018, Mtel has capital share in three
companies, as follows:
• Mtel Austria GmbH, having its registered seat in
Vienna, with 100% share,
• Logosoft d.o.o. Sarajevo, with 100% share,
• Društvo za telekomunikacije MTEL d.o.o. Podgorica
with 49% share.
1.2.1.
BACKGROUND AND ORIGIN
Share (31/12/2018)
Logosoft d.o.o. Sarajevo
100%Mtel Austria GmbH
100%MTEL d.o.o. Podgorica
49%
Basic data
Corporate name
Seat
Date of incorporation
Date of acquiring ownership
Value of registered capital
Number and type of issued shares
web site
Main activity
Telekomunikacije Republike Srpske a.d.
Vuka Karadžića 2, Banja Luka
20/12/1996
28/6/2007
BAM 491 million
491.383.755 regular shares
mtel.ba
Telecommuncations - provision of the telecommunication and related services i.e. voice, data, text, sound and picture transmission
Annual Report 20187
1.2.2.
ACTIVITIES
Pursuing the activities as one of the three national
telecom operators in Bosnia and Herzegovina, Mtel a.d.
Banja Luka offers unique communication solutions.
Following the requirements of more and more dynamic
market, Mtel provides the most contemporary
telecommunication services in the field of mobile
telephony, fixed telephony, digital television, Internet
and data.
Mtel’s main business activities are telecommunications,
provision of the telecommunication and related
services, namely voice, data, text, sound and picture
transmission respectively, encompassing:
• activities in the wire telecommunications,
• activities in the wireless telecommunications,
• activities in the satellite telecommunications and
• other telecommunication activities.
Along with the main activity, with the aim of more
efficient and rational business operations, Mtel
provides a variety of other telecommunication
services, including other fixed and mobile telephony
and data services, leased lines, private lines, services
in the entire network area, additional services in the
mobile telephony, Internet and multimedia services.
Mtel also provides services in the sphere of
the telecommunication infrastructure leasing,
construction, management and protection. Along
with these, the Company also pursues other activities,
ancillary to the registered activity, usually performed
along with the registered activities, to the lesser
extent or from time to time.
With continuous following of the world trends
and cutting-edge technologies in the field of
telecommunications, Mtel listens carefully to the
customers’ wishes and needs. Knowing they want
more than just making phone calls, Mtel introduces
new technologies and offers a wide range of additional
services in BiH.
Integrated business solutions, with calls and data
in the mobile and fixed network, provided for the
business users, create the preconditions for successful
business operations.
Along with provision of the high-quality services and
application of the latest information technologies,
Mtel invests much in sports, culture, education, and
humanitarian projects and, by pursuing activities
with corporate social responsibility, contributes
to development of the recognized values in its
environment.
Annual Report 20188
Since Mtel is a shareholding company i.e. a joint stock
company, the provisions of the Law on Commercial
Companies define its business operations. Pursuant
to these provisions and the Mtel Statute, the joint
stock Company bodies are the following:
• Shareholders Assembly,
• Management Board,
• Board of Directors,
• CEO,
• Auditing Board,
• Internal Auditor.
SHAREHOLDERS ASSEMBLY
Shareholders Assembly involves all the shareholders.
By rule, the CEO, Management Board members and
the Independent Auditor attend the Shareholders
Assembly sessions.
MANAGEMENT BOARD
On the day of 31 December 2018, the following
members: Predrag Ćulibrk, Vesna Lončar, Dejan
Carević, Slavko Mitrović, Draško Marković and Branko
Malović performed the Management Board functions.
CEO
The Company CEO is Marko Lopičić.
BOARD OF DIRECTORS
The Mtel’s Board of Directors includes the CEO, Marko
Lopičić, and the Executive Directors:
• Executive Director for Technics – Miodrag Vojinović,
• Executive Director for Marketing and Sales –
Radmila Bojanić
• Executive Director for Finances – Jasmina Lopičić
• Executive Director for Corporate Affairs – Vladimir
Četrović
• Executive Director for Operations – Nikola Rudović.
AUDITING BOARD
On the day of 31 December 2018, the following
members: Vladislava Argyrakis and Milan Simić
performed the Auditing Board functions.
INTERNAL AUDITING
Internal Auditing, headed by Mirjana Matanović -
Bundalo, is organized as Mtel’s support function.
1.2.3.
MANAGEMENT BODIES
Annual Report 20189
MARKO LOPIČIĆ,CEO
Marko Lopičić was born in 1975 in Kraljevo. He
graduated from the Faculty of Law of the Belgrade
University in 2000.
He commenced his career with the Telekom Srbija,
a.d. in 2000. He worked in the legal representation
within the Legal and General Affairs Secretariat
and, afterwards, he performed the duties of the
Normative Department Head, within the Budget and
Control Division, and the duties of the Legal Support
Department Head, within the Services Division.
He was appointed the Mtel a.d. Banja Luka Executive
Director for Corporate Affairs on 19 June 2007. As
the management team member, he was in charge for
Human Resources, relations with the regulator and
legal affairs, as well as for the activities of the Company
Secretariat and relations with the shareholders.
The Company Management Board elected Marko
Lopičić the Mtel a.d. Banja Luka CEO on 8 June 2016.
MIODRAG VOJINOVIĆ,Executive Director for Technics
Miodrag Vojinović was born in 1972 in Banja Luka. He
graduated from the Faculty of Electrical Engineering
of the Banja Luka University in 1999. He additionally
advanced in the field of telecommunications in the
USA, China, Germany and Austria.
After having been the Telekom Srpske scholarship
grant recipient, he commenced working for this
Company in 2000, and he moved from the position
of junior engineer, senior engineer, department head
and sector head respectively to the function director.
He has participated in the projects such are: prepaid
system, IPTV, wireless access network modernization,
introduction of FTTH, ngHLR, number portability, IMS,
mobile broadband, SBC, and many other. He speaks
English and German.
He was appointed the Mtel a.d. Banja Luka Executive
Director for Technics on 24 March 2015.
JASMINA LOPIČIĆ, Executive Director for Finances
Jasmina Lopičić was born in 1972 in Belgrade. She
graduated from the Faculty of Economics of the
Belgrade University in 1996.
She started her career in JP PTT Srbija in 1997,
in the Division for Economic Affairs. She has been
employed with the Telekom Srbija a.d. Beograd since
1998. She was appointed the Director of the Economic
Estimates Sector in 1999 and, in 2005, the Director of
the Budget and Control Sector within the Economic
Affairs Division in the Telekom Srbija, a.d.
From 2001 to 2004, she was a member of the
Telekom Srbija a.d. Supervisory Board and, in the
period of 2004-2008, a member of the Telekom Srbija
Management Board. From 2010 to 2018, she was a
member of the Mtel Podgorica Board of Directors.
She speaks English. She is married and a mother of
two.
She was appointed the Mtel a.d. Banja Luka Executive
Director for Finances on 19 June 2007.
Annual Report 201810
VLADIMIR ČETROVIĆ,Executive Director for Corporate Affairs
Vladimir Četrović was born in 1968. He graduated
from the Faculty of Law of the Belgrade University.
He started his career as an apprentice lawyer in 1996
and he has been employed with Telekom Srbija a.d.
Beograd since 1998, in the Legal Affairs Secretariat as
the Company’s legal representative. He was appointed
the Director of the Legal Affairs Division in JP PTT
Srbija in 2004 and, in 2007, the General Manager
of Mobtel PTT d.o.o. From 2009 to 2010, he was an
advisor to the JP PTT Srbija General Manager.
In January 2010, he joined the Mtel team as the
Head of Legal Affairs Sector within the Division for
Corporate Affairs.
He was appointed the Mtel a.d. Banja Luka Executive
Director for Corporate Affairs on 14 June 2016.
NIKOLA RUDOVIĆ,Executive Director for Operations
Nikola Rudović was born in 1978 in Bar. He graduated
from the Faculty of Law of the Belgrade University
in 2003, and, in 2004 completed the “PERIKLES“
- School for Social and Political Leadership by the
“Centar za demokratiju“ Fund, financed by the
European Commission.
He passed the judicial examination in 2007. Since 2007,
he has been the member of the Belgrade Lawyers’
Chamber as a lawyer specialized in corporate law.
In January 2013, he joined the Mtel team as the
CEO’s Advisor and, since December 2013, he has
been performing the duties of the Strategy Function
Director. He speaks English.
He was appointed the Mtel a.d. Banja Luka Executive
Director for Operations on 25 April 2014.
RADMILA BOJANIĆ,Executive Director for Marketing and Sales
Radmila Bojanić was born in 1972 in Gradiška. She
graduated in 1997 from the Faculty of Electrical
Engineering of the Banja Luka University. She
continued her academic education in 2004 at the
Faculty of Economics of the Banja Luka University,
having obtained the title of Master of Science in
Economics and later, in 2010, the title of Doctor of
Science in Economics at the Singidunum University
in Belgrade.
She started her career in the Mtel Company in
1998 and moved from the position of engineer and
participant in numerous strategic projects to various
managerial positions in the Division for Marketing
and Sales.
From 2010 until 2013 she was the Head of Business
Customers Sales Sector, and from 2013 until April 2017
she was a Head of Sector for Business Customers Sales
and Wholesale. The year before her appointment to
the Executive Director’s position, she was responsible
for sales to the residential customers as well.
She is an author of several scientific papers in the
sphere of management in the telecommunications
industry and quality management. She speaks English.
She was appointed the Mtel a.d. Banja Luka Executive
Director for Marketing and Sales on 5 April 2017.
Annual Report 201811
MISSION, VISION AND STRATEGY
1.2.4.Mission
“Following closely the tradition that binds us, we
offer our customers a unique digital experience,
making their lives better, easier and more joyful”
Vision
“Step ahead of the others, we want to be the first
customer’s choice in the digital world of services”
Based on the Mission and Vision, it was adopted the
Company’s Strategic Business Plan for the period of
2018-2020. The Strategic plan defines the Company’s
main determinations in the oncoming period, related
to the identification and exploitation of new resources
and the revenues growth, namely orientation towards
further growth in the integrated services, mobile
telephony and mobile internet segments, as well as
towards development of the digital services, as well
as the improvement of the present market position
and internal business aspects.
Methodology tool for implementation of the
Company’s strategy, by which it is ensured uniformity
in the sense of the Strategic Plan, is the Strategic Map
and the harmonized results list. The Strategic Map
aims at making the strategy comprehensible to all
employees, and contributing to futher development
of the organizational culture in which the strategy
is a continuous proccess. The Company’s Strategic
Map for the period of 2018–2020 is based on the
strategic theme: “Market position improvement and
digital transformation“.
The Stategic Theme consists of seven strategic tasks,
fifteen strategic initiatives, as well as the strategic
activities seen through the following four prospectives:
• Financial – How will our shareholders see us? The
primary focus is put on the business revenues
and profit stabilization, namely further growth
of the revenues generated from the integrated
and postpaid services and mobile internet, and
realization of the income from the digital services,
with the aim of establishing a new, long-term source
of income.
• Customer – How should our customers see us? Mtel
will focus on improvement of the customer base
stability and development of the services portfolio.
A special attention will be paid to identification
of the specific market segments. Having in mind
the customers’ needs, development of technology
and competitive relations, the investment cycle will
continue in the broadband infrastructure in the fixed
and mobile network, this being the precondition
for development of the existing and introduction of
new services. The focus will be put on improvement
of the digital channels in marketing and sales, as
well as in development of ICT service, payment
service and IoT service portfolios.
• Internal – In which processes must we be excellent
in order to satisfy our shareholders and customers?
With the aim of achieving excellence, one of
the preconditions for satifying the needs of our
shareholders and customers, it is important to
realize the initiatives and activities within the task
defined as the operational efficiency and business
processes improvement. This will be achieved
through improvement of the business processes
management, improvement of the Data Analytics
system, development of the TC/service platforms
and the IP transformation, as well as through
development of the integrated Core IT system.
• Learning prospective – How to harmonize the non-
material resources in order to achieve excellence
in the processes? Mtel will continue to improve
the employees’ dedication, motivation and
competences and build new organizational culture
on the principles of the employees’ cooperation,
innovativeness and establish an adequate
administrative framework, which will allow for
unimpeded and efficient business operations.
Company’s Stategic Business Plan
for the 2018-2020 Period
Annual Report 201812
Financial prospective
Stabilize Company’s business income and profit
Strategic tasks
Strategic prospective
User prospective
Internal prospective
Learning prospective
Increase revenues from integrated services, mobile postpaid and mobile internet
Realize revenues from digital services
Improve the customer base structure
Improve the digital services portfolio
Improve operational efficiency and business processes
Improve the employees’ dedication and competences
Annual Report 201813
The Company operates in a complex environment, in
terms of market, environment and trends of digital
transformation in all domains and omnipresent
internet and mobile business operations, and tends
to establish optimal management by applying
the management system, to achieve a long-term
fulfillment of all interested parties’ expectations.
In late 2017, the Company established the integrated
management system (IMS), which unifies the
requirements of two internationally recognized
standards: ISO 9001:2015 and ISO/IEC 27001:2013,
for all business processess in the Company.
The Company Strategy outlines the fundamental
principles of the company management related to
the integrated management system:
• Continuous achieving of the results,
• Improving the quality of services and processes,
• Process Management,
• Achieving success based on employees’ competencies
and engagement,
• Developing stable and fair relations with partners
and suppliers,
• Taking responsibility for a sustainable future.
Continuous achieving of the results
Basic Principles of the Quality Management
System
Integrated Management System
(IMS)
Improving the quality of services and processes
Process Management
Achieving success based on employees’ competencies and engagement
Developing stable and fair relations with partners and suppliers
Taking responsibility for a sustainable future
Annual Report 201814
The IMS Rules of Procedure define the integrated
management system policy that represents the
framework for establishing and reconsidering the IMS
aims, including the quality and information security
aims, according to which the Organization undertakes
to periodically reconsider the IMS, for the purpose
of securing the business processes efficiency and
continual improvement. In the course of 2018, it was
performed the internal audit of all organizational
units, for all business processess and, at the end of
the year, it was successfully conducted the external
audit of the Company, in line with both mentioned
standards.
The IMS Policy defines the following principles:
• Fulfillment of the customers’ requirements for high
quality product and services, to maintain a long-
term customer satisfaction,
• Developing competencies that motivate employees
to actively participate in the improvement of all
business aspects,
• Ensuring enjoyment of the rights and equal
treatment to all our shareholders,
• Compliance with laws, regulatory and other
regulations, in order to maintain a fair and effective
market competition,
• Developing long-term and correct relations with
partners and suppliers,
• Providing a continuous technical and technological
development in line with the global trends in the
telecommunications industry,
• Corporate social responsibility, systematically
and permanently building the tradition of quality
relations with the society and environment in which
the Company operates,
• Protection of the Company’s trade secrets, business
partners and clients, as well as protection of their
privacy,
• Permanent care for information integrity, availability
and confidentiality,
• Security of information, as well as of other assets,
to the risk-proportionate extent, through the
effective application of the protective measures
and procedures, in accordance with the financial
justification and Company’s technological strategy.
Annual Report 201815
Quality Management System - QMS represents the
manner in which the Company manages the quality of
products, services and business operations (relations
with all interested parties), as well as the quality of
the organization itself (relations with the employees
and resources, corporate culture).
Quality Management System – QMS requires the
Company to implement the key business processes
management, which Mtel realizes using Business
Process Management (BPM), and permanent shaping,
informatization and monitoring of the business
processes. Management of the key business processes
in the Company enables accommodation to the
changes brought by modern business, bringing along
digital transformation in all areas, along with new
rules, new methods and new people. These changes
lay the foundations for a new business culture and
new business success criteria. The business processes
improvement entails the improved competitiveness
and a better market position through raising the
efficiency and effectiveness.
The importance of the Information Security
Management System – ISMS introduction does not
solely include business operations compliant to the
legal and market requirements, but also the most
important thing – the customer relations improvement
and growing Mtel services users’ trust.
The ISM system, implemented in the Company,
provides for an adequate customer information
protection in all phases of the processing, since the
tasks and responsibilities related to the information
security are clearly defined for all organizational
levels and the employees.
The obtained certificate confirms that Mtel has reduced
the information security risks to the lowest possible
level, that a better control has been implemented over
the information flows, as well as that the potential
information security risks have been properly and
timely addressed. Thus Mtel services users may rest
assure that their exchanged information has been
processed in line with the internationally recognized
practice.
ISO 9001:2015
Quality Management System
ISO/IEC 27001:2013 Information
Security Management System
Annual Report 201816
1.2.5.
STATEMENT ON THE CORPORATE MANAGEMENT STANDARDS APPLICATION
Mtel has its own Code of Conduct and Corporate
Management, which fully employs and ensures
the application of the the corporate management
principles in the Company. The Code more thoroughly
stipulates the mechanisms for functioning of the the
Company bodies’ and protection of interests in mutual
relations of various stakeholders in the Company.
The established corporate principles provide the
mechanisms for determination of the Company
aims, resources for their realization and monitoring
of the effects, as well as create a permanent and
consistent controlling system of the Company bodies’
work and protection of interests in mutual relations
of all interested parties.
With application of the corporate management
principles and its own Code of Conduct and Corporate
Management Standard in 2018, the Company has
ensured efficient application of the Company’s
corporate management principles.
The application of the corporate management
principles provides for transparent business
operations and quality protection of all interested
parties, aimed at creating a long-term economic value
for the shareholders.
Mtel develops and operates in accordance with
good corporate management practice, and tries to
improve the competitive capacities with strategy,
business policy and practice, with the aim of creating
a favorable environment for the investment activities.
Corporate management represents an important
segment of the Company’s market operations, and
Mtel will continue to monitor compliance of the
organization and activities in the Company with the
principles contained in the Code.
In 2019, the Company will adhere to the main Code
principles related to transparent business operations,
clearly defined operating procedures for important
decision-making bodies, avoidance of the conflict
of interests, efficient internal control and efficient
accountability system, thus ensuring further
improvement of the corporate relations among the
interested parties, and improvement of the business
results, as well as the improvement of the Company’s
operations, its growth and development, for the
benefit of all shareholders.
As a responsible and market-oriented company, Mtel
will apply the corporate manegement principles and
realize its rights on fair principles of the market
operations, fulfilling its obligations in a responsible
manner, by which it will try to provide for a sustainable
prosperity of the Company and its shareholders.
Mtel’s statement on harmonization of the organization
and activities with the Code of Conduct, i.e. the
corporate management standards, forms an integral
part of this Report, and is published on the Company’s
Internet site, under the Section „Investitori“: http://
www.mtel.ba and the Stock Exchange Internet site:
http://www.blberza.com
Annual Report 201817
CORPORATE VALUES
1.2.6.
Corporate values of the Company are strong and
concise expression of our corporate culture thus we
try to make them our guidebook and reminder on
what we should do and how we should do it in our
immediate business environment. With these values,
we set the landmarks towards more successful business
and the results we wish to achieve.
Commitment to Customers
Mtel’s Corporate
Values
Well-coordinated Team
Corporate Responsibility
Orientation towards Changes
Constant Growth and Company Development
Company Ambassadors
Annual Report 201818
Corporate Responsibility
Good business practices, compliance with the rules,
procedures and laws is an absolute must of our
business in relations with our customers and business
partners, and with our shareholders as well.
Guided by positive values, we conduct business so that
we systematically and continuously build a tradition
of quality relations with the society and environment
in which we operate, wishing to be recognized as the
company whose business philosophy is clearly directed
towards ethics in business, as the basis on which it
builds the business identity. Social responsibility of
the Company is also manifested in the employees’
common belief that the professional knowledge and
experience should be shared not only within the
company, but outside too, and in our colleagues’
readiness to support the academic community and
participate in the future professionals’ development.
Orientation towards Changes
Orientation towards changes includes close following
of the contemporary requirements, being one of the
most important features of all successful companies.
Every day we learn and adapt to new trends in the
business world, in order to properly address major and
rapid changes the future brings, and we responsibly
deal with all new business challenges. In the course
of 2018, we have tried to build the culture that will
be the common factor of the unity and strength
of all our employees. Thus we have tried to raise
the innovativeness to the level that is optimal for a
contemporary telecommunication company, which we
consider ourselves to be. To this aim, we have initiated
development of the programs for exchange of ideas
and initiatives, which will be based on Design Thinking
methodology, and ensure the ideas are based on the
customers’ needs, but sustainable, enforceable and
cost-effectiveas well. We have also organized the first
internal conference entitled “Technology Is People“,
as well as the meetups that the Company organized
in cooperation with ICT HUB.
Constant Growth and Development
of the Company
On the path of implementation and fulfillment of our
Company’s mission and vision in times of rapid and
major changes, we do our best to keep pace with
the global trends in the telecommunications industry,
to maintain the leading position on the Bosnia and
Herzegovina territory, conquer new markets and
stay recognized in the region as a team that has a
significant impact on its Company’s market share
growth.
Company Ambassadors
We are unique ambassadors of our Company at
our workstations and outside of the Company. Our
dedication to the Company and our work result in the
quality business that bears the signature of all of us.
Commitment to the Customers
We beieve our customers are our mirror, and the
image of their satisfaction is the very image and
measure of our success. Our customers are our
partners in achieving business goals, our start point,
and the ultimate aim of our business is their very
satisfaction.
Well-coordinated Team
We always focuse on strengthening the confidence and
improving the communication between hierarchical
levels, as well as to simplifying the work with
colleagues, customers and associates. By improving
our knowledge, we invest in ourselves, since we
wish to be the best for the benefit of the customers,
community and our Company. It is important to us to
be professional and competent, in order to respond
to the market challenges, and be the best in our
business. We try to improve the cooperation, being the
precondition for a successful business and productive
work climate, through series of team building activities
and workshops, attended by the employees from all
hierarchy levels throughout Bosnia and Herzegovina.
Annual Report 201819
1.3.1. MACROECONOMIC ENVIRONMENT
1.3.2. TELECOMMUNICATIONS MARKET IN BOSNIA AND HERZEGOVINA
1.3.3. PESTEL ANALYSIS
1.3.4. REGULATORY FRAMEWORK
1.3.
ENVIRONMENT AND REGULATORY FRAMEWORK
Annual Report 201820
1.3.1.
MACROECONOMIC ENVIRONMENT
According to the analysis of the World Bank,
published in January 2019, global growth
of the world economy is slowing down and
loosing impetus, since 2017 ended with
the global GDP growth of 3,1%, which was
significantly higher than expected, while the
anticipated growth of the world economy
for 2018 was 3,0%1. Generally, the world
economy is recovering, this being the result of
the investment, production and trade growth.
Projections are that this positive trend will
become slightly moderate, therefore for the
period 2019-2020, the anticipated growth is
2,8% to 2,9%2. The trade war between the
United States and China may reflect in slowing
down the developing countries economic
growth.
GDP growth in the European Union has
reached 2,4% in 2017, thus being 0,7
percentage points higher than expected3. Due
to the anticipation that domestic demand will
lose its intensity, GDP EU growth is expected
to be 1,9% in 2018. Though it is lower from
the achieved in 2017, it is notably stronger
than previously projected. For the period
2019-2020, it is foreseen 1,6% growth rate.
1 World Bank: „Global Economic Prospect“, January 2019. – Table 1.1 , Real GDP; 2 Ibidem; 3 Ibidem; 4 Ibidem;5 World Bank: „Global Economic Prospects“, January 2019 - str. 28.; 6 www.focus-economics.com/countries/bosnia-and-herzegovina; 7 www.worldbank.org/en/country/bosniaandherzegovina/overiew; 8 www.focus-economics.com/counties/bosnia-and-herzegovina
Over the longer term, the EU growth rates
are constrained by shrinking of the working
population in the majority of the Eurozone
economies4.
According to the World Bank estimates, the
year 2018 is expected to be a turning point for
the global economy because, for the first time
in the last ten years, that is since 2008 and
great global recession, the negative output
gaps in the previous period are expected to
be overcome and the world economy will
continue to develop in the positive direction.
Practically, it means that, after long ten years,
the global demand for products and services,
that is outputs, will be higher than the offer5.
According to the economic portal www.
focus-economics.com, in 2017 Bosnia and
Herzegovina achieved the growth of 2,3%6.
From the macroeconomic trends prospective,
the analysts foresee unfreezing of the
pending disbursements from the international
credit institutions has a positive impact on
the movement of the BiH economy in 2018.
According to the Portal analysts, the chances
for economic growth of Bosnia and Herzegovina
in 2019 remain very promising. Opening of
new jobs, more remittances from the abroad-
living BiH citizens, and growing tourism
sector should foster the increase of private
consumption, while the direct international
investments will have a significant influence
on the total investments made in BiH. Shared
government (three peoples’ influence) could
slow down the important reforms that are
necessary for the country’s stable future. The
FocusEconomics Panel participants expect
the real GDP growth in BiH to be 3,1% in
2019, as well as in 2018.
According to the World Bank analyses, the
BiH’s key economic challenge is the disbalance
of its economic model: public policies and
incentives are skewed toward the public
rather than the private sector, consumption
rather than investment, and imports rather
than exports7. Due to the steady growth in
the EU, it is thus expected that these positive
trends should contribute to improving of the
BiH economy. Thus the 3,1% GDP growth is
anticipated for 20188.
Annual Report 201821
TELECOMMUNICATIONS MARKET IN BOSNIA AND HERZEGOVINA
1.3.2.In the telecommunications industry, the processes
of market liberation and competition increasing
have continued. Due to the mobile telephony
revenues decrease, large European telecom and
cable companies purchase smaller operators.
This trend is present both in the regional market
and in the BiH telecommunications market, and
is expected to continue in the following years.
In 2017, it was adopted the Electronic
Communications Sector Policy for the period
of 2017-2021, a strategic document for further
development of the electronic communications
market. Adoption of the will enable further
development and improvement of the
telecommunications industry, next generation
networks (NGN), introduction of the 4G
network, new investments and increase of the
competitiveness level. It has also been developed
the Broadband Access Development Strategy,
given that BiH was the only country in the region
that did not have this document.
All deadlines have been exceeded for the
transition from analogue to the digital terrestrial
broadcasting and 4G mobile network (4G
LTE) introduction. Preparations for 4G mobile
telephony introduction are finished, telecom
operators are ready for transfer, but the licence
price has not been agreed yet. The BiH Council
of Ministers returned the price proposal, created
by the CRA, to be re-done and additionally
explained, and the low price was stated to be
the main reason.
Fluctuation of the population, gross domestic
product, employment rate, degree of informatic
literacy, are just several of the factors that
influence the customer number fluctuation,
market shareand the revenues realized at the
BiH telecommunications market.
The estimated total revenue in the
telecommunications market of Bosnia and
Herzegovina in 2018 is BAM 1.3649 billion, which
is slightly lower than the 2017 realization (BAM
1.375 billion10).
Since 2013, the revenues from the mobile
telephony services have been recording a
decrease in the total market share in BiH,
however, it is still the highest one. The estimated
revenues from the mobile telephony services in
2018 is around BAM 55411 million, i.e. 40,62%12of
the total estimated TC market revenues. The
revenues from the mobile telephony services
9Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 10Telecommunication indicators of BiH in 2017; 11Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 12Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 13Telecommunication indicators of BiH in 2017; 14Telecommunication indicators of BiH in 2017; 15Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 16Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 17Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 18 Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 19 Telecommunication indicators of BiH in 2017; 20Telecommunication indicators of BiH in 2017.; 21Telecommunication indicators of BiH in 2017;
in 2017 were BAM 569.244.67013 i.e. 41,38% of
the total estimated market revenues.
The revenues from the fixed telephony services
continuously decrease, and they were BAM
294.352.34814 in 2017, or 21,38% of the total
estimated market revenues. The estimated
revenues from the fixed telephony services in
2018 were around BAM 27515 million, or 20,16%16
of the total estimated TC market revenues.
The estimated revenues from the Internet
services in 2018 were around BAM 14017 million
or 10,26%18 of the total estimated TC market
revenues. The realized revenues from the Internet
services in 2017 were BAM 111.024.86819 or
8,07% of the total estimated market revenues.
The estimated other revenues20 (cable television,
data, etc.) for 2018, namely their participation
in the total estimated market revenues, will not
significantly change, relative to the year 2017,
when they were BAM 40121 million or 29,16% of
the total estimated market revenues.
Annual Report 201822
At the end of 2018, the public telephony services
through fixed telecommunication networks in BiH
were provided by 15 operators, out of which three
with the License for Public Fixed Telephony Operator22
(BH Telecom d.d. Sarajevo, Telekom Srpske a.d. Banja
Luka and Hrvatske telekomunikacije d.d. Mostar), and
12 operators with the License for Provision of the
Public Fixed telephony Services.23
The tree operators with the Public Fixed Telephony
Operator License have a significant market share,
sales volumes and realized revenues, as well as the
number of employees.
The number of the fixed telephny subscribers of the
SMP operators in BiH was 632.91421 at the end of
the year 2017, and it is estimated that, at the end
of 2018, there will be 581.341 customers25, while the
growth rate, relative to 2017, is -8,1%26. The decreasing
number of the fixed telephony customers is most
obvious in the SMP operators, given that these
operators have the largest customer bases and that
the replacement of the fixed services with the mobile
Three operators hold the License for GSM and UMTS
Services in Bosnia and Herzegovina: JP BH Telecom
d.d. Sarajevo, Telekomunikacije Republike Srpske a.d.
Banja Luka and JP Hrvatske Telekomunikacije d.d.
Mostar.
The operators, registered as providers of mobile public
telephony services, which provide mobile telephony
services based on commercial agreements with
holders of Licenses for GSM and UMTS services are:
Blic.Net d.o.o. Banja Luka, Logosoft d.o.o. Sarajevo,
ELTA-KABEL d.o.o. Doboj and TELRAD NET d.o.o.
Bijeljina, and DASTO SEMTEL d.o.o. Bijeljina.32
At the end of 2017, the total number of the mobile
subscribers in BiH was 3.412.69833, and it was
estimated that this number would be 3.440.08234
at the end of 2018.
The number of prepaid users is still several times
higher than the postpaid ones. The participation of
the postpaid users was 26,07%35 at the end of Q4
2017 and it was estimated that, at the end of 2018,
the participation would be 28,21%, still lower than
in the countries of the Region and EU. According to
the data of the regulatory agencies of the countries
in the region, in 2018, the participation of postpaid
users in Croatia is around 50%, in Serbia - 56%, and
ones has been ongoing for years. On the other hand,
the decrease in the the fixed telephony customers’
number is compensated for with users’ transfer to
the integrated services provided via fixed network.
The number of the new operators’ subscribers in
the fixed was 125.23027 at the end of 2017, and the
estimates were it would be 140.73928 at the end of
2018.
The BiH telecommunications market liberalization,
particularly the number portability service for the
fixed public telephony services users, has increased
the fixed telephony market competitiveness. The
growing trend in the total number of the ported
numbers in the fixed network in BiH continued in
2017, thus it increased to 65.95729. It is estimated
that this number will be 81.60230 at the end of the
year 2018.
It is estimated that the fixed telephony penetration
rate in BiH will be approx. 20,87%31 at the end of
2018.
22Fixed telepohony; 23Fixed telephone services; 24Quarterly comparative data of the electronic communications market Q4 2017; 25Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 26Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 27Quarterly comparative data of the electronic communications market Q4 2017; 28Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 29Quarterly comparative data of the electronic communications market Q4 2017; 30Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 31Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.;
32List of registered providers of mobile telephon services; 33Telecommunication indicators of BiH in 2017; 34Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 35Quarterly comparative data of the electronic communications market Q4 2017; 36Ekip, Ratel, Hakom; 37Quarterly comparative data of the electronic communications market Q4 2017; 38Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 39Ekip, Ratel, Hakom; 40Quarterly comparative data of the electronic communications market Q4 2017; 41Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.
in Montenegro - 50%36. The European average of
the postpaid users’ participation in the total mobile
telephony customer base is around 50%.
The penetration rate in the mobile telephony in BiH
was 97,42%37 at the end of 2017, and it was estimated
that, the penetration rate would reach 99,32%38 at
the end of 2018. Such penetration rate in the mobile
telephony is still below the latest available values
in the surrounding countries (Montenegro 182,96%,
Serbia 122%, and Croatia 106,11%39). The mobile
telephony penetration rate in Europe is around 125%.
The increased use of the applications, substitutes
for voice calls (like Viber, Skype, Gtalk, Whatsapp),
and substitutes for SMS and MMS (like Whatsapp,
Google Talk, Facebook Mesenger, Viber, Skype) led to
decrease in the outgoing international voice traffic
and number of SMS and MMS messages.
Implementation of the number portability service in
the mobile telephony started in 2013. The total number
of ported numbers in the mobile network at the end
of 2017 was 50.25740, and it was estimated that, at
the end of 2018, this number would be 60.89641,
which makes approx. 21,17% increase, relative to the
previous year.
Fixed Telephony Mobile Telephony
Annual Report 201823
The internet access service market is marked
by the access speeds increase for all users, and
telecommunication service and ICT domain services
(cloud, data centers, security)integration. The
Internet services penetration rate in the BiH market
is characterized with continuous growth, with the
broadband access as the growth generator. The use
rate of the Internet via fixed network, at the end
of 2017 was 85,25%42, and it was estimated that it
would be 90,28%43 at the end of 2018.
The number of the fixed broadband access users
in BiH was 663.68244 at the end of 2017 and it
was estimated that, at the end of 2018, it would be
706.79645. The broadband Internet access rate in the
fixed networks, which was 19,83% at the end of 2017,
is estimated to reach 21,36%46 at the end of 2018.
Such penetration rate in BiH and certain countries in
the region, shows that, despite the rise of the fixed
broadband Internet access user number, Bosnia
and Herzegovina still belongs to the group of less
developed countries in the region and is significantly
below the EU average.
Use of broadband services has been increasing every
year thus the number of users has reached 99,97% of
the total Internet subscribers’ number. The dominant
Internet access type is xDSL, with 398.11047 users at
the end of 2017, and it is estimated that, at the end
of 2018, this number will be 420.58648.
The number of cable Internet access users at the end
of 2017 was 221.25149, and it was estimated that, at
the end of 2018, this number would be 228.69850.
We can see a significant increase in use of the
internet via mobile networks in BiH. The operators
offer mobile internet by means of USB modems and
SIM card with the voice traffic disabled and purposed
solely for the data. Given the increasing customers’
need for use of the internet via mobile networks, the
operators create tariff packages that include more
and more free mobile internet. It should be noted
that the operators in the surrounding countries offer
tariff packages with mobile internet services on the
4th generation networks. BiH is behind the countries
of the region in that sense, as well as in terms of the
broadband internet penetration rate in the mobile
network.
The broadband Internet development, together with
the telecommunications market liberalization, has
influenced the service packages offer that includes
several telecommunication services: Internet, fixed
telephony, mobile telephony and television. While the
percentage of the subscribers with the internet in the
package grows, the percentage of the subscribers
with the fixed telephony decreases. The users choose
packages with internet, and use VoIP substitutes,
such are Viber and Skype, for the fixed telephony.
42Quarterly comparative data of the electronic communications market Q4 2017; 43Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 44Quarterly comparative data of the electronic communications market Q4 2017; 45Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 46Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.;47Quarterly comparative data of the electronic communications market Q4 2017; 48Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.; 49Quarterly comparative data of the electronic communications market Q4 2017; 50Internal estimate obtained by means of the SAS Visual Analytic forecast tools on the basis of the oficial data of CRA for 2017.
The multimedia market in BiH, from the SMP operators’
standpoint, is marked by a constant growth of the
package services users number, new customers
acquisition or retention of the existing ones, by making
the xDSL users and voice services users become the
2P, 3P or 4P package services users.
All three dominant operators have improved their
offer in terms of delivering the multimedia contents,
by offering new services in this segment, as well as
an improved service access (multiscreen).
Audiovisual and radio media services market constantly
grows and, according to the latest available data from
the CRA BiH51, as at 30/06/2017, the penetration rate
of the audiovisual and radio media services users’
was 70,53%.
As at 30/06/2017, KDS service was the most present
one, with the share of 47,49%, followed by the IPTV
service with 34,91%, and DTH service with the share
of 17,60%.
In the last three years, the number of the subscribers
via KDS slightly decreases, while the participation of
the connections via IPTV records a slight increase.
Smaller operators, due to the unfavorable business
conditions, are leaving the market. In 2016, twenty-
eight operators provided their services via cable
networks and seven of them via IPTV. One cable
operator offers its services via DTH.
KDS and IPTV service are typically offered to the end
users as an independent service but, more and more
often, they are offered within the packages (combined
with one or more electronic services, publicly available
telephony service and/or broadband internet access
and/or publicly avaiable mobile telephony service).
The mobile TV service is more and more present, as
well as the broadband internet access via fixed and
mobile network.
51Market analysis of retail distribution of audiovisual media services and media radio services, April 2018
Internet Services Multimedia
Annual Report 201824
1.3.3.
PESTEL ANALYSIS
PESTEL analysis of the Bosnia and Herzegovina
market shows that the Company still has no direct
control over majority of the factors. This aggravates
the development of the very sector, by which the
significance of the results the Company has realized
so far is re-emphasized.
Main characteristics of the individual factors (PESTEL)
are:
Political factors:
• Complex inner structure of Bosnia and Herzegovina
with two entities, one district and numerous cantons;
• Low level of political support to development of the
ICT and lack of adequate development programs,
which would result in a higher level of primary
demand for this type of service;
• Inadequate institutional approach to the ICT market
monitoring;
• Negative impact of the political relations to the
economic development.
Economic factors:
• Relatively weak economy structure, with regard
to a small number of companies which create new
value;
• Low level of the economic development, hence a
slow economic recovery;
• Stable currency, due to the Currency Board
existence;
• Relatively high unemployment rate, particularly of
young people;
• Low level of the population’s consumer power.
Social-cultural factors:
• Social-cultural factors:
• High participation of the rural population and
relatively old population;
• Emigration of the working-age population;
• Negative birth rate;
• Relatively low general education level of the
population, but also quite fast acceptance of
new technologies and services by the younger
population.
Technological factors:
• Relatively fast transfer of technology to the Bosnia
and Herzegovina market, thanks to the SMP
operators;
• Low technological literacy level of the population;
• Good network development, particularly in the
mobile telephony segment.
Legislation:
• Seven service providers in the mobile telephony
market, and twelve alternative operators which
operate in the fixed telephony market, as well as a
significant number of ISPs with a tendency to grow,
along with other indicators that can be monitored
in regular reports of the Agency, confirm the high
level of liberalization in the BiH telecommunications
market;
• Relatively rigid attitude of the Regulatory Agency
towards the SMP operators, according to the
concept by which, in certain segments, market
liberalization is based predominantly on reducing
the impact of SMP operators.
Annual Report 201825
REGULATORY FRAMEWORK
1.3.4.Regulation of the Bosnia and Herzegovina
telecommunications market falls within the competence
of the Communications Regulatory Agency (herein
referred to as the “Agency”) and is based on the Law
on Communications (Official Gazette of BiH, No. 31/03,
75/06, 32/10 and 98/12), Electronic Communications
Sector Policy, Policy Implementation Action Plan and
the by-laws.
The existing BiH regulatory framework is based on
the EU regulatory framework, characterized by a
constant telecommunications market monitoring and
analysis, as well as by passing the required regulatory
acts, with the aim of its permanent development, in
the sense of the services number increase, as well
as in terms of marketing and technical innovations.
The BiH telecommunications market was liberalized
in the early 2006 and, at the end of 2018, in this
market there were operating:
• 3 significant market power (SMP) operators;
according to the Significant Market Power Operators
List (Official Gazette of BiH, no. 73/12), Mtel a.d.
Banja Luka, BH Telecom d.d. Sarajevo and HT d.o.o.
Mostar have been declared the significant market
power operators in the fixed and mobile telephony
and leased lines market;
• 12 holders of the License for Provision of the Public
Fixed telephony Services;
• 76 holders of the License for Performing the
Activities of the Operator of the Public Electronic
Communication Networks;
• 67 holders of the License for Provision of the
Internet Access.
• 5 registered providers of the mobile telephony
services.
Mtel pursues the activities in accordance with the
valid licenses granted by the Agency, as follows:
• License for the Public Fixed Telephony Operator,
since 30 May 2017,
• License for Pursuing the Activities of the Internet
Access Provider, since 15 March 2013,
• License for Provision of the GSM Services, since
12 October 2004,
• License for Provision of Mobile Telephony Services
on the Universal Mobile Telecommunications
Systems (UMTS), since 26 March 2009,
• License for Distribution of Audiovisual Media
Services and Media Radio Services, since 9 February
2017.
According to the Annex I of the License for Provision
of Mobile Telephony Services on the Universal Mobile
Telecommunications Systems, dated December 2010,
Mtel is allowed to provide the UMTS services on the
GSM frequency band. According to the Annex I of
the License for Provision of GSM Services, Mtel is
allowed to use additional frequency band - E-GSM,
since June 2012.
Annual Report 201826
Within the liberalization process of the
telecommunication market and in accordance with the
regulatory framework, the following Mtel’s reference
offers are in place:
1. Reference Interconnection Offer for the Mtel’s fixed
network,
2. Reference Interconnection Offer for the Mtel’s
mobile network,
3. Reference Interconnection Offer for unbundled
local loop access,
4. Reference Interconnection Offer for leased lines
wholesale.
The most important regulatory activities in the course
of 2018:
• In April 2018, the Council of the Agency adopted
the following Rules:
» Rule on use of radiofrequency bands of 3400-
3600 MHz and 3600-3800 MHz for MFCN;
» Rule 83/2018 on use of radiofrequency band of
800 MHz for MFCN;
» Rule 84/2018 on use of radiofrequency band of
2600 MHz for MFCN);
» Rule 85/2018 on Plan of purpose and use of
the radiofrequency spectrum in Bosnia and
Herzegovina.
• In April 2018, the Council of the Agency approved
the Proposal of Market Analysis of the retail
distribution of audiovisual media services and
radio media services for the public consultations
procedure.
• In July 2018, the Agency Council adopted the Rule
87/2018 on use of the radiofrequency band of
1452-1492 MHz for MFCN SDL;
• In July 2018, the Agency Council adopted the
Market analysis of completion (termination) of calls
on individual public telephony networks on fixed
location (second round).
• In August 2018, the Agency Council adopted the
Rule 88/2018 on Cost Accounting.
• In August 2018, the Agency Council approved
the draft Rule on distribution of contents of the
audiovisual media services and radio media services
for the public consultations procedure.
• In December 2018, the Agency Council adopted
the following rules:
» Rule 89/2018 on the license fees of the
Regulatory Communications Agency;
» Rule 90/2018 on provision of management
services to electronic communication networks
in the digital terrestrial radiodifusion.
Annual Report 201827
CORPORATE SOCIAL RESPONSIBILITY
1.4.
1.4.1. HUMANITY
1.4.2. CULTURE AND EDUCATION
1.4.3. MUSIC
1.4.4. SPORT
1.4.5. ECOLOGY
1.4.6. EMPLOYEES
1.4.7. AWARDS AND RECOGNITIONS
Annual Report 201828
In 2018, along with the excellent business result, the
Mtel Company added to the book of its successful
results the traditionally important one – continuation
of support to the community in which it operates.
Within the framework of corporate social responsibility,
Mtel has taken part in many activities and created
several projects with the aim of initating positive
changes and helping the people in need.
The Mtel Company considers investing in the corporate
social responsibility projects to be the investment in
the future of the community in which it operates and
exists, and interaction that creates the atmosphere
of the positive values affirmation.
Annual Report 201829
1.4.1.
HUMANITY
Many great humanity projects, having been realized
for many years with the help of our Company, speak
best of our true wish to invest in the community, to
contribute more and better to the positive changes
for all community members, especially the youngest
ones.
Traditional humanitarian action “With Love to Brave
Hearts” was held for the ninth time in 2018. Mtel
has again supported this humane fundraising for the
youngest ones and the most vulnerable categories,
in the form of donation and a short humanitarian
number purposed for this event.
In 2018, the cooperation continued with the “Blue
Phone”, counseling line for the youngest population,
aimed at offering support and psychological help to
the children victims of violence or children who faced
problems in their community.
Supporting the Project “Together We Mean Good“
the aim of which was fundraising for the Gynecology
and Obstetrics Clinic of the Clinical Center in Banja
Luka, Mtel has continued a long-lasting practice of
donating funds for creating better conditions for stay
and treatment in the clinics, particularly in the case
of newborn babies and their mothers.
Traditionally, on the St. Nicholas Day, Mtel presented
the gifts to the young residents of the Children’s
Home “Rada Vranješević“, children in the “Dr Miroslav
Zotović“ Institute for Physical Medicine in Banja Luka,
and the youngest ones in the “Sveta Evgenija, carica
Milica“ Trebinje kindergarten.
In the spirit of humanity, Mtel has supported an
inclusive manifestation entitled “I, like you, also exist!“
held in Banja Luka on the occassion of the World
Down Syndrome Day. This event was dedicated to
the abilities of people and children with the Down
syndrome, as well as to inclusion of the children and
young people with Down syndrome in all cultural and
social events.
The Mtel company tries to support many activities
that are aimed at raising awareness of the vulnerable
groups and help them to achieve better position in
society so, this year again, it has supported the
marking of the World Autism Day.
Also this year we have supported „Mrvice“ -
Association of the parents of prematurely born
babies, which has organized fundraising campaign
for purchase of beds for the neonatology wards in
the Republic of Srpska.
Annual Report 201830
CULTURE AND EDUCATION
1.4.2.The Mtel Company has selected the members for its 8th
generation of m:stipendisti (scholarship grants recipients)
in 2018, and presented the grants to the students of
the electrical engineering faculties from Bosnia and
Herzegovina. So far, Mtel scholarships have been given to
188 best students in BiH, and during 2018, the competition
was announced for the ninth generation of m:stipendisti.
For the second time, this year Mtel has realized a corporate
social responsibility project, entitled App Competition, in
creation of mobile applications for Android and iOS, which
is a joint project of Telekom Srbija, Mtel BiH and Mtel
Montenegro. In BiH, the competition was purposed for
secondary school students from 21 schools throughout
BiH, who had the chance to show their knowledge,
creativity and good ideas, and be awarded for it.
In 2018, the Mtel Company has launched a new developing
IT platform – Playground, with the aim of connecting
people from the IT community and creating new values
for the future. The Playground is designed to gather
talents – creative people, designers, programmers,
academic staff and business partners, as well as those
interested in technological entrepreneurship, in one place,
and the very Platform has originated primarily as the
result of the wish to contribute to the local IT community
development, as well as to keep the pace with the digital
transformation and the latest ICT trends. In 2018, many
activities have been held, as well as educational events,
gatherings, and a start-up academy was launched under
the name of Playground Challenge.
As one of forms of the long-lasting successful cooperation
with the Banja Luka Academy of Arts, in 2018 it was
realized a project of creative painting of the protective
fence in the Vuka Karadzica street, nearby the Company
building. For this purpose, a young artists’ team – 10
Academy students of the Fine Arts Department, has made
a creative solutions in various forms and techniques.
Twelve selected visual solutions are finally placed at the
fence thus enriching this space and making the city more
beautiful
In November 2018, the Mtel Company and the City
of Banja Luka have signed a contract on donation for
construction of the Congress Center in this city, thus the
preconditions have been created for announcing the first
international architecture competition for a large city
building construction, after many years.
The Mtel Company fosters traditional friendships with
many institutions, which promote culture and arts, such
are the following:
• City Theater „Jazavac“ from Banja Luka, organizer
of the 10th Actors’ Festival „Zaplet“, as well as the
children’s manifestation entitled „Kulturica“,
• National Theater of RS, with its traditional „Teatar
fest“, and
• Children’s Theater of the Republic of Srpska, who is
the organizer of the „Snješkovo” event.
In 2018, the Academy of Arts of the Banja Luka University
has organized a culture event entitled “Days of Vlado
S. Milošević“, which was held in April and, in May, the
Museum of Modern Arts marked the 13th European Night
of Museums, with the exhibition “Punktumi“ in focus,
having included the selection of 100 artworks of 80
authors from 17 European countries. The Mtel Company
has supported these manifestations as well.
Within the Project entitled Safety of Children on the
Internet, Mtel has supported the initiative for safe use
of the internet by children and young people. This is
a continuation of the cooperation with the Agency for
Information Society of the Republic of Srpska, which has
been promoting safe use of the internet by the young
population for eight years now.
Mtel Company has, again this year for the 4th time,
in cooperation with the RS Agency for Traffic Safety,
successfully realized a CRS campain under the slogan “Be
smarter than your smartphone! Don’t use your phone &
drive!” (original slogan: „Ne gubi glavu - ne koristi telefon
dok voziš!“). For this participation, Mtel has received
the recognition from the Republic of Srpska Agency for
Traffic Safety for its contribution to the improvement
of the traffic safety and activities of the RS Agency for
Traffic Safety.
On the occasion of the Faculty Day, Mtel has traditionally
awarded three best students of the Faculty of Electrical
Engineering in Banja Luka, with tablets and mobile
phones, which is just one of the forms of cooperation
between this educational institution and Mtel that has
been going on for decades.
For many years, Mtel has been fostering the practice of
donating the equipment to the schools in BiH, in order
to create better conditions for schooling of the young
people. In 2018, many elementary schools have joined
a large group of educational institutions to which Mtel
has already donated the school furniture, computer and
sports equipment.
In 2018, Mtel has participated at the Competition entitled
“Stories from the Neighborhood”, launched by the Mondo
Portal, for the second time. The competition was open
for the participants from BiH, Serbia, Montenegro and
Croatia, and the aim was to offer an opportunity to the
young, anonymous or unestablished writers to show their
talent to the world.
This year again, the Mtel Company has been a part of the
wonderland story of „Zimzograd“ in Banja Luka, which
has offered plenty fun contents for all visitors.
Annual Report 201831
1.4.3.
MUSICAs a socially responsible company, Mtel has supported
various music events in 2018, which have hosted
prominent artist from the region and the world:
• International competition of pianists „Banjalučki
bijenale 2018“, held for the sixth time, where the
school and university students have competed in
the disciplines of piano solo and piano duo.
• „Đurđevdanski festival dječije pjesme“, (children’s
festival) celebrated its 25th anniversary in 2018.
The participants of the festival - 23 of them, from
RS, BiH, Serbia, Croatia, Montenegro, Macedonia,
Slovenia, Bulgaria, Italy and Russia presented 16
selected compositions.
• „O.K. fest“, held on Tjetnište, within which, during
the three festival days, around 30.000 visitors
have enjoyed the preformances of the top-class
musicians from the international and national
music scene, projections of the films in the open,
books promotions, rafting, mountain climbing and
many other charms of the O.K. fest and National
Park of Sutjeska.
• „Demofest“ traditionally held for 11th time at the
Kastel fortress in Banja Luka. Mtel has been a
friend of this largest regional music event for demo
bands since its very beginning, thus the support
was extended to them this year as well.
• The seventh „Fresh Wave festival“, which lasted
three days and hosted over 80 electronic music
performers, and presented the international DJ
stars.
• Exit Festival 84 on the Jahorina mountain, the
biggest winter music party. The popular international
and regional musicians have performed on 5 night
and day floors.
• The fifth international „Festival folklora i festival
trube“ (folklore festival and trumpet festival),
was organized by the City of Trebinje Tourist
Organization with the friendly support of the Mtel
Company.
• Ivan Bosiljčić’s concert entitled A Couple of Verses
for Us („Par stihova za nas“), which is this famous
actor’s author project. An unusual blend of lyrics
and poetry of the greatest poets like Šantić, Rakić,
Antić, Dedić, Rajić, Yesenin and Baudelaire, has
made this evening a special present for all romance-
lovers.
• Concert of Jelena Tomašević, a popular Serbian
singer who held her first solo concert in Sarajevo
with the Mtel’s friendly support.
• Concert of well-known artist and traditional songs
singer, Amira Medunjanin. At this concert, by which
she marked 15 years of her suuccessful musical
carrier, Amira was accompanied by the Norvegian
orchestra of ”Trondheim Solistene“.
• Members of the Russian Kazakhs folklore ensemble
have visited Banja Luka in 2018, having shown
why they belong to the world top-quality folklore
ensembles.
Annual Report 201832
SPORT1.4.4.
The Mtel Company is a sponsor of many sport clubs
and many sports events as well, thus it participates
in promotion of the healthy lifestyle and sport spirit
building, particularly amongst the youngest ones. The
most important sport events:
• BL m:tel halfmaraton – this sports event includes
various children’s races, relay race, halfmaraton and
Fun&Run race, which was particularly interesting
for its amusing atmosphere.
• Kayak Canoe Club Banja Luka Vrbas gathered the
best athletes from all over the world in the World
Cup in Kayak and Canoe on Wild Waters „Banjaluka
- Vrbas 2018“.
• Banja Luka Open 2018 – international swimming
meeting „Banja Luka Open 2018“, gathered
swimmers from 12 countries, who have competed
for medals, records and the World Championship
norms.
• ATP CHALLENGER „Srpska Open“ 2018 – our
friendly support to realization of the ATP Challenger
Tour event, held on the courts of the Tennis Club
Mladost in Banja Luka.
• M:tel Open, tennis tournament held in Prijedor – this
year again, the Mtel Company has supported this
very important sports event, and proudly stands
beside the name of this Tournament.
• International cycling race Beograd – Banja Luka
2018, - the race is on the international cycling union
(UCI) calendar and represents a universal event
and one of the greatest sport events in the region.
• Together for Borac - in February 2018 well-known
local bands held a big concert entitled “Together
for Borac“, with the aim of supporting the „Borac
m:tel“ handball club.
• Winter Days on Kozara 2018 - the Mtel Company
supported this traditional manifestation (original
name: „Dani zime na Kozari“), held in February
on Mrakovica, with the aim of promoting tourist
potential of the Kozara mountain,
• m:tel Winter Adventure on Jahorina – unforgettable
gathering and games, realized by the Mtel Company
for the youngest visitors of this mountain in
February and March 2018.
Along with the above mentioned, the Mtel Company
is a sponsor of many other sports clubs such are:
Vaterpolo klub Banja Luka, OK Borac, KK Igokea, RK
Borac, FK Borac, Teniski savez RS, FK Krupa, KK Rooki.
Annual Report 201833
1.4.5.
ECOLOGY
In accordance with the practice of a responsible
attitude towards the environment, the Mtel Company
puts a special emphasis on adherence to the laws, as
well as on specific activities in the field of environment
and people protection.
In regard with the environment and people protection
in 2018, as in the previous years, the greatest
attention was on the base stations operations and
electromagnetic radiation, which were emitted from
the antenna system. To this aim, in the course of
2018, Mtel cooperated with all Republic and national
bodies in charge for monitoring and realization of the
obligations in protection of environment and people,
mostly with the RS Ministry of Health and Social
Welfare, the RS Republic Inspection Administration
(Health and Sanitary Inspection), the RS Institute of
Public Health, as well as with the BiH Communications
Regulatory Agency.
During 2018, there were 174 reports made on
systematic testing of electric field non-ionizing
radiation level on the mobile telephony base stations,
while 500 measurements of electromagnetic radiation
level were conducted at base stations throughout
Bosnia and Herzegovina. For the purpose of obtaining
the construction and operation permits for the base
stations, under the applicable legislation, 483 requests
were sent to the Ministry of Health and Social Welfare.
For the purpose of obtaining the security certificates
for operation of the base stations on the Bosnia and
Herzegovina territory, 363 Security Declarations were
sent to the Communications Regulatory Agency.
The Republic Administration for Inspection Affairs,
Health and Communal Inspection, continually oversaw
the operations of the Mtel’s mobile telephony base
stations, and carried out inspections at 18 locations
of base stations in the Republic of Srpska.
As in the previous years, in 2018, Mtel has regularly
performed its obligations towards the ZEOS eko-
sistem Company, in line with the Contract on transfer
of the obligation of management and disposal of
waste electric and electronic equipment. ZEOS is a
system operator authorized by the FBiH Environment
Protection Fund. The Fund received a regular report
for 2017 on quantity of the packaging waste, placed
on the FBiH territory through our sales points or
in other way. The fee, provided for the purpose of
management of the waste packaging placed on the
FBiH territory, has been paid to the Environment
Protection Fund.
Annual Report 201834
EMPLOYEES1.4.6.
Given that the employees’ development happens on
daily basis, and that it is not reserved solely for the
formal education and training, we have recognized
the need for strenghtening and directing this
informal development process. Since the Company
management has a specific responsibility for
everyday’s development of the employees and their
leading to the success and result, in the course of
2018 we have commenced the development of the
couching culture, primarily on the managerial level.
Company’s care of the employees, their motivation,
dedication and satisfaction, is manifested through
several activities, originating as the recommendations
from the researches realized in 2017. After researching
motivation and dedication, a series of workshops has
been organized and, on the level of every sector in the
Company, defined the challenges and created action
plans for improvement of dedication and motivation
in the near future.
Social reponsibility of the Company is manifested,
among other things, in the common attitude of
the employees that the professional knowledge
and experience should be shared, not only on
the Company level, but also outside of it, and in
readiness of our colleagues to support the academic
community and participate in development of future
professionals. To that aim, in the course of 2018,
it has been launched or continued the cooperation
with a number of universities across BiH and around.
We commenced cooperation with the Faculty of
Economics, within which it was provided professional
practice for a number of students. We have concluded
the agreement on cooperation with the Faculty of
Technical Sciences from Novi Sad, within which it
was provided professional practice for the students
of this Faculty.
In 2018, it was organized the first internal conference
entitled ”Technology is people“, and, along with this,
Mtel is proud of our colleagues’ participation at the
meetups that the Company organized in cooperation
with the ICT HUB, with the aim of approaching the
startup way of thinking, which could become a
necessary supplement to the large corporate models
in the future.
Employees promote humanity as a role model through
the Voluntary Blood Donors’ Active, which has been
supported and helped by the Mtel Company for years.
Annual Report 201835
1.4.7.
AWARDS AND RECOGNITIONS
As in the previous years, the community has recognized
the efforts our Company puts in the affirmation of
positive values, which has been confirmed by the
awards and recognitions we received in 2018.
Recognition for contribution to the
corporate social responsibility
development in 2017 – RS Chamber
of Commerce
On the 15th manifestation - Election of the Best Ones
in RS Economy („Izbor najuspješnijih u privredi RS“),
traditionally organized by the Republic of Srpska
Chamber of Commerce, with the aim of affirmation and
promotion of successful companies and businessmen,
the Mtel Company has received a prestigious award for
its contribution to the corporate social responsibility
development.
The Republic of Srpska Chamber of Commerce has
awarded the mentioned recognitions on the basis of
the established criteria and collected data. This illustrates
the fact that investing in the community through the
corporate responsibility is an investment that the society
recognizes as an important segment of the contemporary
business.
This recognition is one of many that the Mtel Company
has been receiving for years for its corporate social
responsibility in the business operations, which
distinguishes it as the company that bases its business
on making investments in true values.
Recognition for contribution to the
improvement of the traffic safety
and the work of the Republic of
Srpska Traffic Safety Agency, 2018
Within the 7th International Traffic Safety Conference,
organized in Banja Luka by the Republic of Srpska
Traffic Safety Agency and Ministry of Transport and
Communications, the Mtel Company has received the
recognition for support to realization of preventive
activities in the sphere of traffic safety in the year
2018.
For the 4th year, the Mtel Company, has given its
contribution to the safer roads, through its socially
responsible campaign against the use of mobile
phones behind the steering wheel.
Annual Report 201836
1.5.
SERVICES AND SERVICE USERS
1.5.1. CHANGES IN THE 2018 SERVICE OFFER
1.5.2. SERVICE USERS IN 2018
1.5.2.1. MOBILE TELEPHONY
1.5.2.2. FIXED TELEPHONY
1.5.2.3. INTEGRATED SERVICES
1.5.2.4. NET SERVICES
1.5.2.5. TV SERVICES
Annual Report 201837
1.5.1.
CHANGES IN THE 2018 SERVICES OFFER
Introduction of new services and improvement of the
existing ones, primarily integrated, TV, and mobile
telephony services, with the aim of satisfying the end
users, are the activities that characterize the year
2018 in the services segment.
New services implemented in 2018:
• Web self-care portal. New service related to the
implementation of the corporate site and self-care
web portal, the aim of which is improvement of the
Company’s products and services presentation
part, in the sense of digital shop-window, i.e. one-
stop-shop principle. The project also entails the
systematization of new products and services
through the product catalogue, electronic payment
for products and services and the self-care solution
implementation. This enables the existing users
to manage their services, as well as to submit the
request for new services. In line with the above,
in the course of 2018, we have realized all Project
milestones, which include implementation of the
corporate site with improved presentation part,
creation of a new products catalogue, optimized
for digital presence, e-commerce for new and
existing users, e-commerce for telesales, electronic
payment of the Top-ups, implementation of the
re-designed self-care portal, and Android self-care
application.
• DTH service. This service is introduced in late 2018,
under the name of m:SAT, and it means the delivery
of TV program via satellite to the relevant terminal
equipment installed at the user’s location, where
the program content is organized into television
programs package. For the purpose of providing
this Service, the user is delivered the terminal
equipment consisting of: satellite receiver, satellite
antenna with the kit and LNB (Low Noise Block).
Within the m:SAT service, the users have three
m:SAT TV program packages: m:SAT S, m:SAT M
and m:SAT L, as well as the possibility of having the
m:SAT service at the additional satellite receiver.
This Service is purposed for the residential users
and realized in cooperation with the Telekom Srbija.
Numerous improvements of the existing services
have been performed in 2018, as follows:
• IPTV functionality and contents improvement with
new applications implemented on the IPTV platform:
Dječija TV, Vijesti and Sportski rezultati (Children
TV, News and Sports Results), by which the users,
along with watching the classic TV, can follow the
news on the Mondo and Nezavisne novine portals,
as well as the sports results. The basic IPTV service
package is enriched with number of national and
international channels.
• The mobile telephony postpaid service improvement:
» New postpaid tariffs have been created,
characterized by high internet bonus, roaming
internet in MTS and Mtel-CG, as well as flat
traffic in the Mtel network.
» Mobile internet in roaming tariff options are
introduced in the following operators’ networks
– T mobile Croatia, Austria and Germany, as well
as in Telekom Slovenija.
» Significant discounts on the subscription are
offered to the postpaid tariff models users
whose priority is the subscription fee, due to the
possibility of purchasing the hardware, rather
than the contractual obligation.
» New tariff models have been created for the
business users with minimum spending: tariff
model „m:biz minimalna potrošnja“, which offers
a contracted minimum monthly spending in line
with the group members number, as well as the
corresponding budget for purchase of mobile
telephones, and the „m:biz Net“ tariff model
with 20 GB mobile internet bonus and 1.000
SMS messages.
• The prepaid mobile telephony services have
been improved with new tariff prepaid models
Standardica, Opuštencija, XY net. Introduction
of the tarif model Opuštencija offers the users
a higher protection from unwanted spending and
intensified use of tariff options. New tariff model
- XY net offers higher internet bonuses.
Annual Report 201838
• The fixed broadband access speed has been
increased for business customers, since new
multimedia and internet services require higher
access speeds. In accordance with this, new tariff
model has been introduced, with access speed of
up to 100/20 Mbps per VDSL and GPON technoloy,
and, on the existing tariff packages, upload access
speeds have been increased.
• We have improved the terminal equipment offer,
by purchasing a number of various mobile phones
models and brands, extended offer of TV sets,
various models of tablets, SONY PS4 consoles and
GoPro cameras.
• ICT service offer has been improved as well. Mtel
has continued the development and implementation
of various ITC services in 2018, with the aim of
extending the service portfolio beyond basic
telecommunication services. ICT services that have
been commercially placed in 2018 are:
» Cloud Security service that includes provision
of the managed NGFirewall solution together
with Unified Threat Management services and
reporting on all activities for the business
customers, with the monthly fee and without
initial investing in the system implementation.
There are offered 4 service packages.
» Virtual Private Server service that enables the
users to rent and use virtual servers in the
Mtel Data Center. VPS service is created on the
basis of processor strength rental on the daily or
monthly level, operational memory, data storage
space and required port speed, by selection of
the Linux OS or Windows server operational
system.
Annual Report 201839
SERVICE USERS IN 2018
1.5.2.
Mtel a.d. Banja Luka offers the most contemporary
telecommunication services in the mobile telephony,
fixed telephony, digital television, internet and data.
Operating on more and more dynamic market, the
Company closely follows global trends and the latest
technological achievements in the telecommunication
industry, and carefully listens to its customers’ wishes
and needs.
In 2018, the service portfolios have been improved in
the sphere of the integrated and TV services, mobile
telephony service as well as internet service, with
the aim of retaining the customers and increasing
customer satisfaction, as well as for attracting new
customers. In line with this, the customer base
has been stabilized, which is shown in the slower
decreasing trend of the fixed customers’ number,
as well as the rising of the integrated and mobile
telephony services customers number thus the
customer base was represented with over 1,6 million
users in 2018.
The customer base has increased for 0,6% in 2018,
with the highest rise shown in the integrated services
segment, particularly the packages with TV service
offer.
Mobile telephony
Users
Traffic
Market share of mobile telephony in BiH
Fixed telephony
Integrated services
NET
Users
Traffic
Market share of fixed telephony in BiH
million
million
thousand
million
Users thousand
1,32
1.101
38,79%
1,31
1.084
38,24%
1,3%
1,6%
227,3
455
32,39%
235,3
523
32,31%
-3,4%
-13,1%
Users
Market share of broadband in BiH
thousand 143,0
19,83%
134,1
19,67%
6,7%
109,5 97,1 12,8%
2018Customers and Market Share 2017 % change
Annual Report 201840
MOBILE TELEPHONY
1.5.2.1.
Mtel provides high quality services in the mobile
telephony, and closely follows global trends with its
offer, providing the users with the top-quality prepaid,
postpaid, VPN, M2M and mobile telephony services
in the the fixed telephony, television and internet
package.
As at 31/12/2018, the mobile telephony users’ number
is 1,32 million, out of which there are 379.064 postpaid
users and 942.563 prepaid users.
In the total number of the mobile telephony customers,
the most significant growth is within the postpaid
subscriber base - by 4%, with expected tendency to
grow further, which is one of the Company’s aims for
the oncoming period. In 2018, the postpaid users have
participated in the total mobile telephony customer
base with 28,7%.
+1,3%
Mobile Telephony Users
1,311,32
2017 2018
mill
ion
+4,0%
Postpaid Users of Mobile Telephony
364,6379,1
2017 2018
thou
sand
+0,2%
Prepaid Users of Mobile Telephony
940,5942,6
2017 2018
thou
sand
In the course of 2018, in the segment of postpaid
services, along with the „Pretplata“ tariffs, there were
also introduced the Pretplata plus tariffs, which offer
unlimited communication, depending on the selected
model, and the users may select the desired model
according to their needs and wishes. Also offered
are mobile telephones the users may purchase under
attractive prices and pay in installments.
In the business customers’ segment, there are offered
m:biz tariff models with postpaid way of payment,
which offer various monthly bonuses (calls, SMS,
mobile internet) for various amounts of monthly
subscription.
In the total mobile telephony customer base, the
prepaid users participate with 71,3%, and record
around 0,2% growth, relative to the previous year.
This is the direct consequence of various promotional
offers, intended to retain the users of this kind of
service.
The offer is also improved for the prepaid users in the
segment of the mobile internet service, as a response
to the rising influence of the OTT services, primarily
Viber, thus new tariff models entitled „Standardica“,
„Opuštencija“ and „XY net“ have been introduced. In
comparison with the standard prepaid service offer
(Standardica), the Opuštencija tariff model protects
the user from unwanted mobile internet spending.
The prepaid users are also offered the XY net tariff
model, which allows the users to purchase Internet
options with 30 GB mobile internet quote.
The traffic realized within the mobile telephony is 1,1
billion minutes, which is 1,6% higher than the previous
year. The growing traffic, compared to the year 2017,
is a direct result of increased number of the postpaid
tariff models users with higher monthly subscriptions,
within which the users receive significantly higher
minute bonuses.
Annual Report 201841
FIXED TELEPHONY
1.5.2.2.In 2018, the fixed telephony market, as in previous
years, is characterized by the customer number
decrease, since certain number of the fixed telephony
users has been migrating to the integrated services
packages. This influences the fixed telephony market
preservation and creates additional value for the
operator, but also for the customers.
In the BiH market, it is notable a substitutive relation
of the fixed and mobile telephony, more and more
prominent use of the OTT services, and the customer
number decrease in the segment of the number
portability service. Also notable is a negative influence
of the emigration of the population to the other
countries.
Mtel offers its customers the fixed telephony services
as a standalone service or as a service within the
integrated services package.
The total fixed telephony customers number is
227.251, which is 3,4% lower than the previous year.
Out of the total customer number, 83,3% relates to
the residential users, (POTS, VoBB, ISDN BRI, CLL,
prepaid users and package services users), while
16,7% are business customers (POTS, VoBB, ISDN
BRI, ISDN PRI, CLL, IP centrex, package services).
In 2018, the decreasing trend of the fixed telephony
customer number has continued. The number of the
fixed telephony customers records a decrease in
the standalone services segment (POTS, ISDN, CLL,
Prepaid), while the number of the fixed telephony
customers in the integrated services packages records
further growth, this being the consequence of the
customers’ migration from the basic voice services
to the integrated services packages.
With the aim of retaining the customers in the fixed
telephony, Mtel offers a unique “fixed prepaid“ service
(„fiksna prepaid“), used by around 14 thousand
customers.
Business users base records growth, relative to the
previous year. The number of the IP Centrex service
users is 44,9% higher than the previous year.
The total realized traffic within the fixed telephony
services in 2018 is 454,7 million minutes, out of which
79,9% relates to the residential users’ traffic and
20,1% to the traffic generated by the business users.
43,4%
0,1%
39,9%
16,6%
Structure of Fixed TelephonyUsers 2018
Business users non-integrated
Business users integrated
Residential users integrated
Residential users non-integrated
Annual Report 201842
INTEGRATED SERVICES
1.5.2.3.
Mtel offers its customers various services within
multiple packages and, in various combinations, it
unifies fixed and mobile telephony services, Internet
access services via ADSL and TV services tailored
to the customer needs, with the aim of raising the
customer satisfaction and loyalty level.
As at 31/12/2018, the total number of the integrated
services users is 109.543, which is 12,8% more,
relative to the previous year.
Out of the total integrated services users, the major
participants are the two-service package users, than
the three-service package users and, finally, the users
of the four-service package. Relative to the year 2017,
the highest customer number rise of approx. eight
thousand or 20,0% is realized within the three-service
package segment.
In 2018, the integrated services packages are
enhanced with new TV contents, higher internet
access speeds, as well as with higher mobile internet
bonuses. We should emphasize a siginificant number
of promotional activities, launched with the aim of
increasing the integrated services customer number
and transition of the users from minor cable operators.
Within the package, the users are provided with
flat traffic in the fixed telephony towards the Mtel
network, selection of one Friend Number in the mobile
telephony, with a more favorable call price, selection
of ADSL service speed, and other benefits. Integrated
services retain a good market position and extend
the fixed telephony lifespan.
+12,8%
Integrated Services Users
97,1109,5
2017 2018
thou
sand
Annual Report 201843
In the course of 2018, the trend of data services offer
improvement has continued, with increased access
speeds, faster connection realization, quality and free
technical support, and introduction of new packages,
intended for various user groups. Broadband internet
access in the m:tel network infrastructure is possible
through ADSL, VDSL and GPON, depending on the
connection type and the technology available at the
user’s location.
As at 31/12/2018, the total number of the NET users is
143.001, which is 6,7% more, relative to the previous
year. In the total NET users structure, the integrated
services packages users have the major participation
and make 67,4% of the total NET customer base.
Higher number of residential Net users within the
package is the result of increased Net service
bandwidth speed, particularly for the optic users (100
Mbps), while the internet speed has been enhanced
in the business customers’ segment, which is an
imperative for the business users, if they wish to
keep pace with the latest applications and programs.
NET SERVICES1.5.2.4.
+6,7%
Net Services Users
134,1143,0
2017 2018
thou
sand
Annual Report 201844
TV service represents a platform for offering the
television programs and additional contents, such are
the videoteque and electronic program guide.
As at 31/12/2018, the total number of the TV users
is 91.359, i.e. 22,3% higher, relative to the previous
year.
TV SERVICES1.5.2.5.
The TV users’ number grows year after year, which
is in line with the popularity of IPTV service, which
Mtel has been providing since 2010.
The TV service is offered within the package for
residential and business users, as well as a selfstanding
service for the business users. The number of
residential TV users is significantly higher and makes
97,6% of the total service users number.
Basic TV package with over 250 TV channels has
been created for the needs of the whole family, and
includes exclusive info, film, music, sport, and children’s
channels. Mtel provides the Pickbox videoteqe that
offers thousands of hours of popular TV series of
various genres, as well as rich film contents, purposed
for the youngest generation.+22,3%
TV Services Users
74,791,4
2017 2018
thou
sand
Enjoyment of the TV contents is now enriched with
pause, rewind, record and catch-up services.
Through various promotional actions, Mtel offers its
customers the monthly subscription subsidies and
possibility of purchasing hardware, as well as a good
offer of the top brand LCD TV sets with excellent
characteristics.
Annual Report 201845
1.6.1. FINANCIAL RESULTS IN 2018
1.6.2. BUSINESS OPERATIONS SEGMENTS
1.6.3. FINANCIAL INSTRUMENTS
1.6.4. FINANCIAL RISKS MANAGEMENT
1.6.5. EVENTS AFTER THE REPORTING PERIOD
1.6.
FINANCIAL REVIEW OF 2018
Annual Report 201846
1.6.1.
FINANCIAL RESULTS IN 2018
The business year of 2018 is marked with the BAM
61,0 million net profit, which is 1,6% higher, relative
to 2017, primarily due to higher realization of the
revenues - of 1,1%, relative to the previous year.
The EBITDA margin in 2018 is on the level of 38,78%,
while the EBIT margin is on the level of 15,81%.
Gross business result, prior to depreciation, is BAM
166,7 million in 2018, which is BAM 1,7 million higher,
relative to the previous year.
The realized net profit margin in 2018 is 14,19% and
it shows that the Company realizes BAM 0,14 net
profit on each BAM 1 of the realized sales.
Key Business Operations Indicators
Total income (BAMm)
Total expenditures (BAMm)
EBITDA (BAMm)
EBITDA margin
EBIT (BAMm)
EBIT margin
Gross profit (BAMm)
Net profit (BAMm)
Total assets/equity and liabilities (BAMm)
ROE
ROA
2018
431,9
363,7
166,7
38,78%
68,0
15,81%
68,2
61,0
968,5
9,04%
6,73%
2017
427,2
360,4
165,0
38,91%
64,3
15,15%
66,8
60,1
843,6
8,90%
7,07%
% promjene
1,1%
0,9%
1,0%
5,8%
2,1%
1,6%
14,8%
EBITDA margin
EBITDA
38,91% 38,78%
165,0166,7
2017 2018
BA
Mm
Gros profit margin
Net profit margin
15,76%15,86%
14,16%14,19%
2017 2018
Annual Report 201847
As at 31/12/2018, the total assets are BAM 968,5
million, which is 14,8% higher, relative to 31/12/2017,
due to the increase in the construction objects value,
being the result of the business building purchase, with
the aim of a long-term financial effects realization, as
well as due to the cash balance, which has amounted
to BAM 69,8 million in 2018.
Current assets
Non-current assets
Equity
Long-term liabilities
Short-term liabilities
Assets
Balance Sheet Structure (BAMm)
31/12/2017 31/12/2018 31/12/2017 31/12/2018
Equity and liabilities
Total income from businessactivity
408,6421,3
2017 2018
BA
Mm
BA
Mm
BA
Mm
ROE
8,90%9,04%
2017 2018
843,6968,5
701,5
142,1
737,8
230,7
843,6968,5
672,9
133,2
676,8
125,9
37,5 165,8
Current assets
Non-current assets
Equity
Long-term liabilities
Short-term liabilities
Assets
Balance Sheet Structure (BAMm)
31/12/2017 31/12/2018 31/12/2017 31/12/2018
Equity and liabilities
Total income from businessactivity
408,6421,3
2017 2018
BA
Mm
BA
Mm
BA
Mm
ROE
8,90%9,04%
2017 2018
843,6968,5
701,5
142,1
737,8
230,7
843,6968,5
672,9
133,2
676,8
125,9
37,5 165,8
Current assets
Non-current assets
Equity
Long-term liabilities
Short-term liabilities
Assets
Balance Sheet Structure (BAMm)
31/12/2017 31/12/2018 31/12/2017 31/12/2018
Equity and liabilities
Total income from businessactivity
408,6421,3
2017 2018
BA
Mm
BA
Mm
BA
Mm
ROE
8,90%9,04%
2017 2018
843,6968,5
701,5
142,1
737,8
230,7
843,6968,5
672,9
133,2
676,8
125,9
37,5 165,8
Annual Report 201848
In 2018, the total revenues amount to BAM 431,9
million, which represents 1,1% growth, relative to
the year 2017, this being primarily the result of the
integrated services and other revenues growth. In
the total realized revenues, the mobile telephony
revenues participate with 44,7%, the fixed telephony
revenues with 16,1%, and the integrated services
revenues participate with 13,8%.
The total revenues in the mobile telephony are
realized in the amount of BAM 192,9 million, and
participate with the highest percentage of 44,7% in
the total revenues. Being the result of the latest trends
following and putting efforts in the mobile telephony
service portfolio improvement, as well as due to the
customer number increase for almost 17 thousand
in 2018, there has been realized the 3,9% growth in
the income from the mobile telephony subscription.
On the other hand, in the mobile telephony segment,
the traffic volume related to the the OTT services
use has decreased, which lead to 5,4% decrease in
the traffic income, relative to 2017.
With the aim of delivering a higher value to the user,
and increasing the customer satisfaction and loyalty
level, the integrated services packages have been
improved with new TV contents, higher internet
access speeds and higher mobile internet bonuses
in 2018. Significant number of promotional actions
have been conducted for acquisition of the integrated
services users, such as monthly subscription discounts,
numerous attractive devices available under the
subsidized prices, all having influenced the user
Revenues
number increase and, also, transfer of the users from
smaller cable operators to Mtel. The result of the
above is 14,2% growth of the integrated services
revenue, relative to the year 2017.
Sales of products, namely smart devices, within the
services is one of the significant Company’s income
generators. The subject of sale are the mobile
telephones, 3G equipment, tablets, lap tops, LCD
TV sets, fixed telephones, as well as the additional
equipment for these devices.
The total revenues, realized in 2018 on the basis of the
sale of products, amount to BAM 39,5 million, which
represents 2,8% growth, relative to the year 2017. The
revenues growth is the result of the increased number
of sold products, but also the high-level segment
devices sales, due to their price being significantly
higher, relative to the price of other devices.
For years, the fixed telephony market has been
characterized by decreasing user number and
revenues, which is in line with the changes in the
customer communication manner, conditioned by
the changes in life. Therefore, the customers are
abandoning the fixed telephony more and more,
switching to the mobile telephony and integrated
services, since these services provide more contents
adapted to the users’ modern communication needs.
In accordance with the above, the realized fixed
telephony income is BAM 69,5 million in 2018.
Mtel provides the internet access service via ADSL,
VDSL and FTTH technology, and it is the subject of
constant investment and improvement, with the aim
of providing the service to the users at the maximum
possible speeds. The internet service revenues
realization is BAM 20,9 million in 2018.
29,3%
32,6% 29,4%
0,1%0,2%
8,4%
Traffic
Subscription
Leased lines
Connection
National interconnection
Other revenue
Fixed TelephonyRevenue Structure
+14,2%
Integrated services revenue
52,259,7
2017 2018B
AM
m
+2,8%
Related services
38,439,5
2017 2018
BA
Mm
Annual Report 201849
In 2018, the total expenditures are BAM 363,7 million,
which is 0,9% higher, relative to the year 2017.
In the total expenditures structure, realized in 2018,
the mobile telephony expenditures participate
with 57,6%, and the fixed telephony and internet
expenditures participate with 42,4%.
Significant category of expenditures having recorded
36,7%, growth in 2018, relative to the year 2017, is
the costs of contents, this being the result of 22,3%
increase in the customer number and increase in the
TV channels number, due to the integrated packages
improvement with new TV contents.
Expenditures
Maintenance costs have recorded 11,9% growth in
2018, relative to the previous year, primarily due to
the increased costs of the information technologies
maintenance.
In the expenditures structure in 2018, there is a
significant reduction of the rental costs of 15,6%,
relative to the previous year, being the result of the
business building purchase, with the aim of the long-
term positive financial effects realization.
Depreciation costs are 2,0% lower in 2018, relative
to the year 2017, this being the result of a permanent
investing in modernization and enhancement of
the capacities, by which we directly influence the
extension of the real estate, facilities and equipment
lifespan.
+36,7%
+22,3%
Content cost
TV Services Users
9,9
13,6
2017 2018
thou
sand
BA
Mm
74,791,4
+11,9%
Maintance cost
17,7 19,8
2017 2018B
AM
m
-15,6%
Rental costs
17,014,4
2017 2018
BA
Mm -2,0%
Depreciation costs
100,8
98,7
2017 2018
BA
Mm
Annual Report 201850
BUSINESS OPERATIONS SEGMENTS
1.6.2.According to the segment, the fixed telephony
revenues are BAM 182,4 million and the mobile
telephony revenues are BAM 249,5 million.
In the year 2018, the fixed telephony expenditures
are BAM 154,1 million while the expenditures in the
mobile telephony are BAM 209,6 million.
Fixed and mobile telephony segment in 2018
182,4
249,5
154,1
209,6
28,339,9
Income Expenditures Gross profit
BA
Mm
Mobile telephony segment Fixed telephony segment
At the end of 2018, Mtel has over 227.000 fixed
telephony customers and 143.001 of the NET Users.
The integrated services users’ number is 109.543,
which is 12,8% increase, relative to the previous year.
The TV services users’ number is 91.359 at the end
of 2018, which is 22,3% increase relative to the year
2017.
The number of the mobile telephony customers is
1,32 million, which represents an increase of 1,3%,
relative to the previous year.
In the course of 2018, the most important capital
investments in the fixed telephony are realized in
the cable transport network and access network
and equipment, while the most important capital
investments in the Internet are realized in the terminal
equipment and IPTV.
The most important investments in the mobile
telephony have been made into the wireless access
network, construction of the mobile telephony objects
and services, and service systems in the mobile
network. The most important investments in IT have
been made into the IT support to the corporate
systems and into the servers and storages.
Annual Report 201851
FINANCIAL INSTRUMENTS
1.6.3.
The aim of the capital management is for the Company
to remain capable of maintaining the business
operations indefinite continuity in foreseeable future,
in order to preserve the optimal capital structure with
the aim of reducing capital expenses, and provide
the dividends to its shareholders.
The Company monitors the capital on the the
indebtness coefficient basis.
The Company’s Management Board reviews the
capital structure on need basis. Upon the review,
the Company balances the capital structure through
new long-term investments, as well as by taking new
loans or purchasing the existing ones. The overall
capital management strategy of the Company remains
unchanged.
Capital Management
Annual Report 201852
FINANCIAL RISKS MANAGEMENT
1.6.4.
In its regular business operations, Mtel is exposed
to certain financial risks in various forms, as
follows: market risk, liquidity risk and credit risk.
Risk management is directed towards minimizing
potential adverse effects to the Mtel’s financial status
and business operations in the quite unpredictable
situation at the financial markets.
Risk management is defined by the Company’s
accounting policies. Mtel does not enter into
transactions with the derived financial instruments
(derivatives), such are interest rate swaps or forwards.
Market risk includes the risk of the foreign currency
exchange rate fluctuation, risk of the interest rate
change and risk of the capital prices changes
respectively.
• Risk of the foreign currency exchange rate fluctuation
- although Mtel performs part of its transactions
in the foreign currency, the Management’s opinion
is that it is not exposed to any significant risk of
the foreign currency exchange rate fluctuation in
its business operations in the country and abroad,
since the business transactions are performed
mostly in the local currency (convertible mark
-BAM), as well as in EUR, to which the convertible
mark is related by the fixed exchange rate (1 EUR
= 1,95583 BAM).
• Risk of the interest rates change – Mtel is exposed
to various risks, which, through the changes of
the interest rates level, affect its financial position
and cash flows. Given that Mtel does not have any
significant interest-bearing assets, the income is
quite independent in terms of the market interest
rates changes. The Mtel’s risk of the interest
rates change arises primarily from the long-term
loans received from the suppliers. The changeable
interest rate loans expose Mtel to the cash flow
interest risk, while the fixed interest rate loans
expose Mtel to the risk of changes in the interest
rate fair value. During the year, having ended on
31 December 2018, most of the liabilities under
the loans had variable interest rates, related to
the EURIBOR. The liabilities under the changeable
interest rate loans have mostly been in foreign
currency (EUR).
• Risk of the capital value change – in the 2018
reporting period, Mtel has been exposed to certain
risk of changes in the registered securities prices.
These investments are purposed more for strategic
purposes, rather than for the daily trading purposes,
and are not subject to the active transactions.
Market Risk
Annual Report 201853
Liquidity management is centralized on the Mtel
Company’s level. The responsibility for liquidity rests
with the management, which has established specific
procedures related to the short-term and long-term
liquidity risk. Mtel manages its assets and liabilities
in the manner that allows it to fulfil its obligations
at all times.
Mtel has a sufficient amount of high-liquidity assets
(cash and cash equivalents) at its disposal, as well
as a continuous inflow of funds from the services
realization, which enables it to service the obligations
in due time. Mtel does not use any financial derivatives.
For the risk management purposes, Mtel has adopted
the financial policies that define dispersion within
the decision-making levels in the process of specific
goods/services procurement. This dispersion has
been made by establishing the limits to which the
individual persons, or the bodies of Mtel, may decide
on the particular procurement.
Credit risk is related to the risk when the other party
does not perform its contractual obligations towards
Mtel, which will result in the Mtel’s financial loss.
Mtel has adopted the policies for monitoring of the
partner’s credit standing, as well as for requesting
certain warranties (collaterals) where possible, all with
the aim of reducing the potential risk of financial
losses, caused by non-performance of the contractual
obligations.
The credit risk arises in relation with the receivables
from legal entities and physical persons, cash and
cash equivalents, deposits with banks and financial
institutions, as well as the commitments. Mtel is
exposed to the credit risk to the limited extent. The
credit risk security was established by undertaking
certain measures and activities on the Mtel’s level.
Mtel does not have a significant credit risk
concentration related to the receivables, since it has
numerous mutually non-related customers with small
amount of respective debts. Along with the services
suspension, the following collection mechanisms are
also used: debt re-programming, settlement with legal
entities, legal actions, out of court settlements, etc.
Repayment of the credits, extended to the Mtel’s
employees, is secured by application of the
administrative measure, namely deduction of the
particular amount from the salary. The employees
who leave the Company regulate the outstanding
debt repayment at the moment of their actual leaving
from Mtel.
Liquidity Risk Credit Risk
Annual Report 201854
EVENTS AFTER THE REPORTING PERIOD
1.6.5.
On the day of 31 January 2019, it was realized the
Share Purchase and Transfer Agreement, for 100%
capital share in the Company Blicnet d.o.o. Banja
Luka, by which the 100% capital share in the Blicnet
d.o.o. Banja Luka was transferred to the Mtel a.d.
Banja Luka. On the day of 6 February 2019, it was
realized the Share Purchase and Transfer Agreement,
for 100% capital share in the Company Telrad Net
d.o.o. Bijeljina, by which the 100% capital share in
the Telrad Net d.o.o. Bijeljina was transferred to the
Mtel a.d. Banja Luka. Transfer of the share from
the Seller to the Purchaser causes the change in
the ownership structure, so that the ownership of
the share is transferred to the Purchaser, by which
the Purchaser obtains all the rights, obligations and
authorizations originating from the share. On the basis
of the mentioned Agreements, the Company obtained
the right to register as the owner of the share in
the relevant court registers, by which it became the
legal and actual owner of the share and acquired all
the rights the owner of the share in the mentioned
companies was entitled to acquire.
On the day of 31 January 2019, the District Commercial
Court in Banja Luka issued the Decision by which the
Company was registered as the 100% share owner
of the Blicnet d.o.o. Banja Luka and, on the day of
6 February 2019, the District Commercial Court in
Bijeljina issued the Decision by which the Company
was registered as the 100% share owner of the Telrad
Net d.o.o. Bijeljina.
Annual Report 201855
1.7.
CAPITAL INVESTMENTS
Annual Report 201856
In the course of 2018, there have been realized the
investments, with the aim of further enhancement
of the services portfolio that Mtel provides to the
customers in all segments of the telecommunication
services and introduction of new services, with
continuous activities in the fixed and mobile network
and internet modernization.
With the primary aim to realize a long-term financial
effects, Mtel has bought a business building in 2018,
which is the only building in Banja Luka that satisfies
the Company’s spatial, infrastructural and logistic
needs.
The total realized investments in 2018 amount to
BAM 152,6 million.
Capital investments
75,9
152,6
2017 2018
BA
Mm
Annual Report 201857
The capital investments in the mobile telephony have
been realized in the amount of BAM 16,9 million in
2018. The most important investments are realized
in the wireless access network and construction of
mobile telephony objects, services, service systems,
and core and service mobile network platforms.
In the course of 2018, a total of 123 mobile telephony
base stations and 17 repeaters were put into
operations, thus, at the end of 2018, there was a total
of 1.450 base stations, and 99 pico repeaters. Along
with this, the coverage, capacity and service quality
have been enhanced through introduction of 3G on
900 MHz, introduction of F2 and F3 on 2100 MHz,
while the LTE1800 MHz equipment installation has
been preformed on the total of 120 locations and LTE
800 MHz on 60 locations. The mentioned equipment
will be put into operation when the Communication
Regulatory Agency (CRA) issues the required licenses.
Along with construction of each new location, the
conditions are met for the exisitng wireless transport
network optimization, in regard with the hops number
or protection level reduction.
One of the significant activities in 2018 has been
the connection of Mtel and Deutsche Telekom signal
networks, by SIGTRAN protocol stack and traffic
migration from E1 links to the IP/SIGTRAN. On the
Mtel cloud, it has been installed the system for mobile
users protection on the internet, by means of the user
traffic re-routing and the user notifying on potentially
insecure web sites.
In the core mobile network, it has been performed
the preparation and connection of the PS Core and
CS Core networks for the purpose of introduction
of the LTE technology and services. Following the
trends, we have procured the test equipment for
construction of the LoRaWAN network with the aim
of testing the commercial market potential in the IoT
service domain.
In the course of 2018, the conditions have been met
for further mGo application improvement, which also
entails the existing version re-designing in accordance
with the latest market trends, in terms of Company’s
strategic aims and, also, global directions of the
android and IOS platforms development. The mGo
application is enriched with new services, avilable to
the users, such as: real time account balance check for
the data traffic, minutes, SMS, IPTV program scheme,
speed test for mobile internet, presentation of the
offer to the user depending on their consumption and
actual campaigns, user’s application for the electronic
subscriber bill delivery, information on m:tel points of
sale and customer care, and other similar services.
The Mtel Company recognizes the importance of the
online business and customer care thus, in 2018, it
has significantly improved the Company site (mobile
first buy), but also the self care activities through
the site and specialized application „Moj m:tel“ on
the key platforms (Android and iOS).
Capital Investments in the Mobile
Telephony
The greatest capital investments in 2018 have been
realized in the fixed telephony segment, in the amount
of BAM 38,4 million, that is in the segment of cable
transport and access network construction.
In 2018, the optical access network construction in
the cities of the Republic of Srpska has continued, to
make the new broadband technology approach every
user. Optic network enables multiple internet speeds
increase, better service quality with a set of new
functions, through the possibility of use of the most
contemporary Mtel IPTV packages, not only in the
major cities, but also in the smaller towns and rural
environments. This is the case of a revolutionarily
better technology, enabled by investing significant
funds in the access network and technical capacities,
thus having created the preconditions for provision
of the top quality services to the customers.
With intensive contruction of the backbones and
regional optic cable links, primarily on the City of
Banja Luka territory where the total of 143 km cable
ducts have been, the integrated services users’
number has increased. We have continued the access
network modernization projects in the IJ Doboj and
IJ Zvornik areas, as well as the optic access network
construction in the IJ Prijedor, IJ Brčko, IJ Istočno
Sarajevo, IJ Foča and IJ Trebinje, and transfer of the
users to the VDSL and GPON technology, for the
purpose of quality broadband service provision.
Capital Investments in the Fixed
Telephony
The preparation and performance of the works in the
OTN/DWDM network enhancement have continued
in 2018. Additional capacities have been realized for
new traffic requests with construction of the DWDM
structure on the lines Višegrad – Užice, Šipovo –
Mrkonjić Grad and Banja Luka – Mrkonjić Grad, and
new protection route has been established over the
Republic of Serbia territory on the line Bijeljina –
Telekom Srbija network – Višegrad.
The Time Pictra synchronization supervision system
upgrade to the latest version has been finished.
The activities continued in the fixed Backhauling
optimization, with alteration of the access network
elements connection to the IP/MPLS network,
formation of new IP/MPLS aggregation points and
optic rings, and their protection on the link level.
Annual Report 201858
Capital investments in the Internet are realized in the
amount of BAM 14,1 million in 2018. The majority of
this year’s investments into Internet relates to the
procurement of the terminal equipment for business
and residential users (IAD, STB, ONT, VoIP gateway
equipment, routers and other user equipment), as
well as to new terminal equipment types testing for
the purpose of their installation at the end users’.
It should be noted a permanent IPTV users’ number
rising and, in line with these trends, the capacities of
the IPTV STB system have been enhanced, as well
as the capacities of the system, both in terms of
number of nPVR and OTT channels, thus the following
functionalities are enabled on the platform: pause
contents, watching over, catch-up, and contents
recording available on 100 channels instead of
previously available 30 channels.
Since TV is more than just watching TV program, the
IPTV service is enhanced with two new applications:
Vijesti (News) and Sportski rezultati (Sport Results).
The applications are designed in the way that the
Capital Investments in the Internet
users, by means of a remote control, may easily
access the desired news, see the gallery of pictures
or video, and share the news on their Twitter account.
Both applications are linked to the Interactive Guide
and, in the course of watching the TV channel,
enable showing the announcement in case the
“breaking news” appears on the portals or in case an
important sports match finishes. Along with these two
applications, there is also developed an application,
namely additional mode for the youngest ones, which
offers a full parental control of time limit, selection
of age appropriate contents, as well as a completely
new look, fully adapted to the youngest ones.
A special attention is given to the improvement of
the OTT service, and, along with increased number of
OTT channels, it is also enabled the use of non-linear
functionalities like pause contents, watching over, 72h
catch-up, and the recorded contents reproduction.
Along with this, it was performed the adaptation of
new versions of multiscreen applications (TV To Go
for telephone, tablet and PC), all with the aim of
improving the customer experience.
Capital investments in the information technologies
have been realized in the amount of BAM 9,9 million
in 2018.
In 2018, several strategic directions marked the Mtel
Company activities: improvement of digital channels
in marketing and sales, development of the ICT
service portfolio, and improvement in the business
processes management through number of projects
and upgrades on the internal business systems.
In the course of the year, mobile applications for iOS
and Android have been developed, having enabled the
users to review their services, accounts and requests
and, on the corporate portal, it has been enabled the
Card payment via web for electronic top-ups and the
prepaid tariff plans purchase.
In the ICT services domain, it has been completed
the Cloud platform migration to the KVM hypervisor
and OpenStack, with installation of new hardware,
enhancement of the storage, and transfer of all existing
internal and external virtual machines to the new
Capital Investments in the
Information Technologies
infrastructure, by which the security and complete
system performances have been enhanced. New ICT
service for agricultural producers has been realized,
purposed mainly for automated management of the
agricultural production by application of contemporary
technologies and scientific achievements. The Service
has been realized on the Mtel Cloud infrastructure, on
the shared business model basis. Important is also the
presentation of new ICT and Cloud service portfolio in
the Chamber of Commerce entitled “Cloud services
for more efficient business“, and participation at
the Microsoft Community BH conference with the
presentation “m:tel – one stop shop for ICT services“.
Implementation of new technological solutions has
also continued in the infrastructure, such as storage
systems virtualization or network functionalities
virtualization system installation, and numerous
projects, contributing to the IT security enhancement,
have been successfully implemented as well.
Annual Report 201859
1.8.
HUMAN RESOURCES
Annual Report 201860
As at 31 December 2018, the total number of employees
is 2.131, that is six staff less, relative to the end of
the previous year. Out of the total headcount, there
are 1.295 or 60,8% males, whereas there are 836
or 39,2% females.
In terms of the staff qualification structure on the
Company level, the secondary school certificate
holders have the greatest participation (54,5% or
1.162 staff). The second most numerous category are
the university degree holders (39,1% or 834 staff),
which also includes the master’s and doctor’s degree
holders.
In terms of age, the major share in the total headcount
belongs to the 41-50 age group with 39,5% or 842
employees, as well as to the group of over 50, with
32,8% or 700 employees.
Total number of employees
2.137 2.131
31/12/2017 31/12/2018
54,5% 39,1%
0,1%2,1%
4,2%
Staff Qualification Structurein 2018
Two-year college degree
Highly skilled
Skilled
Ph. D, M.Sc, University degree
Secondary school
7,5%
20,2%
39,5%
32,8%
41 to 50 years
Over 50 years
Under 30 years
Staff Age Structurein 2018
31 to 40 years
Annual Report 201861
In the course of last year, various types of training
have been organized with the aim of business
processes improvement through improvement of the
employees’ competences in various spheres (in th
sphere of technics, management, sales) as well as
the communication improvement.
Having in mind a long-lasting experience in the
staff education and knowing the Company’s internal
potential to develop educational activities in line
with its own business needs, the priority was set to
organization of internal trainings and the Internal
academy – „m:akademija” activities.
Following the annual education plan, we have
organized a large number of in-house and internal
trainings for all Company’s organizational units.
Two team buildings have also been organized for the
Executive Board members and newly recruited staff.
The second year of the Internal Academy activities is
organized in two semesters. A total of 46 trainings has
been realized for about 1.000 participants, and 36
internal trainers have been engaged in the realization.
Internal trainings have been held in the sphere of
technics, sales, project management, other business
skills and software and applications.
In the course of 2018, the following activities have
been realized:
• The culture of innovativeness improvement through
the employees education on design thinking tools,
i.e. customer-oriented solutions of the business
problems,
• The culture of cooperation improvement through
internal events, entitled Strengthening the Synergy,
which have been attended by the management
representatives and the Executive Units employees,
with the aim of strenthening the team,
• The culture of administration reduction, which
entails the HR process digitalization through
development and putting into operation of the
module for submission and approval of the requests
for education and business trips,
Education Internal Trainings Activities in Improvement of the
Company’s Organizational Culture
• The HR process harmonization with the Company’s
corporate values, by means of correction of
the performance evaluation process through
harmonization of the main competences with the
corporate values,
• The couching culture through educations on the
intensive, result-oriented cooperation model on
all levels of the management, but also on the
operational levels, have been organized throughout
the year.
Annual Report 201862
INFORMATION TO THE INVESTORS
1.9.
Annual Report 201863
The total realized turnover of Mtel is BAM 3,38
million, which makes 3,4% of the total realized
regular turnover, according to the Banja Luka Stock
Exchange annual statistical report, while 853 realized
transactions put Mtel at the second place in the total
realized turnover of the Banja Luka Stock Exchange
in 2018.
The average price of the Mtel’s share in 2018 is BAM
0,95, the minimum share price is BAM 0,77, while the
maximum realized price is BAM 1,06.
On the last day of the Mtel’s shares trading in 2018,
the share price is BAM 0,83.
As at 31 December 2018, the market capitalization is
BAM 407,85 million.
At the Shareholders Assembly session, held on 7
December 2018, it was passed the Decision on
Payment of the Interim Dividend from the H1 2018
profit, in the amount of BAM 22,57 million.
The interim dividend was distributed equally over all
Company’s shares upon the principle – the same face
value of BAM 0,046 per share.
Telekom Srbija a.d.Beograd, Srbija
Pension Reservs Funda.d. Banja Luka
Restitution fundRepublic of Srpska
a.d. Banja Luka
DUIF Kristal invest a.d.OMIF Future fund
Other shareholders
65,01%
8,92%
5,03%
3,30%
17,74%
65,01%
8,92%
5,03%
3,18%
17,86%
20172018 Mtel Shareholders Structure
The decreasing profitability of majority of the
companies, whose shares are traded at the stock
exchange, has caused the reduced investors’ interest
in investing into shares.
Due to the high yield with acceptable risk, the investors
have changed the focus and oriented towards bonds
trading, which consequently leads to decrease in the
shares trding at the Banja Luka Stock Exchange year
after year.
Pursuant to the Law on Securities and Rulebook on
the Registration and Transfer of the Securities with
the Central Securities Register, as at 15 April 2003,
the Mtel’s share capital was divided into 260.230.389
regular shares with the face value of BAM 1.
The Mtel a.d. Banja Luka shares have been quoted at
the Banja Luka Stock Exchange since 11 May 2004.
As at 31 December 2018, the share capital value was
BAM 491,38 million.
In the shareholders structure, the majority relates
to Telekom Srbija, with 65,01% share in the total
capital of Mtel. The Mtel shareholders structure on
31/12/2018 is presented in the chart below:
Information to Investors
Number of transactions
Total turnover (BAMm)
Market capitalization (BAMm)
Paid dividend (BAMm)
EPS (Earnings per share)
ROIC (Return on invested capital )
2018
853
3,4
407,8
56,2
0,124
8,74%
2017
1.000
5,3
516,0
63,5
0,122
9,54%
% change
-14,7%
-36,6%
-21,0%
-11,5%
1,8%
Annual Report 201864
2.
MTEL GROUP
2.1. MTEL GROUP STRUCTURE
2.2. MTEL GROUP FINANCIAL INDICATORS
2.3. LOGOSOFT, DOO SARAJEVO
2.4. MTEL AUSTRIA GmbH
Annual Report 201865
As at 31 December 2018, within the Mtel
Group there are the parent company - Mtel
a.d. Banja Luka and two subsidiaries with
100% of the parent company share: Mtel
Austria GmbH, with the corporate seat in
Vienna, and Logosoft d.o.o. Sarajevo.
MTELGROUP
Logosoft d.o.o.Sarajevo
Mtel a.d.Banja Luka
Mtel AustriaGmbH
2.1.
MTEL GROUP STRUCTURE
Annual Report 201866
FINANCIAL INDICATORS OF THE MTEL GROUP BUSINESS OPERATIONS
2.2. The business year 2018 has been characterized with
BAM 60,9 million realized net profit, representing
8,1% increase relative to the previous year.
The realized EBITDA margin is 13,65%.
The total revenues at the Mtel Group level, in the
amount of BAM 460,5 million, have recorded 3,4%
growth, relative to the year 2017.
Total income (BAMm)
Total expenditures (BAMm)
EBITDA (BAMm)
EBITDA margin
EBIT (BAMm)
EBIT margin
Gross profit (BAMm)
Net profit (BAMm)
Total assets/equity and liabilities (BAMm)
Total number of users (in million)
Total number of employees
460,5
392,3
163,2
36,09%
61,7
13,65%
68,2
60,9
973,6
1,66
2.259
445,6
382,5
159,9
36,58%
55,1
12,62%
63,1
56,3
841,5
1,63
2.253
3,4%
2,6%
2,1%
11,9%
8,2%
8,1%
15,7%
1,6%
0,3%
Key Business Operations Indicators 2018 2017 % change
+8,1%
Net profit margin
Net profit
12,88%13,47%
56,360,9
2017 2018
BA
Mm +1,6%
Total number of users
1,631,66
2017 2018
mill
ion
Annual Report 201867
LOGOSOFT, DOO SARAJEVO
2.3.
The Company of “Logosoft d.o.o. Sarajevo” was
founded in 1995 as a computer engineering company.
The past 24 years of successful business are
characterized by innovations in the field of various
concepts and technologies, by which the Company
is recognized as the leader at the contemporary,
business information-communication solutions
market. Since its establishing, the Company has been
expanding its services portfolio, from the Internet
access services, over its own fiber infrastructure, to
the fixed and mobile telephony services, IP television,
network integration activities, software and business
solutions, colocation and cloud services in its own
Data Center, as well as the IT education.
Logosoft d.o.o. Sarajevo has continued to spread its
operations outside the BiH market, by establishing
the company – „mts sistemi i integracije d.o.o.
Beograd“ in Serbia, with 100% ownership share,
thus having extended the volume of its successful
business operations to the regional level. With this,
Logosoft has made an important step ahead towards
fulfillment of the Company’s positioning strategy,
both within the MTS group and global ICT market.
Offer the cutting-edge information-telecommunication
services, create extraordinary business solutions, and
provide our subscribers with the best value for their
money, with continuous investing into the services
development and our employees’ education, as well
as into the relationships with the end users.
By following the global trends, we create the
contemporary business information-communication
solutions, facilitate everyday communication and
create a better living and business environment for
the modern people.
Company Background and Origin Mission Vision
Annual Report 201868
Logosoft has strengthened its position and set high
standards for provision of the business information-
communication services. Logosoft business platform
unifies the permanent Internet links services,
connection of distant locations – VPN, fixed and
mobile telephony, mobile Internet lease service,
Office365 solution of server and office applications,
local, global and hybrid cloud solutions and, as
such, represents an excellent business, information-
communication solution.
Development of various business solutions in the
system integration domain, software development
and establishment of the new generation Logosoft
Data Center, as well as the implementation of
various solutions on the Microsoft platforms, have
promoted Logosoft into a reputable business partner
of many companies in BiH market. Several years
of experience in the Microsoft Dynamics NAV and
Microsoft Dynamics CRM solution implementation
projects, distinguish Logosoft both on the Bosnia
and Herzegovina territory and in the region. The
Logosoft Company is the only Microsoft partner
with the Microsoft Gold ERP partner competence
in Bosnia and Herzegovina, which has a localization
CfMD module for NAV 2018, as well as the salaries
calculation module for the BiH market, which
represents a significant comparative advantage over
the competitor companies.
„Logosoft Edukacija” is the first Microsoft-certified
training center and certified VUE and Certiport
test center, with greatest number of trainings in
technical knowledge, required for IT professionals
and programmers.
Through its business policy, the Logosoft Company
provides a continuous support to development
and promotion of culture, sport, art and education
in Bosnia and Herzegovina, which is one of the
fundamental characteristics of the Company’s
socially responsible operations and business policy.
In 2018, they have supported and contributed to
successful operations of the Sarajevo Philharmonic,
Kamerni teatar 55 and Youth Theater, as well as
provided a financial support in realization of the
Bosnian Culture Center Sarajevo. Having supported
IT education, Logosoft has been the partner of the
greatest IT Conference in BiH - Microsoft NetWork,
for 8th time, and 7th MSCommunity BiH conference,
the most important gatherings of IT professionals
from BiH and region. The same support has also
been given to the Infoteh Jahorina 2018 tehnical
conference. In 2018, the cooperation with the Faculty
of Natural Sciences and Mathematics Sarajevo
continued, and the support has also been given to
the Mathematicians Association of the Sarajevo
Canton, by which Logosoft has directly supported
the education process of young people and children.
The Logosoft Company has expressed its support
and determination for a safe society by supporting
the European Safety Conference - EUROCRIM 2018,
which gathered the greatest global experts in the
field of criminology and criminalistics. Logosoft has
also supported “The Safer Internet Day“, aimed at
promoting the efforts and activities in prevention
of children and youngsters abuse on the Internet.
The Logosoft’s stable busines operations on the
national market and expansion of the business into
both regional and European market, have been the
characteristics of the year 2018. Partnership with
global cloud vendors – Microsoft and Cisco, and direct
connections with the largest global Tier 1 parent
providers, has enabled the Company to plan and
work on joint implementation of the cloud-based
services and high level of services availability and
reliability on the local and regional level.
In 2018, Logosoft has received two prestigious
certificates, which confirmed its compliance with
the requirements of the International ISO standards,
ISO/IEC 27001:2013 for the information security
management system and ISO/IEC 20000-1:2011 for
IT services management system.
Activities Corporate Social Responsibility
Main Characteristics of the 2018
Business Operations
With continuous support extended in 2018 to the
„Pomozi.ba” Association, the Children’s Psychiatry
Ward and Gastroenterohepatology Ward of the
University Clinical Center Sarajevo, Association of
the Persons with Children’s Palsy of the Sarajevo
Canton, Association of Persons with PTSP - “Life“,
Association ”Culture of Rememberance“, „Edhem
Mulabdić“ Grammar School Maglaj, the School of
Mechanical Engineering Students’ Association, they
have confirmed their sincere wish to improve the
quality of life in the country, by pursuing the activities
with corporate social responsibility.
In the course of 2018, the Company has obtained
the extension of the Cisco Cloud and Managed
Service Provider Master (CMSP Master) status,
thus having re-confirmed that the Logosoft Data
Centar has satisfied all strict technical, security
and organizational requirements for the Cisco
partners who offer cloud services based on the Cisco
infrastructural solutions. With this, the Company has
confirmed the position of the regional leader in the
field of the cloud-based services and technologies.
The proof of the above stated is BAM 1,7 million net
profit, realized by Logosoft in the course of 2018.
Annual Report 201869
MTEL AUSTRIA GMBH
2.4.
The subsidiary - Mtel Austria GmbH, with the seat in
Vienna, founded by Mtel a.d. Banja Luka, commenced
its commercial operations on 1 October 2015, and the
entering and registration of this newly established
company with the register of the relevant authorities
of the Republic of Austria was done on 1 July 2014.
Lead by the tradition and strength of the Telekom
Srbija Group, we provide our customers with a unique
communication experience that makes their life in
Austria easier and better, and their connections with
the motherland - stronger and closer.
Under the corporate slogan - Closer to Home!
(Näher daheim!), we offer mobile telephony services,
primarily purposed and tailored for our customers
in Austria, originating from Bosnia and Herzegovina,
Serbia or Montenegro, those who often travel there
or those who need a frequent communication with
the people from these countries.
Regulation of the telecommunication market in
Austria falls within the competence of Regulatory
Agency – Rundfunk & Telekom Regulirungs (RTR), and
it is based on the Republic of Austria Communications
Law.
A step ahead of the others! We wish to be the
customers’ first choice in the communication world
of services.
Company Background and Origin
Mission
Strategic Goals and Values
Regulatory Framework
Vision
Annual Report 201870
The 2018 business operations of Mtel Austria are
marked with the new market presentation strategy
and orientation towards enhancement of the postpaid
offer and growth of the postpaid customer base,
with maintaining a continuous growth of the prepaid
customer base. The number of the mobile telephony
users on 31/12/2018 recorded a growth of 56,8%
relative to the previous year.
The enhanced participation of the postpaid users
in the customer base, for 8 percent, is the result
of the targeted offer and communication, as well
as recognized potential for further growth of this
customer base.
In the course of 2018, the service tariffs have been
re-designed and the high-class telephones sale has
been introduced. Improvement of the postpaid offer
included unlimited calls to EU, in Austria, towards the
networks of the Telekom Srbija Group, and unlimited
calls from Serbia, BiH, MNE towards all networks in
Main Characteristics of the 2018
Business Operations
Austria and Telekom Srbija Group networks. Also,
the mobile internet quote was enhanced within the
monthly subscription.
Use of the Mtel Austria services constantly grows
and it is expected to continue in the oncoming
period, as the result of enhanced use of the services
by the existing customer base, as well as due to
generating a number of new customers, particulaly
in the postpaid segment.
In the course of 2018, intensive campaigns have been
launched in the sphere of the integrated marketing
communcations: digital marketing, advertising, direct
marketing, sales improvement, events and social
responsibility. Digital marketing was the dominant
way of communication, particularly in the second
half of the year.
The logo of the Mtel Austria Company has been
changed and the corporate website re-designed.
Annual Report 201871
Vuka Karadžića 2
78 000 Banja Luka
Tel: +387 (51) 240 100, +387 (51) 240 101
Fax: +387 (51) 211 150
www.mtel.ba
Ausstellungsstrasse 50 / 2. Stock
1020 Wien
Austria
Tel: +4312051073194
www.mtel.at
Igmanska 9, Bosna i Hercegovina
71120 Sarajevo – Novo Sarajevo
Tel: +387 (33) 931 900
Fax: +387 (33) 931 901
www.logosoft.ba
Telekomunikacije Republike Srpske,
a.d. Banja Luka
Mtel Austria
GmbH
LOGOSOFT, d.o.o.
SarajevoCONTACTS
Annual Report 201872
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