Thursday, September 21, 2006

Battle for third mobile operator begins / NIP

Somewhat sooner than expected, the Serbian government announced that the license for the third mobile phone operator, to compete against Telenor and state owned MTS, would be granted before the end of the year.

The news suggests that the Serbian government did a good job in selling Mobitel to Telenor since some observers claimed that part of that contract would be to give the winner at least 6 months of 'breathing space' before having to compete against a third rival.

As previously stated the starting price for the license will be 320 million Euros. Potential bidders include France Telecom, Oraskom (Egypt), Deutch Telekom (Germany), Telefonika (Spain), KPN Mobile (Holland) and Mobilkom. For now there is no word from mobile giant Vodaphone who have an agreement with Mobilkom not to compete on the same market.

The favourites must be Mobilkom who want to be present on the Serbian market as part of their wider regional strategy. But the same is true for Deutch Telekom (T-Mobile).

For now most analysts are keeping silent on how much they believe the government will bank but government sources suggest that any sum over 500 million Euros will be highly satisfactory.

And much of that total will be ploughed into the National Investment Plan which is a smart strategy for governing DSS since polls suggest that the Serbian voting public is rather keen on the NIP. Rather predictably the IMF have been sounding the alarm bells on the same issue. They claim that the money could be more wisely spent and are worried about the potential inflationary pressure on the economy.

It is crucial that funds from the NIP are wisely spent since there are only a few more large scale privatisations left to be carried out in Serbia - such as NIS (Oil Industry of Serbia). And one must be wary of the government tending to spend money on projects they believe will increase their popularity rather than benefit the country in the longer term.
However, many of the projects, particularly relating to infrastructure are necessary and long overdue. The current government may be fortunate to find itself in this position but if the money is well spent the current government will deserve to be remembered positively, on this issue at least.

2 Comments:

Blogger Bg anon said...

Well the 'battle' turned out to be rather tame.

The only company that purchased the docuementation requried to take part in the bidding process for the license was Mobilkom.

My opinion? Above all there should have been some clause that stated that the process could only go ahead if more than one company purchased documentation.

And my optimism on this turned out to be misjudged. It looks as if the current government is more concerned with banking this money to sweeten up the electorate before elections ASAP.

Pity.

6:50 pm  
Anonymous Anonymous said...

I wonder what difficulties NIS will face even before it tries to start the process of privatization? It's not a secret that the company is involved in a wild bunch of litigation proceedings. Each of them can impede privatization because the decisions taken by courts can be unfavourable. Oh, wait! How the decisions of Serbian courts where NIS is involved can be unfavourable since it's a JP?! All is bought and sold here. God save Serbia...

1:17 pm  

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