Serbia’s state-controlled operator is not a monopoly in the legal sense, but it has built the economics of a dominant platform across fixed broadband, television and bundled services. Banks financed that expansion. The next stage may require equity rather than another layer of debt.
Telekom Srbija occupies an unusual position in the European telecommunications market. Serbia has three mobile network operators, number portability, privately owned competitors and a regulator that publishes detailed market-share data. Yet the commercial outcome is highly concentrated. In the first quarter of 2026, Telekom Srbija controlled 71.4 per cent of fixed telephony subscribers, 58.5 per cent of fixed broadband, 62.3 per cent of media-content distribution and 41.53 per cent of active mobile subscribers. It is not a statutory monopoly, and the mobile market remains competitive. But in the parts of the market where infrastructure, television rights and household bundles matter most, Telekom Srbija has become the dominant economic platform.
Calling it a monopoly would therefore be imprecise. The more accurate description is a state-controlled incumbent operating at the centre of a concentrated oligopoly. Mobile is a three-player market, with Yettel at 32.27 per cent and A1 Serbia at 26.20 per cent. Fixed broadband and pay television increasingly resemble a contest between two integrated groups. Adding the separately reported shares of SBB and Yettel gives their common economic group about 33.4 per cent of fixed broadband and 34.4 per cent of media distribution. Telekom Srbija remains decisively larger, while smaller operators account for only a fragmented remainder.
This matters because Gulf capital is already present in the Serbian telecom sector — but currently on the other side of the competitive divide. Abu Dhabi-based e& completed the acquisition of a controlling 50 per cent plus one economic share in PPF Telecom’s businesses across Serbia, Bulgaria, Hungary and Slovakia in October 2024. It subsequently joined PPF in the acquisition of SBB Serbia for €825mn, adding more than 700,000 active customers to the Yettel platform. SBB reported 2023 revenue of €244.1mn and an EBITDAaL margin of about 50 per cent, implying a transaction multiple of roughly 6.8 times EBITDAaL. The deal demonstrated that a Gulf strategic investor is prepared to deploy substantial capital into Serbian telecommunications when infrastructure, customers and consolidation potential are available.
Telekom Srbija’s own response has been more expansionary. In February 2025, it agreed to acquire a collection of United Group assets for €652mn on a cash-free and debt-free basis. The package included Eon TV International, the NetTV Plus diaspora service, direct-to-home television businesses in Serbia and North Macedonia, and Sport Klub-related sports rights across the western Balkans. It also absorbed Orion Telekom and smaller fixed-network assets, strengthening its fibre, broadband and enterprise presence. Management has set a target of approximately €3bn in annual revenue by 2030, transforming the company from a domestic incumbent into a regional combination of telecom infrastructure, content distribution and digital services.
The commercial logic is clear. Telekom Srbija can sell mobile, fibre broadband, fixed telephony and television within one customer relationship. Serbia had approximately 1.88mn bundled-service subscribers in the first quarter of 2026, with internet, fixed telephony and television remaining the most common three-service package. Exclusive or strategically important sports content reduces churn, supports higher prices and gives Telekom an asset that can also be licensed to other distributors. Fibre investment improves connection speeds, while the legacy fixed network provides access to households that would be expensive for a new entrant to duplicate. Market power here does not depend on eliminating competitors. It arises from the difficulty of reproducing Telekom Srbija’s combined infrastructure, content catalogue, distribution reach and state-supported balance sheet.
The result has been rapid headline growth. Telekom Srbija reported 2025 group revenue of €2.3bn, an increase of 28.1 per cent, and adjusted EBITDA of €1.3bn, up 51.3 per cent. Those figures make the group appear exceptionally profitable, with an adjusted EBITDA margin above 50 per cent. Fitch, however, uses a more conservative analytical definition. It calculated 2025 revenue of RSD231bn, equivalent to roughly €2bn, and Fitch-defined EBITDA of RSD87bn, or about €740mn, producing a margin closer to 38 per cent. The two sets of numbers are not directly comparable, but the difference is too important for a prospective equity investor to ignore. Fitch treats content-cost amortisation as an operating expense, reflecting the continuing economic cost of sports and entertainment rights rather than allowing all of it to sit below EBITDA.
That accounting bridge would be at the centre of any Gulf investor’s due diligence. A valuation based on management’s €1.3bn adjusted EBITDA could be dramatically higher than one based on the credit agencies’ more conservative earnings measures. Content rights may attract subscribers, but they require repeated renewal payments and can become expensive when broadcasters compete for the same football leagues, basketball competitions or regional rights. Consolidation may reduce bidding pressure and improve margins, as Fitch expects, but it also makes the quality and durability of earnings more dependent on the treatment of content costs. A serious strategic investor would need contract-level visibility rather than a single adjusted profit number.
For most of Telekom Srbija’s recent expansion, that scrutiny has come from banks and bond investors rather than shareholders. In October 2024, the company issued a $900mn international bond with a 7 per cent dollar coupon. Telekom said the dollar exposure was hedged into euros at an effective interest cost of about 5.9 per cent. Orders reached approximately $5.5bn, nearly seven times the amount offered. BNP Paribas, Bank of America, Deutsche Bank, Erste, Raiffeisen, UniCredit and MUFG arranged the transaction, using their distribution networks to place Serbian corporate risk with international institutional investors.
The second transaction, completed in May 2026, was much larger. Telekom Srbija raised the equivalent of approximately €1.95bn, attracting a reported $13.87bn of orders from about 300 institutional investors. The syndicate included Bank of America, BNP Paribas, Citi, Deutsche Bank, Eurobank, JPMorgan, OTP, Raiffeisen and UniCredit. The issue comprised $1.35bn of 7.25 per cent notes due 2031, €500mn of 6.75 per cent notes due 2033 and €300mn of 7.125 per cent notes due 2036. Before currency hedging, those three instruments carry annual coupons of approximately $97.9mn and €55.1mn. The proceeds were primarily intended to refinance existing obligations rather than increase net leverage, but the coupons show that international confidence has not made Telekom Srbija’s capital cheap.
The banks’ role has consequently changed. They are no longer merely bilateral lenders funding a domestic state company. They have become underwriters, bookrunners, currency-risk advisers, distribution agents and gatekeepers to global portfolios. This is strategically important. Two international bond transactions have already forced Telekom Srbija to develop a credit-rating history, investor documentation, sanctions and compliance procedures, international legal structures and recurring communication with asset managers. Much of the institutional machinery needed for a minority equity transaction is therefore already in place.
The credit profile still explains the attraction of equity. Fitch upgraded Telekom Srbija to BB- with a stable outlook in May 2026, expecting free cash flow to improve during 2026–27 and turn positive in 2028. Its measure of net leverage was approximately 6.5 times EBITDA in 2025, with a projected decline to 5.2 times in 2026 and 4.3 times by 2029. Fitch also noted that Serbia generated 69 per cent of group revenue, leaving Telekom materially dependent on one relatively small market despite its regional expansion. The rating benefits from a one-notch uplift because of the Serbian state’s ownership and the agency’s expectation of potential government support in financial distress.
Moody’s analysis points to the same underlying constraint through a different methodology. It estimated adjusted gross leverage at 4.4 times in 2025 and highlighted negative free cash flow of about €900mn, associated with acquisition spending, network investment, customer migration, 5G and sports content. At the end of March 2026, the group reportedly had about €254mn of cash and €673mn of available credit facilities, but Moody’s expected it might need to return to capital markets to manage maturities falling due in 2028. The differing leverage measures should not obscure the message: Telekom Srbija has a strong market position and improving earnings, but cash generation has not yet caught up with the pace of development.
The 5G programme adds another demand on capital. Telekom Srbija commercially launched 5G in December 2025 and plans coverage in all Serbian cities during 2026, followed by nationwide coverage by the end of 2027. In May 2026, the US Export-Import Bank gave final approval for financing tied to equipment and services supplied by American technology companies. This diversifies funding and embeds Telekom within western technology and development-finance networks, but it does not replace permanent capital. Export credit, bank facilities and bonds can extend maturities or reduce procurement costs; they cannot absorb losses in the same way as equity.
Telekom Srbija has already demonstrated that it can bring foreign infrastructure investors into carved-out assets. An Actis-led consortium acquired approximately 1,800 telecom towers across Serbia, Bosnia and Herzegovina and Montenegro, establishing an independent tower company with Telekom as anchor tenant under a long-term master-services agreement. IFC documentation puts the portfolio at 1,827 sites, including 995 in Serbia, 725 in Bosnia and Herzegovina and 107 in Montenegro. The transaction monetised passive infrastructure while preserving Telekom’s access to the assets and providing commitments for future construction.
That tower deal offers a potential template for Gulf capital even without a parent-company share sale. Fibre infrastructure, data centres, cloud platforms, enterprise services or international media distribution could be placed in separately governed ventures with long-term commercial agreements. Gulf sovereign and infrastructure investors often prefer assets with contracted revenues, inflation-linked pricing and visible investment programmes. Such a structure could fund network expansion while allowing Serbia to retain direct ownership of the consumer-facing operator. It would, however, provide less balance-sheet relief than genuine parent-level equity unless proceeds were explicitly used to reduce debt.
The parent-company ownership structure presents a more direct route. The Republic of Serbia owns 58.11 per cent of Telekom Srbija, while the company holds 20 per cent of its own shares. Individuals own 14.95 per cent, and current and former employees hold the remaining 6.94 per cent. Because treasury shares do not carry ordinary voting rights, rating agencies describe the Serbian state as controlling about 73 per cent of voting rights despite its lower economic interest.
Subject to Serbian law, corporate approvals and political agreement, some or all of the 20 per cent treasury stake could theoretically be placed with a strategic investor. That is the cleanest mechanism for introducing new capital without requiring the state to sell its existing shares. A full placement would leave the Republic with its 58.11 per cent economic majority, while the incoming investor could obtain a meaningful minority position, board representation and negotiated governance protections. The transaction could therefore be presented domestically as recapitalisation and strategic partnership rather than privatisation or loss of national control.
For Telekom Srbija, such a deal would make sense only under disciplined conditions. Proceeds would need to reduce leverage, strengthen liquidity and fund clearly defined fibre, 5G, cloud and data-centre programmes. Using new equity merely to support another acquisition cycle would dilute shareholders without resolving the balance-sheet question. Gulf capital is most valuable when it replaces expensive debt, not when it allows the company to postpone deleveraging.
For the investor, governance would be at least as important as valuation. Telekom Srbija combines commercial objectives with the responsibilities of a state-controlled national infrastructure company. Its dominant position in fixed broadband and television creates pricing power, but also exposes it to competition-policy, media-plurality and political scrutiny. The investor would probably seek independent directors, reserved matters for major acquisitions, a formal leverage ceiling, transparent procurement rules, audited reporting of content obligations and a predictable dividend policy. It would also need a detailed separation between commercial expenditure and projects undertaken for wider state-policy purposes.
The obvious Gulf name, e&, would be the most complicated prospective partner. Through e& PPF Telecom, it already controls the economic group containing Yettel Serbia and SBB, Telekom Srbija’s principal competitor. A parent-level investment in Telekom could create significant competition concerns and conflicts over pricing, infrastructure strategy, content and customer information. The importance of the e& transactions is therefore not that the same company is likely to invest in Telekom Srbija, but that they establish a regional valuation precedent and demonstrate Gulf appetite for Balkan telecom assets.
Other strategic telecom groups, sovereign funds or digital-infrastructure investors could approach the opportunity differently. A strategic operator could contribute technology procurement, roaming relationships, enterprise products and operational expertise. A sovereign investor might accept a longer investment horizon and a minority position alongside the Serbian state. An infrastructure fund could prefer a ring-fenced fibre or data-centre platform with contracted revenues. No transaction is being asserted here; the Gulf-capital proposition is a capital-structure thesis rather than evidence of a disclosed sale process.
Telekom Srbija is nevertheless much closer to being transaction-ready than it was several years ago. It has completed sizeable cross-border acquisitions, sold infrastructure to international investors, obtained ratings from the leading agencies, accessed US export finance and issued nearly €3bn-equivalent of international bonds across two transactions. It has relationships with the global banks that would be expected to advise, finance and distribute a strategic equity placement. The company also possesses the asset that Gulf capital usually seeks first: a defensible position in essential infrastructure with recurring household revenues and regional expansion potential.
The unresolved question is whether the Serbian state is ready to exchange part of Telekom Srbija’s financial and operational autonomy for external governance and permanent capital. The company’s expansion has produced scale, subscriber concentration and headline earnings growth. It has also produced heavy refinancing requirements, expensive coupons and a continuing dependence on adjusted profit definitions. A sale of part of the 20 per cent treasury stake, accompanied by binding deleveraging targets and minority protections, would give the group a more durable capital base while preserving state control. Telekom Srbija has already demonstrated that banks are willing to finance its dominance. The next test is whether that dominance can attract equity on terms that improve cash generation rather than simply finance the next stage of expansion.
