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From Fiber to Film: Telekom Srbija's Bold Investment in Infrastructure & Content

Telekom Srbija, a key player in the Southeast European telecom sector, posted revenues of over 1.5 billion euros ($1.56 billion) and core earnings near 600 million euros in 2022, underscoring its successful long-term investments in content and advanced infrastructure.

November 14, 2023

During the mid-2010s, Telekom Srbija faced heightened competition in the Serbian market as other operators jostled for dominance. To maintain its leadership, the company innovated, adapted, and expanded into other Southeast European countries. Fast forward a decade, and a strategic shift to fiber-to-the-home (FTTH) technology, paired with a focused content strategy, has transformed it into a regional multimedia powerhouse. Now, the company serves over 11 million customers in 12 countries, marketing its content globally.

Reflecting on Telekom Srbija's evolution over the past 10 years, CEO Vladimir Lučić said, "Our market share in paid TV and internet was initially weak, and we lacked the technical ability to deliver quality internet." By 2015, moving from outdated ADSL broadband to FTTH became a priority to improve service quality and increase subscribers.

Telekom Srbija partnered with Huawei in 2016 to accelerate this shift, which played a spivotal role in building 80% of its optical fiber infrastructure. Now, over 1 million Serbian households are connected to Telekom Srbija's fiber network, holding a 60% market share and serving more than 400,000 optical fiber users.

The second part of Telekom Srbija's strategy was to pair its fiber network with top-quality content, enhancing the value for domestic subscribers and providing a new source of income. "We first had to build really good internet access, but as a telecom company, diversifying our revenue streams was essential," elaborated Lučić.

The leap into content distribution mirrored its swift and effective fiber rollout. For instance, its sports broadcasting unit Arena Channels Group exclusively holds sports rights – including the Premier League and UEFA Champions League – in six countries in the region. Last year, Arena Sport generated 7.1 billion dinars ($30 million) in revenue by selling TV rights licenses, distribution, media space leasing, and advertisements.

The company also produces film and TV content and is now the region's largest content producer, selling its productions to the likes of Amazon Prime and Disney Plus. While creating and licensing content is an expensive investment – Arena Channels Group still operates at a loss overall – Lučić sees it as pivotal, arguing that "this content is more or less one of the main advantages when you compare us with competitors."

Despite their leadership in content, advanced future-oriented infrastructure remains central to Telekom Srbija's strategy. With plans to roll out 5G across Southeast Europe, Lučić stated, "5G is our top priority."

As the Serbian government prepares to issue 5G licenses next year, the company plans to use its existing optical fiber infrastructure to speed up the network's rollout. "Optical fiber is a really important part of 5G because you need optical fiber to connect 5G base stations. Therefore, our existing optical fiber network will enable us to quickly develop our 5G infrastructure," explained Lučić.

Telekom Srbija has also further cemented its partnership with Huawei, signing a contract in October to grow its service to 300,000 more homes and upgrade its network speeds to 10 gigabits per second. Lučić highlighted Huawei's role, stating, "Huawei is our strategic partner … they are part of our success, and together we will expand in the market."

Lučić also emphasized Telekom Srbija's goal to expand fixed wireless access, especially in regions without fiber connectivity. While the focus has predominantly been on urban centers, he underscored the importance of reaching rural areas.

Despite Telekom Srbija's current success, the coming years will be crucial in determining the effectiveness of the company's strategic vision. With a promising start and much room for growth, the anticipation among stakeholders is palpable. Reflecting on the advancements, Lučić confidently shared, "We have a better-quality network and now better-quality content. This is the reason why we are growing."

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