Montenegro, Establishment of a state telecommunications company could be a good move if approached seriously

Published on 27. February 2023., News

The establishment of a state telecommunications company, which was announced by the Government, could be a good move if approached seriously and with a clear plan, because the field of telecommunications is extra-profitable, according to financial analyst Oleg Filipović.

He points out that several questions are asked, among which the goal of that company is certainly highlighted.

– How will that company be founded, will the state be the 100% owner, where will it be financed, i.e. are the funds planned in the budget, that is, does this investment fall under the capital budget? Also, the state must determine what the target company will be, i.e. whether it will operate only on the Montenegrin market, or whether it has a medium or long term with the aim of further development, and certainly, and not least, who will lead that company – emphasizes Filipović.

He also believes that the state would soon have to come out with projected revenues, possible service prices and a competition analysis.

– Also, an important thing is that, due to the existence of three such companies on the Montenegrin market, the state would not be able to have a monopoly on the market, and that is good. Monopoly is not a good thing in any form, and we have that in Montenegro in some areas. So the business will determine how much money will be set aside for that company, who will run it, what will be the founding capital, what will it offer, and appearing in the market means you have to offer something new, because you have three companies that are doing very well , and not only on the Montenegrin market – says Filipović.

Given that Montenegro, as a small market, already has three such companies, the state-owned company would have to do a serious analysis of the competition.

– An analysis of the competition in relation to the existing operators must be done and what time period would be sufficient for positioning on the market. The idea initially looks good, the state should invest in profitable companies, but it must fulfill all these stated conditions – emphasizes Filipović.

He points out that It is better for the state to have its own company than to rent these services from others.

When creating such a company, you must have people who have experience in that business, and I believe that we have such people here, so the state must seriously deal with this business. The market may be small for a new company, but if a good strategic plan is made, that company can expand further.
– If we are creating a company that will only stay on the domestic market, or for a short time, in order to sell it later, then that is not it. So, if we create a company, develop it on the domestic market and expand further, and maybe even list on European or American stock exchanges, we have done a good job. That should be the ultimate goal not only of this company, but also of all others, regardless of the field of business – concluded Filipović.

The government recently announced that it plans to establish a state telecommunications company, and Prime Minister Dritan Abazović then pointed out that the working group will assess the situation and infrastructure, and if the assessments turn out to be favorable, the state would start establishing that company.

Serbia showed a good example

Filipović believes that we have a comparative analysis, but also a good example, in the market of Serbia, which has an independent mobile company.

– MTS in Serbia had an excellent strategy. They started on the domestic market, and then started conquering other markets and expanded to Montenegro, Austria, Switzerland… Also, the value of the company is not negligible, nor is the projected profit, for which it is necessary to do a cost-benefit analysis, which is often debatable. Because some extraordinary expenses always appear – says Filipović.