HOW ŠOLAK BECAME THE RICHEST SERB: The unstoppable push into the regional market with the support of big investment funds (4)

From 2007 onwards, Šolak's SBB found itself in increasingly favourable circumstances. The company was for the most part ahead of Telekom both as a cable provider and the biggest internet service provider in Serbia. In such an environment, Šolak was quickly expanding his network by purchasing local cable operators. In 2007, the London-based investment fund Mid Europa Partners, with George Soros as one of its key investors, took ownership of SBB.

In the period that followed, Telemach Group, which covered Slovenia and Bosnia & Herzegovina, was acquired. The company United Group was subsequently founded, comprising SBB and Telemach, with Šolak appointed as the chairman of the board of directors.

United Group combined the biggest internet service providers and cable and satellite television operators in the former Yugoslavia, with over 1.8 million users in total: SBB (Serbia Broadband) – the biggest operator and internet service provider in Serbia (over 700,000 users); Telemach – the main cable operator in Slovenia and Bosnia & Herzegovina; Total TV – the first satellite television network, with operations in six countries of the former Yugoslavia; NetTV Plus – the main IPTV operator; United Media – the owner of Sport Klub television channels (12 channels), Sinemanija, Ultra, Mini Ultra, Lov i Ribolov (Hunting and Fishing); and CAS Media – the biggest advertising space sales agency.

In 2014, United Group purchased the "turbo-folk music" entertainment industry giant Grand Produkcija (Grand Production) and acquired a majority stake in the Montenegrin cable operator BBM. Lastly, United Group started its own regional television channel TV N1 – CNN's exclusive partner with television studios in Belgrade, Zagreb, and Sarajevo. This controversial move made it possible for Šolak to combine distribution and production of media content, which was one of the key operations in gaining a dominant market position. Slovenian citizen Tomaž Jeločnik, CEO of the British Virgin Islands-based BL Media Group Limited – a company whose actual owner was Dragan Šolak – served in TV N1's management as a representative.

In 2015, another precedent was set when United Group purchased the Slovenian Tušmobil. This was the first case in the region involving a cable operator acquiring a mobile telephony company. Next, in 2017, the group bought the operations of Central European Media Enterprises in Croatia and Slovenia. These included the most-viewed Croatian television channel TV Nova, whose evening news programme is the country's most popular television show, as well as POP TV, whose "24ur" is the leading Slovenian news programme. At the same time, United Group continued to expand into fixed and mobile telephony and take over its competitors, such as BHB Cable TV (Bosnia & Herzegovina), M-kabl (Montenegro), and Ikom (Serbia).

In 2018, United Group obtained a permission from the Commission for Protection of Competition for purchasing a 100-percent stake in Direct Media – a company formerly owned by Dragan Đilas – in the Serbian, Montenegrin, North-Macedonian, and Albanian markets. This included Direct Media getting the approval for purchasing the television stations Pink BiH and Pink in Montenegro. The group then expressed an interest in buying TV Pink in Serbia and the television stations owned by the Greek Antenna Group – TV Prva and O2.

By diversifying its media portfolio, United Group made serious forays into television content production, culminating in founding new media outlets and acquiring the existing ones in the region, e.g. TV Nova S and the daily with the same name, as well as the Danas daily. Numerous media outlets have actively been bought in recent years in Bulgaria and Montenegro. The acquisition of the Vijesti (News) concern is currently under way in Montenegro.

As United Group was expanding in the field, it regularly changed both owners and investors. In late 2013, the Mid Europa Partners fund initiated the sale of its stake in the company. In late March 2014, a majority stake was acquired by the investment firm Kohlberg Kravis Roberts & Co (KKR), which had US Army General and former Director of the CIA, David Petraeus, as chairman. This US investment fund paid USD 1.3 billion for taking over UG.

Five years later, in the summer of 2018, UG was sold to the UK fund BC Partners for EUR 2.6 billion. At the time, SBB had a 55-percent market share in Serbia, which set the alarm bells ringing at Serbia's Telekom, which found itself on the verge of complete destruction. Facing it was a giant owned by big international investment funds whose path, from a business operation "based in a Kragujevac garage" to the regional monopolist worth several billion US dollars, was marked by an expansion that resembled the primitive accumulation of capital, with no punches pulled.

COMING UP NEXT: The secret of SBB's success – how the state, Telekom, and Serbian Postal Services handed the market over to United Group without a fight

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