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  • Crnogorski Telekom 2018 AnnuAl RepoRt

  • Crnogorski Telekom 2018 AnnuAl RepoRt

    Dear shareholDers

    this version of our report/ the accompanying documents is a translation from the original, which was prepared in Montenegrin. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

  • ConTenT: to ouR ShAReholdeRS About Crnogorski telekom letter to our Shareholders

    MAnAgeMent RepoRt Management Report for the Financial Year 2018 Crnogorski telekom’s Management Board of directors Chief Executive Officer and Management Committee Vision and Strategy Regulatory environment promotions and offers

    huMAn ReSouRCeS

    CoRpoRAte ReSponSiBilitY

  • Dear ShareholDerS

    This version of our report/ the accompanying documents is a translation from the original, which was prepared in Montenegrin. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

  • 3Dear ShareholDerS

    CrnogorSki Telekom 2018 AnnuAl RepoRt

    To our shareholders ABout CRnogoRSki telekoM

    Crnogorski telekom (hereinafter “Crnogorski telekom”, “telekom”, “Company”, “Ct”) is the largest telecommunications company in Montenegro. It provides a wide range of fixed and mobile telecommunication services (voice, internet, tV, FMC services, leased-line circuits, data networks, iCt and Cloud solutions).

    Crnogorski Telekom fully digitalized the fixed-line network in 2007 and brought AdSl coverage to a complete customer base by the end of 2012. From 2011 CT is enhancing its fixed broadband network through roll-out of fiber network and through VDSL from 2016. In 2007, Crnogorski Telekom started an IPTV service, while in 2016 “tVzaSve”, a dVB-t2 based service, was launched in cooperation with Radio-broadcast Centre. in 2011 Crnogorski telekom started offering iCt solutions. Full migration to iMS was completed in 2015.

    Since entering the mobile market in 2000, the company has always offered innovative and advanced services to the Montenegrin market and has been experiencing dynamic growth. A 3g network was launched in the summer of 2007, while 4G service was launched in 2012. in 2016, Crnogorski telekom renewed all of the existing frequency bands and acquired significant portion of the new bands that were the subject of the Spectrum auction.

    in May 2009, Crnogorski telekom a.d., t-Mobile Crna gora d.o.o and internet Crna gora d.o.o were merged into one legal entity, Crnogorski telekom a.d.

    From 2012 all products are marketed under the t- brand.

    In April 2005, Magyar Telekom obtained a 76.53% interest in Crnogorski telekom, and Crnogorski telekom became part of Deutsche Telekom Group. In January 2017, HT Holding doo, company fully owned by hrvatski telekom, bought the complete Magyar telekom’s stake in Crnogorski telekom A.d. deutsche Telekom AG holds 51% of the Hrvatski Telekom shares. Deutsche telekom is one of the leading telecommunication companies in the world, present in over 50 countries worldwide. With members of deutsche telekom group Crnogorski telekom has regular transactions. details of related party transactions are given in the company’s Financial Statements, note 29.

  • 4

    Crnogorski Telekom 2018 AnnuAl RepoRt

    Dear shareholDers

    dear shareholders,

    in 2018, we achieved two main strategic goals - we stabilized revenues and increased profitability, which is a great success and a result of the commitment of all employees in the company. Crnogorski telekom is on the right path to deliver growth in all business segments through efficiency increase and business transformation and thus remain the first choice for communication and entertainment for Montenegrin customers.

    We are particularly proud of the positive developments in customer base of the fixed internet, TV and post-paid segment. After several years, we achieved growth in retail revenues and successfully implemented turnover strategy in this segment. the growth of retail revenues has almost completely offset the decrease in wholesale revenues, and total revenues show substantially better trend compared to previous years.

    Operating profit before interest, taxes and depreciation (EBITDA), excluding special effects, amounted to EUR 31.4 million, which is an increase by 6.5% compared to the previous year. The net profit amounted to EUR 7.3 million euros and is higher by 40%, i.e. EUR 2.1 million compared to 2017.

    As a technology leader in the market, we continued to invest in infrastructure development to enable our customers to access the most advanced telecommunication services. having in mind the growing need for mobile internet services, the company was particularly dedicated to the development of the mobile network. Currently, we cover almost the entire populated territory of Montenegro with 4G network, with speeds up to 150 Mbps, while at some locations users can access speeds of up to 400 Mbps, with 4G + technology. The reliability of Telekom’s 4G network is best illustrated by the fact that more than half of the total 4G mobile internet traffic in Montenegro in 2018 passed through our network.

    the company continuously invests in improving network performance. planned investments include the modernisation of existing infrastructure as well as the future development of nB iot and 5g technology, in order to provide our customers with access to even broader range of modern services and technologies, and enable new development opportunities for the Montenegrin economy.

    In the fixed segment, thanks to the development and expansion of fiber infrastructure, more than 82 thousand households in Montenegro has access to best quality services. As a result of investments in existing copper infrastructure with advanced new technology, 68 000 households has access to turbo dSl. thanks to the investments, the average speed of internet packages has grown by 61%, which brings Montenegro significantly closer to the objectives of the european digital agenda for the year 2020.

    In 2018 we made a significant step towards expanding fiber network outside the urban areas thanks to the agreement on the use of fiber infrastructure that we signed with Crnogorski elektrodistributivni sistem (CediS). this created the conditions for the provision of broadband services in suburban and rural areas, and so far, thanks to this agreement, over 10 000 households gained access to modern telecommunications services.

    our premium service Magenta 1 counts around 30.000 customers, making it the most popular integrated product on the telecommunications market. Magenta 1 offers the best combination of services in the field of mobile and fixed telephony, television and the internet, and it is a solution created to meet all family needs when it comes to communication and entertainment. The offer is constantly upgraded with new benefits, developed to meet the needs of our customers and current usage trends.

  • 5Dear ShareholDerS

    CrnogorSki Telekom 2018 AnnuAl RepoRt

    in the past year we have made an important step forward in the field of digitization and with the Government of Montenegro we signed a Memorandum of understanding and cooperation for digital Montenegro, which represents a framework for further development of the infrastructure and new generation networks, as well as development of iCt solutions, in order to improve the efficiency of services and the quality of life of Montenegrin citizens. With this initiative we once again confirmed that we are the first partner of the Government and the business sector in the process of digitalization.

    We launched many innovative projects, e.g. Smart City solutions that have already been implemented in several Montenegrin towns. Smart parking is provided in the centre of podgorica, smart irrigation system in cooperation with a local winery was also implemented in the capital city, while the Municipality of herceg novi launched a system for monitoring air quality and noise levels. First stop for charging electric cars is implemented in Sveti Stefan. We believe that this is only the first step towards modernization and creation of better living conditions in Montenegrin cities, and we are proud to say that our technologies and services can provide a better future for generations to come.

    In 2018 we were recognized as leaders in the field of corporate governance in Montenegro. the prize awarded by Montenegrin stock exchange is proof of our effort and commitment to the principles of transparent and responsible business that is in the best interest of our shareholders, customers, employees and society as a whole. Through a number of projects in the field of corporate social responsibility, we continued to actively contribute to the development of local community and strive to be present in all areas that are important for the Montenegrin society.

    dear shareholders, we appreciate your trust. With your support and the great commitment of all employees in the company, we were able to achieve our goals for 2018 – to increase profitability, stabilize revenues and reverse the negative trends. thanks to the results achieved, in 2019 we have the opportunity for g

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