Bosnia and Herzegovina Telecommunications Report Q4 2009

Bosnia and Herzegovina has three incumbent telecoms operators, BH Telecom, HT Mostar and Telekom Srpske, each of which is expanding out of its historical concession area. The country is split into two distinct political regions, the Federation of Bosnia and Herzegovina (FBiH) and the Republic of Srpska. BH Telecom is the largest operator and had the largest historical concession area, being the major of the FBiH. Meanwhile, HT Mostar is the smallest of the three, being historically responsible for the Herzegovinian region. Telekom Srpske was the incumbent for the Republic of Srpska and remains the only one of the three operators to have been majority privatised, being under the control of Serbian incumbent Telekom Srbija.

Although noises continue to emanate from the government of the FBiH about the privatisations of BH Telecom and HT Mostar, no formal timetable has been established and political infighting continues to delay the privatisation process. However, in July 2009 HT Mostar was listed on the Secondary Free Market of the Sarajevo Stock Exchange paving the way for further privatisation of the operator. HT Mostar is 39.1% owned by T-Hrvatski Telekom, the Croatian incumbent that is itself controlled by Germany's Deutsche Telekom. Meanwhile, a number of operators including Telekom Slovenije and Telekom Austria have expressed an interest in BH Telecom. Once the privatisations have been completed we expect an influx of investment into the telecoms sectors and intensification of competition.

Meanwhile, the markets have now been liberalised enough that incumbents are competing in each others historical concession areas, which has resulted in renewed vigour to the country's telecoms markets.

Last year saw Bosnia's broadband market finally take off with xDSL connections driving growth. At the end of 2008, there were over 100,000 xDSL connections after y-o-y growth of 177%. The three incumbents are aggressively expanding their ADSL networks to meet the demand for high-speed internet access. A number of alternative operators such as Logosoft are ensuring competition to the incumbent operators and helping to drive down prices. Wireless broadband is also playing an increasingly important role in the sector's development, with 37,000 wireless broadband connections reported at the end of 2008 after annual growth of 136%. With Bosnia's challenging geographic terrain and large rural population, wireless broadband technologies will play a vital role in Bosnia's broadband future.

The mobile sector is the most dynamic of Bosnia's telecoms markets as each of the operators has aggressively expanded into each others' historical concession areas. Commercial 3G launches are expected to take place by the end of 2009 after licences were issued in March 2009.