2011 Telekom Srbija FYR

TELEKOM SRBIJA FULL YEAR RESULTS THROUGH 2011

DISCLAIMER & DISCLOSURE

The data in this material are of the informative nature and are intended exclusively as a basis for the further reconsideration. The company Sinteza

Invest Group a.d. has prepared this material with all the necessary care and based on the data it received from the sources it believes to be reliable.

Sinteza Invest Group a.d. does not guarantee for the accuracy, promptness, completeness and correctness of the data in this material. The information,

opinions, estimates and forecasts may be well affected by subsequent changes in market conditions. This report does not take into account the

investment objective, financial situation or particular needs of any particular investor. Investors should obtain individual financial advice based on

their own particular circumstances before making an investment decision based on the recommendations in this report. This document may not be

reproduced in whole or in part, or published for any purpose.

The company Sinteza Invest Group is a corporate agent and market maker of the company Sojaprotein on the Belgrade Stock Exchange. In that light,

Sinteza Invest Group is expected to regularly update the company’s prospectuses for the Belgrade Stock Exchange, disclose and release to the public

company’s significant events, deliver all necessary documents and reports to the representative regulatory bodies as well as undertake all necessary

legal and economic steps to enhance the relations between the company and former, current and prospective investors.

In addition, Sinteza Invest Group and Sojaprotein are both members of the holding Victoria Group which has the stake of 40% in the stated capital of

the former and 63% in the legal capital of the latter. Sinteza Invest Group uses reasonable care and judgment to achieve and maintain independence

and objectivity in presenting the past performance results and expected earnings power of Sojaprotein.

GENERAL INFORMATION TELEKOM SRBIJA

- Telekom Srbija was founded back in 1997 via the process of restructuring of Post Traffic Srbija (PTT Srbija) when it became a single-member joint stock company;

- In June 1997 PTT Srbija sold 49% while having controlled the rest of 51% of the stated capital. 29% was sold to Dutch subsidiary of Telekom Italia and 20% was sold to Greek OTE (majority controlled by Deutsche Telekom);

- In February 2003 PTT Srbija entered the repurchase agreement with Telekom Italia and bought back 29% of shares to control 80% of Telekom;

- During 2010 PTT Srbija transferred its 80% stake into the ownership under the government of the Republic of Serbia which became Telekom’s major shareholder;

- In January 2012 Telekom Srbija issued a loan to buy back 20% of OTE’s shares as treasury stocks. Through this process Telekom became fully owned and controlled by the Serbian government.

- Telekom Srbija (Telekom) is a leading Serbia’s provider of telecommunication service which drives the business in the following business fields:

- Fixed telecommunication services in the country and abroad;

- Internet services;

- Mobile telephony services;

- Multimedia services.

- In addition to the core activities, Telekom maintains, designs, constructs and repairs telecommunication facilities and network, leases, manages and protects telecommunication infrastructure;

- In 2006 Telekom got the license for public mobile telecommunication network and public mobile telecommunication network services in accordance with GSM.

PTT Srbija51%

Tel. Italia29%

OTE20%

1997

PTT Srbija80%

OTE20%

2003

OTE20%

Republic of Serbia 80%

2010


Treasury Stocks 20%

2012 Employees 7%

Treasury Stocks 20%


Citizens 13%

mid-2012

- The Government of the Republic of Serbia called for tender of Telekom in October 2010. Deutsche Telekom, Telekom Austria, America Movil, France Telekom, Weather Investments and Turkcell Iletisim Hizmetleri were potential bidders, but Telekom Austria was the only that placed the bid for 51% stake.

- Telekom Austria, the phone company that runs mobile networks in seven east European nations, offered EUR 950m in cash and EUR 450m in committed investments over three years.

- The offered price was far below the minimum that the government asked of EUR 1.4bn. The evaluation done with CitiGroup showed the value of Telekom of EUR 2.4bn.

- After the extension of the bid offer, Telekom Austria raised its bid to EUR 1.1bn.

- In January 2012 Telekom Srbija issued a EUR 320m loan to buy back 20% of the stake in OTE’s hands. Telekom totally paid EUR 380m by adding EUR 60m from own CFO. It paid out additional EUR 17m to OTE in the name of dividends from the profit made in 2011.

- Taking that into consideration, 51% of Telekom is EUR 969m worth.

Telekom Srbija

Telekom Srpske

m:tel

Telus

FiberNet

TS:NET

65%

51%

100%

100%

100%

- Telekom Srbija purchased 65% of the Telekom Srpske in June 2007 by injecting 646 EUR. The rest of 35% is diversified amongst Pension Fund of the Republic of Srpska, ZIF Zepter Fond, Restitution Fund of Republic of Srpska and other shareholders.

- In April 2007 Telekom Srbija set up a new telecommunication company in Montenegro by investing EUR 20.4m under the name of m:tel. After a few several changes in the shareholding structure including some recapitalizations, Telekom has gained the stake of 51% (EUR 20.4m) and Telekom Srpske the share of 49% (EUR 19.6m).

- The enterprise Telus was set up by Telekom in 2005 and its core business is maintenance and security of facilities, property and provision of other similar services.

- FiberNet was founded back in cooperation with Montenegrin Railways in 2008. Its main activities comprise construction, possession, operation and maintenance of transport and telecommunication networks alongside with telecommunication services provisions.

- The core business of Amsterdam-based TS:NET is the lease of telecommunication equipment and performance of other associated tasks. The enterprise was set up in 2010.

Managing Director

Vice MD

Internal Audit Strategy PR Dept. Yellow & White Pages Function

Commercial Affairs

Technical Affairs Economic Affairs Corporate Affairs Logistic &

General

Marketing & Sales

Service Management

Customer Care

Wholesale & Multimedia

Planning & Development

Technical Preparation

Maintenance

Capital Construction

IT

Treasury

Budget & Control

Accounting

Legal Affairs

Human Resource

The organizational structure of the Telekom Srbija is constructed in line with functional, territorial and market principles.

SRB B&H

MNE

Orion Telekom

0.20%

Fixed Telephony

99.8%

Others23.30%

ADSL Internet

76.7%

BH Telecom37.80%

HT Mostar22.50%

Mobile Telephony

39.7%

Telenor39.60%

T-Mobile

37.00%

Mobile Telephony

23.4%

The population coverage by GSM is 87.1%, while the territorial coverage by GSM is 80.6%.

The largest competitors in ADSL internet services are: Eunet, SezamPro, Beotel, Verat net, PTT….

In 2010 Telenor was granted a license for provision of fixed telecommunication services and became the first competitor of Telekom in this business line.

The population coverage by GSM is 99%, while the territorial coverage by GSM is 86.5%.

The population coverage by GSM is 96%, while the territorial coverage by GSM is 81.9%.

53%

Telekom generates its revenues majorly through fixed and mobile telephony (91%). The Fixed telephony accounts for 52%, while the mobile telephony accounts for 39% in sales revenues.

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100%

2008 2009 2010 2011

Fixed Telephony Mobile Telephony Internet Other Services

Sales Breakdown (m RSD) 2009 2010 2011

Fixed Telephony 42,663 45,173 45,357

Domestic Market 35,456 36,911 37,082

Foreign Market 7,207 8,262 8,275

Mobile Telephony 39,434 34,261 33,590

Domestic Market 37,015 32,890 32,784

Foreign Market 2,418 1,371 806

Other Services 3,377 5,349 7,832

TOTAL 85,473 84,783 86,779

% in Total Sales 2009 2010 2011

Fixed Telephony 50% 53% 52%

Mobile Telephony 46% 40% 39%

Other Services 4% 6% 9%

TOTAL 100% 100% 100%

% Growth 2009 2010 2011

Fixed Telephony - 5.88% 0.41%

Mobile Telephony - -13.12% -1.96%

Other Services - 58.40% 46.42%

TOTAL - -0.81% 2.35%

FINANCIALS TELEKOM SRBIJA

ØFX EURRSD 84.95 93.95 103.04 101.95

Statement of Earnings (m RSD) 2008 2009 2010 2011

Operating Revenues 83,494 86,038 85,319 87,319

Sales 83,494 86,038 85,319 87,319

Growth - 3% -1% 2%

Fixed Telephony 42,045 42,663 45,173 45,357

Mobile Telephony 38,589 39,434 34,261 33,590

Internet 1,625 3,266 4,966 7,017

Other Services 1,235 676 919 1,355

Change in Inventories 0 0 0 0

Operating Expenses 63,013 65,112 64,935 67,748

COGS 435 51 39 7

Cost of Materials 4,171 4,399 5,300 6,015

Wages and Other Labour Costs 12,595 13,010 12,659 14,959

Depreciation and Provision Costs 16,145 16,857 16,961 17,393

Other Operating Expenses 29,667 30,795 29,976 29,373

EBITDA 36,626 37,782 37,345 36,965

Growth - 3% -1% -1%

EBIT 20,481 20,925 20,384 19,572

Growth - 2% -3% -4%

Other Non-Operating Items -15,177 -5,376 -4,594 2,702

Interest Expenses -4,795 -3,316 -2,002 -1,620

FX Gains (Losses) -7,348 -5,569 -5,620 1,083

Net Income 5,304 15,549 15,789 22,274

Growth - 193% 2% 41%

Source: Sinteza Research, Telekom Srbija

Telekom managed to increase the sales by more than 2% primarily due to the growth in sales generated via internet business line.

Internet business segment had the strongest growth pace for last 4 YRS. Its CAGR was 62.85%.

EBIT and EBITDA fell in 2011 despite the 2% rise in sales predominantly owing to wages increase and the rise in costs of materials.

In relative terms, wages costs rose by 18.2%, while costs of materials advanced 13.5%.

Volatile dinar against the euro caused the net income to be varying for last 4 YRS. Compared to 2008 the bottom line soared 319.93% at the CAGR of 61.33%.

In FY 2011 net income surged to RSD 22.27bn due to the fall in FX losses experienced over the previous 12 months and the rise in FX gains.

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2008 2009 2010 2011

m RSD

Sales and EBITDA

Sales EBITDA

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2008 2009 2010 2011

%

Margins

EBITDA Margin EBIT Margin Profit Margin

ØFX EURRSD 84.95 93.95 103.04 101.95



Sales 83,494 86,038 85,319 87,319

Growth - 3% -1% 2%

Fixed Telephony 42,045 42,663 45,173 45,357


Internet 1,625 3,266 4,966 7,017

Other Services 1,235 676 919 1,355



COGS 435 51 39 7





EBITDA 36,626 37,782 37,345 36,965

Growth - 3% -1% -1%

EBIT 20,481 20,925 20,384 19,572

Growth - 2% -3% -4%



FX Gains (Losses) -7,348 -5,569 -5,620 1,083

Net Income 5,304 15,549 15,789 22,274

Growth - 193% 2% 41%


Apart from VIP Srbija, whose sales and EBITDA boomed y-o-y, sales in the peer group rose by 3.63% on average. Telekom was below that average, and we consider it due to the fall in sales created in mobile industry.

In Serbia, two main competitors, Telenor Srbija and VIP Srbija, recorded a rise in sales of 12% and 35% respectively. We believe this comes as a result of stronger market penetration and takeover of Telekom’s clients in mobile industry.

35%

430%

-15%

-10%

-5%

0%

5%

10%

15%

20%

% Main Peers - 2011

Sales Y-o-Y EBITDA Y-o-Y

ØFX EURRSD 84.95 93.95 103.04 101.95



Sales 83,494 86,038 85,319 87,319

Growth - 3% -1% 2%

Fixed Telephony 42,045 42,663 45,173 45,357


Internet 1,625 3,266 4,966 7,017

Other Services 1,235 676 919 1,355



COGS 435 51 39 7





EBITDA 36,626 37,782 37,345 36,965

Growth - 3% -1% -1%

EBIT 20,481 20,925 20,384 19,572

Growth - 2% -3% -4%



FX Gains (Losses) -7,348 -5,569 -5,620 1,083

Net Income 5,304 15,549 15,789 22,274

Growth - 193% 2% 41%


N/A N/A

11%

7%

17%

47%

35% 33%

31%

36%

33% 34%

37%

32%

26%

43% 42%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

H-Telekom Telenor MagyarTelekom

TelekomSlovenia

TelekomMontenegro

FranceTelekom

TelekomAustria

America Movil DeutscheTelekom

VIP Srbija Telenor Srbija TelekomSrbija

% Main Peers - 2011

Wages/Sales % EBITDA Margin

Peer group average = 35.87%

Peer group average = 15.30%

Telekom Srbija had stable EBITDA margin for last four YRs at the range 42-44% meaning that EBITDA followed the trend of sales. Despite the fixed costs, operating income margin was also stable drawing the conclusion that operating leverage is quite low.

EBITDA margin of Telekom is above the average of our peer group by 6 pp. In the Serbian telecommunication sector, VIP Srbija has significantly lower margin due to negative operating income. Telenor Srbija has EBITDA margin similar to the Telekom’s value.

In 2011, Telekom’s wages accounted for 17% of sales made in last 12 months. It is above the average of our peer group, and considerably above the figures of competitors in Serbia. Last year, Telekom paid out RSD 1.56bn for severance and compensation which attributed wages cost rise by 15%.

FX EURRSD 88.60 95.89 105.50 104.64

Balance Sheet (m RSD) 2008 2009 2010 2011

Assets 207,619 210,694 209,967 210,232

Long-lived Assets 180,141 178,540 179,092 172,972

PP&E 110,381 110,866 110,340 103,998

Other Long-lived Assets 69,761 67,674 68,752 68,974

Current Assets 26,760 31,304 29,766 35,924

Inventories 6,853 5,836 6,446 6,648

Receivables 12,397 13,363 12,395 12,381

Cash and Cash Equivalents 4,861 9,462 7,949 14,019

Deferred Tax Assets 718 850 1,108 1,336

Equity 101,518 113,169 122,294 131,003

Growth - 11% 8% 7%

Stated Capital 82,521 82,521 82,521 82,521

Reserves 18,996 30,648 39,773 48,482

Liabilities 106,102 97,525 87,673 79,229

Long-term Borrowings 49,755 49,324 41,720 17,317

Growth - -1% -15% -58%

Other Long-term Liabilities 1,899 2,067 1,849 1,614

Short-term Liabilities 54,447 46,134 44,105 60,298

Short-term Borrowings 30,768 23,547 21,370 28,339

Growth - -23% -9% 33%

Accounts Payable 9,756 6,876 5,652 6,634

Other Short-term Liabilities 13,923 15,710 17,083 25,325

Deferred Tax Liabilities 0 0 0 0


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100%

2008 2009 2010 2011

%

Source Structure

Equity Long-term Borrowings Short-term Borrowings

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40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2008 2009 2010 2011

m RSD

Asset Structure

Long-lived Assets Current Assets

FX EURRSD 88.60 95.89 105.50 104.64


Assets 207,619 210,694 209,967 210,232


PP&E 110,381 110,866 110,340 103,998


Current Assets 26,760 31,304 29,766 35,924

Inventories 6,853 5,836 6,446 6,648

Receivables 12,397 13,363 12,395 12,381



Equity 101,518 113,169 122,294 131,003

Growth - 11% 8% 7%

Stated Capital 82,521 82,521 82,521 82,521

Reserves 18,996 30,648 39,773 48,482

Liabilities 106,102 97,525 87,673 79,229


Growth - -1% -15% -58%




Growth - -23% -9% 33%





Telekom reduced its long-term liabilities by 58% to RSD 17.3bn.

The most significant fall was in IB liabilities to foreign banks (from RSD 20.9bn at the end of 2010 to RSD 512.7m at the end of 2011) which mature in more than 1 YR. That caused short-term borrowings to rise to RSD 28.3bn (RSD 20.3bn refer to long-term credits that mature in 2012), or by a third. That might hurt company’s liquidity in the short-run.

The largest Telekom’s creditor is Citibank London with outstanding loan of RSD 19.9bn which is due in 2012.

At the same time Telekom had greater liabilities towards foreign goods suppliers who it also pays interest to. These liabilities fell from RSD 17.3bn to RSD 14.4bn at the end of 2011.

up to 1 YR

62%

1-2 YRs 15%

2-3 YRs 11%

3-4 YRs 8%

4-5 YRs 3%

over 5 YRs 1%

FX EURRSD 88.60 95.89 105.50 104.64


Assets 207,619 210,694 209,967 210,232


PP&E 110,381 110,866 110,340 103,998


Current Assets 26,760 31,304 29,766 35,924

Inventories 6,853 5,836 6,446 6,648

Receivables 12,397 13,363 12,395 12,381



Equity 101,518 113,169 122,294 131,003

Growth - 11% 8% 7%

Stated Capital 82,521 82,521 82,521 82,521

Reserves 18,996 30,648 39,773 48,482

Liabilities 106,102 97,525 87,673 79,229


Growth - -1% -15% -58%




Growth - -23% -9% 33%





3%

97%

Banks

Suppliers

14%

86%

Suppliers

Domestic

Foreign

Long-Term Borrowings - 2011

100%

Banks

Foreign

33%

67%

Suppliers

Domestic

Foreign

Short-Term Borrowings - 2011

72%

28%

Banks

Suppliers

FX EURRSD 88.60 95.89 105.50 104.64


Assets 207,619 210,694 209,967 210,232


PP&E 110,381 110,866 110,340 103,998


Current Assets 26,760 31,304 29,766 35,924

Inventories 6,853 5,836 6,446 6,648

Receivables 12,397 13,363 12,395 12,381



Equity 101,518 113,169 122,294 131,003

Growth - 11% 8% 7%

Stated Capital 82,521 82,521 82,521 82,521

Reserves 18,996 30,648 39,773 48,482

Liabilities 106,102 97,525 87,673 79,229


Growth - -1% -15% -58%




Growth - -23% -9% 33%





100%

Banks

Foreign

ØFX EURRSD 84.95 93.95 103.04 101.95

Cash Flow Statement (m RSD) 2008 2009 2010 2011

Inflows from Operating Activities 98,826 103,371 105,978 106,363

Sale and Received Payments in Advance 97,710 102,431 105,274 105,392

Other Inflows from Operating Activities 1,115 940 704 971

Outflows from Operating Activities 71,076 73,960 73,726 71,272

Outflows to Suppliers and Payments in Advance 46,017 46,890 46,564 44,632

Other Outflows from Operating Activities 25,059 27,070 27,161 26,641

CFO 27,750 29,411 32,252 35,091

Inflows from Investing Activities 2,322 5,720 5,339 4,373

Dividends Received 316 5,094 4,717 3,485

Other Inflows from Investing Activities 2,006 626 622 889

Outflows from Investing Activities 24,805 14,871 17,829 11,563

Acquisition of Fixed Assets 20,475 14,109 15,641 10,773

Other Financial Investments 4,330 762 2,188 790

CFI -22,483 -9,151 -12,490 -7,190

Inflows from Financing Activities 8,873 0 0 0

Prinicpal Amounts of Debt Issued 8,873 0 0 0

Other Inflows from Financing Activities 0 0 0 0

Outflows from Financing Activities 4,062 11,549 16,447 22,170

Dividends Paid to Shareholders 4,062 3,897 6,665 4,737

Other Outflows from Financing Activities 0 7,652 9,782 17,434

CFF 4,811 -11,549 -16,447 -22,170

NET INFLOWS/OUTFLOWS 10,078 8,710 3,315 5,730


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Main Peers - 2011

CFO/Sales - left axis Cash Flow Earnings Index - right axis

Worst performer

Best performer

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40%

Main Peers - 2011

ROA ROE

LIQUIDITY 2008 2009 2010 2011

Current Ratio 0.49 0.68 0.67 0.60

Quick Ratio 0.37 0.55 0.53 0.49

Cash Ratio 0.09 0.21 0.18 0.23

SOLVENCY 2008 2009 2010 2011

Debt-to-Equity 0.79 0.64 0.52 0.35

Debt-to-Capital 0.44 0.39 0.34 0.26

Debt-to-Assets 0.39 0.35 0.30 0.22

Financial Leverage 2.05 1.86 1.72 1.60

Financial Liabilities/EBITDA - ttm 2.20 1.93 1.69 1.24

PROFITABILITY - Margins 2008 2009 2010 2011

EBITDA Margin 43.9% 43.9% 43.8% 42.3%

EBIT Margin 24.5% 24.3% 23.9% 22.4%

Profit Margin 6.4% 18.1% 18.5% 25.5%

PROFITABILITY - Returns 2008 2009 2010 2011

Operating Return on Assets - ttm 9.9% 10.0% 9.7% 9.3%

Return on Assets (ROA) - ttm 4.6% 8.9% 8.4% 11.3%

Return on Equity (ROE) - ttm 5.2% 14.5% 13.4% 17.6%

Tax Burden - 97.5% 97.7% 96.2%

Interest & FX Burden - 76.2% 79.3% 118.3%

EBIT Margin - 24.3% 23.9% 22.4%

Asset Turnover - 0.41 0.41 0.42

Financial Leverage - 1.95 1.79 1.66

Return on Capital (ROTC) - ttm 11.3% 11.4% 11.0% 10.8%

Source: Sinteza Research

Statement of Earnings (m RSD) 2012F 2013F 2014F 2015F

Sales 88,057 89,053 90,328 91,906

Growth 0.8% 1.1% 1.4% 1.7%

Fixed Telephony 46,518 47,708 48,930 50,182


Internet 8,070 9,280 10,672 12,273

Other Services 1,398 1,443 1,488 1,535


COGS 140 141 143 146





EBITDA 38,280 38,712 39,267 39,953

Growth 3.6% 1.1% 1.4% 1.7%

EBIT 20,948 21,185 21,488 21,864

Growth 7.0% 1.1% 1.4% 1.7%

Other Non-Operating Items -4,662 -2,691 -722 1,069


FX Gains (Losses) -6,164 -4,631 -2,620 -827

Other Items 3,328 3,365 3,414 3,473

Net Income 16,286 18,494 20,766 22,933

Growth -26.9% 13.6% 12.3% 10.4%

Source: Sinteza Research

The sales growth in the following period we base on the revenues from fixed telephony and internet business segment. We assume that each segment of the business will continue to rise at the compound annual growth rate experienced in last 4 YRs except for internet sector which has soared so far. We see it to increase at a slower pace in the following period.

Our assumption is also that Telekom will not be sold to a strategic partner in three-year time and that all costs, incl. wages and other operating costs, will have the same participation in sales they have had since 2008.

Provided that, Telekom will enjoy slower EBITDA rise through up to 2015.

Huge depreciation of the domestic currency against euro will cause the net income to plunge in 2012 to around RSD 16bn. Up to 2015 the bottom line may reach RSD 23bn.

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2008 2009 2010 2011 2012F 2013F 2014F 2015F

m RSD

Sales and EBITDA

Sales EBITDA

as of 18-May-2012

Name P/E P/S P/B P/EBITDA EV/EBITDA ROA (%) ROE (%) P/CFEBITDA

Margin (%)

Profit

Margin (%)

Debt/Equity

(%)

Divi.

Yield (%)

Median 13.5 1.6 1.8 4.6 4.9 4.2 9.0 5.8 33.2 8.6 57.9 5.5

Average 20.6 1.4 2.0 4.0 5.2 4.7 7.9 5.0 34.8 8.9 111.5 5.7

Market Cap Weight. Aver. 20.7 1.6 2.0 4.8 6.5 5.4 13.1 5.6 33.9 11.8 89.2 5.5

Telekom Srbija 11.4 2.9 1.9 6.9 7.7 42.3 17.6 7.2 42.3 25.5 34.9 3.7

HRVATSKI TELEKOM 10.9 2.5 1.8 5.2 4.2 13.6 16.4 6.5 47.0 22.5 0.5 5.5

VODAFONE GROUP 11.6 2.0 1.0 6.3 8.3 5.2 9.0 6.8 32.0 17.4 43.8 6.0

FRANCE TELECOM 8.3 0.7 1.2 2.1 4.3 4.1 13.7 2.5 33.2 8.6 133.1 14.0

DEUTSCHE TELEKOM 68.2 0.6 1.1 2.0 4.5 0.4 1.5 2.4 32.4 0.9 121.0 8.0

TELENOR 22.0 1.6 1.9 4.6 5.2 4.2 8.3 5.8 34.9 7.3 39.0 4.7

TURKCELL ILETISIM HIZMET 16.5 2.1 1.8 6.7 5.7 7.3 11.5 9.8 31.1 12.6 32.7 0.0

TELEKOM AUSTRIA 0.9 4.6 2.7 4.9 -3.4 -21.4 3.4 34.3 -5.7 447.2 4.9

TELEKOM SLOVENIJE 12.0 0.5 0.5 1.6 3.2 2.1 4.2 1.8 30.8 4.2 57.9 7.2

AMERICA MOVIL 15.0 1.9 4.3 5.0 6.2 9.1 27.9 6.4 37.4 12.5 128.7 1.1

Source: Sinteza Research, Bloomberg

The initial Telekom’s value, set by the Government of Serbia, will be EUR 2.27bn which, at the FX rate of EURRSD 112, gives the value of RSD 254.24bn. The number of outstanding shares , distributed to current shareholders, will be exactly 1bn, and the price per share, hence, is to be EUR 2.27 (RSD 254.24).

Telekom paid out to Greece’s OTE EUR 17m in the name of dividends for 2011. That makes 20% of the total dividend Telekom may pay out this year. The calculation gives the payout ratio of 38.9% and dividend per share of 9 eurocents.

At the current price and earnings made in 2011, we see the stock price of Telekom to fall on the first days of trading despite the fresh breath the listing of the company brings onto the market. This particularly when we concentrate on core-business results (EBITDA and EBIT), which fell y-o-y. In the future, these two result subtotals are likely to stagnate or even decline owing to the stronger competition arising especially in the mobile industry from VIP Srbija and Telenor Srbija.

Furthermore, when it comes to the bottom line, we see the net income to plunge in 2012 due to huge FX loss burdens, which fuelled the result in 2011. The additional downward pressure on the price will also arise from the significant ask orders given by citizens who are in the need for money.

as of 18-May-2012


Margin (%)

Profit

Margin (%)

Debt/Equity

(%)

Divi.

Yield (%)

Median 13.5 1.6 1.8 4.6 4.9 4.2 9.0 5.8 33.2 8.6 57.9 5.5

Average 20.6 1.4 2.0 4.0 5.2 4.7 7.9 5.0 34.8 8.9 111.5 5.7


Telekom Srbija 11.4 2.9 1.9 6.9 7.7 42.3 17.6 7.2 42.3 25.5 34.9 3.7


VODAFONE GROUP 11.6 2.0 1.0 6.3 8.3 5.2 9.0 6.8 32.0 17.4 43.8 6.0

FRANCE TELECOM 8.3 0.7 1.2 2.1 4.3 4.1 13.7 2.5 33.2 8.6 133.1 14.0


TELENOR 22.0 1.6 1.9 4.6 5.2 4.2 8.3 5.8 34.9 7.3 39.0 4.7


TELEKOM AUSTRIA 0.9 4.6 2.7 4.9 -3.4 -21.4 3.4 34.3 -5.7 447.2 4.9


AMERICA MOVIL 15.0 1.9 4.3 5.0 6.2 9.1 27.9 6.4 37.4 12.5 128.7 1.1


On the other hand, valuation indicators may look better when consolidated results have been reported and included in the calculations. Dividend paying policy and the sale of the controlling stake in the future to a strategic partner may hold the price at the higher level compared to main peers. This also as Telekom will be the leading and the biggest company in the market by market capitalization .

as of 18-May-2012


Margin (%)

Profit

Margin (%)

Debt/Equity

(%)

Divi.

Yield (%)

Median 13.5 1.6 1.8 4.6 4.9 4.2 9.0 5.8 33.2 8.6 57.9 5.5

Average 20.6 1.4 2.0 4.0 5.2 4.7 7.9 5.0 34.8 8.9 111.5 5.7


Telekom Srbija 11.4 2.9 1.9 6.9 7.7 42.3 17.6 7.2 42.3 25.5 34.9 3.7


VODAFONE GROUP 11.6 2.0 1.0 6.3 8.3 5.2 9.0 6.8 32.0 17.4 43.8 6.0

FRANCE TELECOM 8.3 0.7 1.2 2.1 4.3 4.1 13.7 2.5 33.2 8.6 133.1 14.0


TELENOR 22.0 1.6 1.9 4.6 5.2 4.2 8.3 5.8 34.9 7.3 39.0 4.7


TELEKOM AUSTRIA 0.9 4.6 2.7 4.9 -3.4 -21.4 3.4 34.3 -5.7 447.2 4.9


AMERICA MOVIL 15.0 1.9 4.3 5.0 6.2 9.1 27.9 6.4 37.4 12.5 128.7 1.1


CONTACT DETAILS Analysts: Ivan Dzakovic

Milos Bijanic

Email: [email protected]

[email protected]

Tel: +381 11 2099 574

+381 11 2099 582

2011 Telekom Srbija FYR

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Transcript of 2011 Telekom Srbija FYR