In 2017, the segment Republic of Serbia continued to be characterised by a highly competitive market with aggressive convergent offers including high discounts. Vip mobile counteracted this market environment by changing its positioning in the market and subsequently introducing a new product portfolio with attractive flat-rate tariffs in June 2017. Additionally, results were impacted by regulatory headwinds due to termination rate cuts in January 2017.
Compared with the same period last year, the contract share increased significantly from 57.7% in 2016 to 62.7% in 2017. The total number of customers increased by 1.7% year-on-year. This was entirely attributable to the postpaid segment, supported by high gross additions as a result of the new tariffs mentioned above and the high demand for mobile Wi-Fi routers.
Total revenues increased by 4.4 % year-on-year as a result of higher equipment revenues, which increased as a result of higher sales prices, and the positive one-off effect resulting from changed parameters in the calculation of asset retirement obligations. Excluding this one-off effect, total revenues increased by 2.6 % year-on-year. Increased monthly fees were fully offset by lower interconnection revenues, prescribed by regulation, and by lower airtime revenues.
In the year under review, total costs and expenses increased by 5.5 % year-on-year, mainly driven by higher equipment costs due to mobile Wi-Fi routers and higher handset prices. The higher costs were also attributable to higher bad debts as well as increasing personnel and advertising costs as a result of sales initiatives. These increases were partly compensated for by lower interconnection expenses due to the above-mentioned termination rate cuts.
In the Republic of Serbia, the higher total revenues did not entirely offset the higher costs and expenses, resulting in a 1.2 % decline in EBITDA. Excluding the abovementioned oneoff effect, EBITDA decreased by 11.0 % year-on-year. Together with somewhat lower depreciation and amortisation than in the previous year, this resulted in negative operating income of EUR –6.8 mn (2016: EUR –7.8 mn) in the year under review.