As a result of the cable operator SBB's unhindered expansion, this company, owned by Dragan Šolak, had a 54-percent market share in Serbia in the fall of 2018. Telekom's share, according to the official RATEL figures, stood at only 25 percent although its actual share was far less, per the state operator's own internal research.
Telekom has suggested that this sort of development was helped along by both bad decisions made by the company management post-2000 and the political limitations imposed on the state operator at a time when Šolak's SBB pulled no punches taking over the market with nary a competitor.
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When 49 percent of Telekom shares were sold in 1998, although the strategic decisions made at the time envisaged that The Serbian Postal Services was to be the main cable operator in the country and Telekom a company involved in telecommunications (telephony and the internet) development, from 2001 onwards the development of The Postal Services' cable network (KDS) was stopped even as Telekom's cabling infrastructure was freely available to privately-owned operators.
Stopping the development of KDS at a time when its competitors – above all SBB – were taking over the available market space was justified by the fact that The Serbian Postal Services was facing financial problems as a result of the government putting a strain on the company by imposing on it the financing of the Telekom share repurchase from the Italian STET.
In a business operation carried out in December 2002 by the Government of Serbia, 29 percent of Telekom shares – bought only five years before by the Italian STET for EUR 497 million – were repurchased for EUR 195 million. Because The Serbian Postal Services was financially drained as a result of the purchase, the possibility of Telekom buying the part of the Postal Services involved in KDS or getting a different ownership share through investment were floated as solutions for the missing investment funds problem.
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However, according to Dragan Kovačević, who was Deputy Manager of the Business User Division at Telekom at the time, investing in KDS was not part of Telekom's strategy as its plans envisaged expansions in ADSL and multimedia services. This meant that Telekom's development would be based on the copper cable network at a point when its competitors had already begun installing the more advanced optical-fibre cabling. As a result, faced with its network's modest bandwidth, it was only after 2012 that Telekom started to expedite the introduction of its own optical-fibre cable network – a full eight years behind its competitors.
Meanwhile, The Serbian Postal Services nonchalantly lost the cable TV race to its biggest rival, SBB, with the latter taking over the richest users (primarily big companies) and so gaining the dominant position in a market with almost no serious competitors whatsoever.
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Predrag Milićević, SBB's marketing director at the time, testifies to how confused and out of step with the emerging business logic the decisions made by the government, Telekom, and The Serbian Postal Services were post-2000. In a statement for the Vreme (Time) weekly from July 2004 (Issue no. 706), Milićević confirmed that Telekom had contributed to the growth of SBB by the decisions made there.
"SBB is currently the biggest distributor, and this fact was made possible in part by Telekom, which SBB has had no problems with in relation to renting the TT cabling. The Serbian Postal Services has been complaining to high heaven about Telekom, annoying its users the most, so, having lost their patience, they've asked for their contracts to be terminated," Milićević said then.
Back in the day, The Serbian Postal Services was regularly filing complaints with the authorities regarding Telekom not renting out its cabling to it. Examples bordering on the absurd are on record too. According to Tihomir Živanović (whose statement was also published in the Vreme weekly's issue no. 706), in Smederevo – an area facing serious problems surrounding the introduction of cable TV at the time – Telekom rented out one meter of cabling to The Serbian Postal Services for RSD 14 and to privately-owned companies for RSD 4.
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Adding insult to injury, even The Serbian Postal Services' right to invest public funds in its main line of business was called into question by some public figures. For example, in his statement for the abovementioned weekly, France Presetnik, a representative of many distributors at the time, claimed that "as a state-owned enterprise, The Serbian Postal Services shouldn't be involved in commercial activities anyway." The same article quotes Tihomir Živanović, President of the Telekobra Association for the Protection of Telecommunications, IT, Radio, and TV Services Users' Rights and advisor to the Telekom Srbija trade union, as saying that, "under the law, [The Serbian Postal Services] doesn't have the right to invest public funds in KDS development." In other words, as their competitors were taking over the market without let or hindrance right under their noses, two state-owned companies were at war with each other.
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