Annual Report 2009 by yaofenjin

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									Annual	 	 	
Report	 	 	
2009		 	 	
Zagreb, 30 March 2010
                                                                      3
                                                        Optimatelekom
                                                     Annual Report 2009




                                                             Sadržaj	


About Optima Telekom                                5

Main Features of the Group                          8

Optima Telekom Business Review 2009                 10

The fixed communications market                     13

Internet                                            14

Market Strategy                                     15

Wholesale                                           18

Public Tenders                                      21

Revenues from Sale of Telecommunications Services   22

Capital Investments and Projects in 2009            25

Market Potential                                    26

Fiber Optic Network                                 30

New services                                        32

Optima Direct d.o.o.                                33

Regulatory Framework                                35

Perspective and chances in 2010                     36

Corporate Governance                                37

Corporate Governance Code Compliance Statement      38

Statement of persons responsible for reporting      40
                                                                                                              5
                                                                                                Optimatelekom
                                                                                             Annual Report 2009




                                                                       About	Optima	Telekom	 	


OT – Optima Telekom d.d. is the first alternative fixed telecommunica-
tions service provider in the Republic of Croatia and the second fixed
telecommunications operator in the Croatian market. In only 5 years of
commercial presence, the IP technology-based Optima telecommunica-
tions network is present in over 100 Croatian cities with a full spectrum
of telecommunications services.


T
    he current market potential of over half million lines is connected through over
    2,200 km of fiber optic network. The corporate culture of Optima Telekom supports
innovativeness, loyalty, training, enterprise and the desire to overcome in every em-
ployee, which is all well recognized by our faithful private and business users, currently
242.650 users in all. At the beginning of February 2007, Optima placed on the market
bonds in the value of HRK 250 million, and for two years now Optima Telekom’s ordinary
shares are listed on Zagreb Stock Exchange.


• Supervisory Board: Matija Martić - Chairman, Nada Martić - Member

• Management Board: Goran Jovičić - Chairman, Damir Bokšić - Member, Jadranka Suručić -

 Member
• Bank account number: 2360000-1101848050 at Zagrebačka banka d.d.

• Commercial Court of Zagreb

• Personal Identification Number (OIB): 36004425025

• Company Registration Number (MBS): 040035070

• Tax number (MB): 0820431

• Share capital: HRK 28.200.700,00

• Number of shares: 2.820.070 (with nominal value of HRK 10,00 each)
    6




	       About	Optima	Telekom
	       Optima	Telekom	Regions	and	Centers




                               HEAD	OFFICE	–	MANAGEMENT	OF	THE	COMPANY

                               OT-Optima Telekom d.d.
                               Bani 75a, Buzin, Zagreb      Tel. +385 1 54 92 699
                               10 000 Zagreb, Hrvatska      Fax. +385 1 54 92 019




                               REGION	NORTH

                               OT-Optima Telekom d.d.
                               Bani 75a, Buzin              Tel. +385 1 54 92 301
                               10 000 Zagreb, Hrvatska      Fax. +385 1 54 92 309


                               OT Centar
                               Savska 5, Zagreb             Tel. +385 1 54 92 299
                               Cvijete Zuzorić 3, Zagreb    Tel. +385 1 63 31 740




                               REGION	EAST

                               OT-Optima Telekom d.d.
                               Županijska 21/I              Tel. +385 31 492 999
                               31 000 Osijek, Hrvatska      Fax. +385 31 210 459


                              OT Centar
                              Lorenza Jägera 2, Osijek      Tel. +385 31 554 602
                                                            Tel. +385 31 554 603
                                                            Fax. +385 31 554 495
                                                                                           7
                                                                             Optimatelekom
                                                                          Annual Report 2009




REGION	WEST

OT-Optima Telekom d.d.
Andrije Kačića Miošića 13                       Tel. +385 51 492 799
51 000 Rijeka, Hrvatska                         Fax. +385 51 492 709


OT Centar
Andrije Kačića Miošića 13
Rijeka                                          Tel. +385 51 554 651




REGION	SOUTH

OT-Optima Telekom d.d.
Trg Hrvatske bratske zajednice 8/II             Tel. +385 21 492 899
21 000 Split, Hrvatska                          Fax. +385 21 492 829


OT Centar
7. domobranske pukovnije 1/3, Zadar             Tel. +385 23 492 860
Ivana Matijaševića 14, Dubrovnik                Tel. +385 20 220 640




Apart from OT-Optima Telekom d.d. for telecommunications,
as of 2007, members of the Group are also:


Optima Direct d.o.o.      Optima-Telekom d.o.o. Optima Pazinka d.o.o.
Trg Josipa Broza Tita 1   Ulica 15.maja 21           Šime Kurelića 20
52 460 Buje               6 000 Koper                52 000 Pazin
Republika Hrvatska        Republika Slovenija        Republika Hrvatska
    8




	       Main	Features	of	the	Group


                  • Total Consolidated revenues in 2009 amount to HRK 467,2 million. As compared to 2008, the

                   revenues increased by 5% whereby the growth rate from the previous years continued.

                  • Revenues from sale of telecommunications services in 2009 have increased by 12,8%, as com-

                   pared to 2008. The largest growth accounts for revenues from Internet services (72,6%), reve-

                   nues from interconnection services (23,6%) and revenues from public speech services (4,8%).

                   Revenues from data services have recorded a decrease by 5,6%.

                  • The number of LLU users has increased by 31% (from 69,328 to 90,844 users)

                  • A 10% increase of revenue from large business users has been recorded, small and medium-

                   size 3%, residential 18%, while the SOHO segment records a decrease of 7%.

                  • Number of collocations has increased by 6,6 % (22 collocations in 2006, 121 collocations in 2007,

                   226 collocations 2008, 241 collocations in 2009).

                  • Potentially available connections increased by 6,1% (from 638.361 to 677.024 connections, which

                   represents 42% of active fixed-telephony connections market).

                  • The EBITDA improvement trend continued in 2009 for the amount of HRK 38,4 million, and

                   compared to the previous year amounts to HRK 22,5 million

                  • EBT amounts to HRK -111,1 million, which indicates that the trend of decreasing the overall loss

                   which started in the previous year continues, by HRK 2,4 million
                                                                                                        9
                                                                                          Optimatelekom
                                                                                       Annual Report 2009




Goran Jovičić - Chairman of Management Board

“This was a very challenging year, both for us and our country as a whole. However,
given that we foresaw the strain the crisis would put on our business operations, we
kicked-off the year with revenue and margin protection as our priority. It is my pleasu-
re to state that our strategy has been efficient and that we have accomplished stable
results reflecting a high quality of services and a strict expense control, which enabled
us to tackle problems in the economy. Furthermore, I believe that our results show the
importance of Optima Telekom services for the Croatian economy.“
      10




      Optima	Telekom	Business	Review	2009
													Trends	in	the	Croatian	Economy




                            The basic trends in the Croatian economy in 2009 have not differed si-
                            gnificantly from trends at global level, the financial crisis has lead to a
                            significant decrease in demand for goods and services, which resulted
                            in a decrease of their production. The year 2009 ended with a total of
                            291.545 unemployed persons, which is the highest number since March
                            2007. The unemployment average in 2009 amounted to 263.174, which
                            supersedes the 2008 average by 11,2%.

                            NET wAGES PER MONTHS IN 2008 AND 2009




                                                                                                          



                            ACTUAL ANNUAL GDP INCREASE RATES PER qUARTERS




                                                                                                          

                                                                                                          11
                                                                                             Optimatelekom
                                                                                          Annual Report 2009




T
    he registered unemployment rate in December amounted to 16,7%, while at an
    annual level it amounted to 14,9%. Given that according to the work force survey in
the third quarter the unemployment rate amounted to 8,7%, it can be concluded that in
Croatia half the unemployed work in the “gray” economy.


The average monthly gross wage per employee in 2009, in Euros, amounted to EUR 1.051,
which supersedes the average gross wage in 2008 by 0,6%. In this way, Croatia finds
itself among the few transitional countries that conserved the growths and a high level
of wages amidst the economic crisis. Given that the gross wage represents the largest
part of the overall work cost, these developments have had a negative influence on the
economy’s competitiveness.


The Gross Domestic Product in the third quarter of 2009 has recorded an objective de-
crease of 5,7% compared to the same period in 2008. Compared to the two preceding
quarters in which the decrease amounted to 6,7 and 6,3%, the deceleration recorded in
the third quarter was expected mostly due to a low statistical base of the third quarter
of 2008. The decrease deceleration in the third quarter of 2009 was mostly affected by a
significant deceleration in the decrease of the most significant component of the GDP,
personal consumption.


The Gross Domestic Product in the last trimester of 2009 was actually smaller by 4,4%
compared to the same trimester of 2008. The first estimate by the National Statistics
Bureau shows that in 2009, the GDP is smaller by 5,8% compared to 2008. The GDP
decrease in the fourth trimester has been decelerated, which continues the trend from
the third trimester.


The money supply M1 value in 2009 was smaller by over HRK 8 billion or 14,6%, compared
to 2008.
Overall liquid funds, encompassing money supply, savings and time-deposit HRK and
foreign currency deposits, as well as bonds and money market instruments (monetary
aggregate M4), in December 2009 record a decrease of about HRK 500 million at a mon-
thly level, while at the end of 2009 there is a difference of almost HRK 2 billion less than
at the end of 2008.


According to the official announcement of the National Statistics Bureau, the final hou-
sehold consumption as the largest GDP category has decreased by 9,4% in the 2nd tri-
mester of 2009, and by 6,9% in the 3rd trimester, compared to the respective trimesters
of 2008.
12




Optima	Telekom	Business	Review	2009
Key	events	for	Optima	Telekom



                 The most important market trends of 2008 remained relevant in 2009;
                 a strong development of broadband services and the introduction of
                 digital television services, an ever-greater demand for internet featu-
                 res, a continued drop of fixed telephony, in line with worldwide trends.
                 • September 2009 - Optima digital television service was launched - OptiTV. The digital television

                  service was implemented through Transmitters and Connections, offering a state-of-the-art

                  system for compression of digital signal which gives users the highest quality signal, and by that

                  the highest quality IPTV service

                 • By the end of December 2009, OptiTV has recorded 2683 users

                 • On 30 July 2009, the Croatian Parliament enacted the The Law on Amendment of the VAT Act.

                  The amendment pertains to the increase of the basic VAT rate from 22% to 23%, in application

                  from 1 August 2009.

                 • On 1 August 2009, a new special wages tax act entered into force, as part of the Government’s

                  anti-recession measures.

                 • As of 1 August 2009, the Law on Compensation for Provision of Services in Mobile Electronic

                  Communications entered into force. Pursuant to said Law, operators pay a compensation of 6%

                  of the income accrued through SMS and MMS messages and speech services
                                                                                                                                   13
                                                                                                                      Optimatelekom
                                                                                                                   Annual Report 2009




                                                                     The	fixed	communications	market	


             The fixed telephony market in Croatia has remained competitive with
             nine active operators in 2009, the same as 2008.


             A
                   ccording to the National Statistics Bureau, the number of minutes spent in the fixed
                   communications market decreased by 7,6% in the first nine months of 2009, which
             is in line with the fixed communications decrease in the rest of Europe. There were no
             significant changes in the fixed telephony penetration rate which amounted to 42% in the
             population, according to the national regulatory agency, the HAKOM.



        14.4%     15.53%       16.74%    17.82%   20.05%   21.38%    22.19%   23.46%    24.08%   24.84%   25.99%    26.73%

        85.6%     84.47%       83.26%    82.18%   79.95%   78.62%    77.81%   76.54%    75.92%   75.16%   74.01%    73.27%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

 0%
        Mar_07    Jun_07       Sep_07    Dec_07   Mar_08   Jun_08    Sep_08   Dec_08   Mar_09    Jun_09   Sep_09    Dec_09


       FIxED NETwORKS OPERATORS SHARE ACCORDING TO NUMBER OF USERS (SOURCE HAKOM)

       new operators HT d.d.



         41.34%    41.51%      41.59%    41.83%   42.02%    42.05%   42.06%   42.34%    42.16%            41.95%    41.92%
 45%

 40%

 35%

 30%

 25%

 20%

 15%

 10%

  5%

  0%
         Mar_07    Jun_07       Sep_07   Dec_07   Mar_08   Jun_08    Sep_08   Dec_08   Mar_09    Jun_09   Sep_09     Dec_09


       DENSITy OF SUBSCRIBERS IN THE FIxED COMMUNICATIONS NETwORK (SOURCE HAKOM)
14




Internet



                   A
                           ccording to data from the Croatian Agency for the Post and Electronic Communica-
                           tions, on 31 March 2009 there were 722.110 broadband Internet connections in the
                   Republic of Croatia, and a density of 16,28 %. In this way, compared to the same period in
                   2008 which recorded an overall number of 416.000 broadband Internet connections, the-
                   re was a growth of 57,6 %. This is a continuation of the broadband connections growth
                   trend, which began in 2003 and recording better results every year.




                                                                                    135.132   158.524    170.883    198.569    242.172   252.238

                   284.4103     22.915   355.770   387.0194     16.001    451.775   488.209   524.683    591.383    615.344    648.143   684.960
      1000000

       900000

       800000

       700000

       600000

       500000

       400000

       300000

       200000

       100000

            0
                  Mar_07      Jun_07     Sep_07    Dec_07     Mar_08     Jun_08     Sep_08    Dec_08    Mar_09     Jun_09     Sep_09     Dec_09




                BROADBAND INTERNET CONNECTIONS NUMBER (SOURCE HAKOM)

                Mobile communications network Fixed communications network
                                                                                                                            15
                                                                                                              Optimatelekom
                                                                                                           Annual Report 2009




                                                                                                Market	Strategy	
                                                                                                    Private	Users	Segment



         Business operation in accordance with the adopted principle “OPTIMA is
         the FAIREST” still provides a growth in the number of users in the resi-
         dential sector.


          T
                hrough intense sales activities and a FAIR approach to the market, Optima Telekom
                realizes:
          • Transfer of existing Optima users who are already using CPS service (the so-called migration);

          • Contracting new users to Optima’s network



          Due to a large number of users of CPS service, in 2009, the transfer of customers to the
          own network has been as important as connecting new users where good results have
          been achieved.




70%


60%


50%


40%


30%


20%


10%


0%
       Jan_09    Feb_09     Mar_09   Apr_09   May_09   Jun_09   Jul_09   Aug_09   Sep_09   Oct_09     Nov_09   Dec_09




      NEw USERS CONNECTION TREND

      Existing CPS users New users
16




Market	Strategy
Transfer	of	Customers	to	the	Optima	Telekom	Network



                  In 2009, 30.194 contracts have been entered to effect full transfer to
                  Optima’s network.
                  In this way, Optima Telekom continues the designated transfer strategy
                  but it also continues with acquisition of new users to its own network.


                  T
                      he overall data on transfer of users to the own network indicate that Optima is by far
                      the most successful. The data in question originate from the transferred accounts
                  database (CADB) of the Croatian Agency for Post and Electronic Communications (HA-
                  KOM) which registers, on a daily basis, the status of each ongoing transaction related
                  to the process of number portability as well as data on routing calls towards ported
                  number used to update operative databases hosted by the operator i.e. it indicates which
                  operator holds a specific user number from mobile or fixed network.


                  The overall data on portability of telephone numbers show the transfer of 120.606 acco-
                  unts to Optima’s network which represents 38,9% of the total number of migrating
                  numbers and it is one of the key indicators of recognizing new operators and readiness
                  of Croatian citizens to changes in using telecommunication services and liberalization
                  of the Croatian market as a whole.




                  Amis Iskon Metronet OT Portus Primatel T-com VIPNet Vodatel Voljatel

                                                OPERATOR SHARES IN MIGRATED CONNECTIONS
                                                                                                      17
                                                                                         Optimatelekom
                                                                                      Annual Report 2009




                                                                                       Market	Strategy	    	
                                                                                        Business	Segment



Providing services to demanding business users – audio video conferen-
ce, data and voice VPN, UM, FAX, WEB directory etc. eventually resulted
in an increase of the cumulative number of active business users up to
the number of 9103.

B
      usiness sales of Optima Telekom offer specific integrated business solutions to all
      business subjects regardless of the line of business. In 2009, Optima continued be-
ing present in tourism, trade, transportation and higher education. Large business users
of Optima Telekom are mainly represented in the following activities:
• Hotels

• Intellectual services

• Media at national and regional level

• Financial institutions

• Intellectual services

• Transport

• Trade

• Tourism

• Associations

• Catering

• Embassies and foreign missions

• Health

• Science



The general trend of Optima’s achievements in the business segment is the increase of
number of users on its own infrastructure. Broadening the network and introducing a
large number of new locations which began in 2006 created the necessary preconditions
for more advanced services based on broadband technology to be offered to business
users outside Croatia’s major cities.
18




Wholesale
Relations	with	Other	Operators




                 O
                      ptima Telekom has entered into interconnection agreements with 23 international
                      operators, 3 national operators of mobile networks and 9 national operators of
                 fixed networks. This number of contracts has ensured us wholesale revenues in the
                 amount of HRK 69,16 million in 2009, which is an increase of 10,7%, compared to the
                 previous year.
                                                                                          19
                                                                             Optimatelekom
                                                                          Annual Report 2009




80mil




70mil




60mil




50mil




40mil




30mil




20mil




10mil




 0mil                                                REVENUE 2007 THROUGH 2009

        Revenue 2007   Revenue 2008   Revenue 2009
20




Wholesale
Overall	interconnection	charges




                            200mil




                             160mil




                             120mil




                             80mil




                             40mil




                                                                                   Interconnection charges have been redu-
                                                                                   ced, as compared to 2008, by HRK 20,86
                                                                                   million (12,3%) and in 2009 they amounted
                                                                                   to HRK 148 million.
                                                                                   OT INTERCONNECTION CHARGES
                              0mil
                                      Charges 2007   Charges 2008   Charges 2009
                                                                                       21
                                                                          Optimatelekom
                                                                       Annual Report 2009




                                                                    Public	Tenders	



Optima Telekom participated in public tenders in 2009 as well and en-
tered into contracts with public institutions, 21 public tenders in all.
22




Revenues	from	Sale	of	Telecommunications	Services
Revenues	per	services




                 The revenues from sale of telecommunications services in 2009 have, as
                 compared to 2008, increased by 12,8%.

                 T
                        he largest increase was recorded in the revenues from internet services, 72,6%,
                        revenues from interconnection, 23,6% and revenue from public voice service, 4,8%.
                                                                                                          23
                                                                                             Optimatelekom
                                                                                          Annual Report 2009




250mil




200mil




150mil




100mil




 50mil




                                                                                  2008.

  0mil                                                                            2009.
         Public Voice   Internet   Data Services   Interconnection   Multimedia
24




Revenues	from	Sale	of	Telecommunications	Services
Revenues	per	User	Segments




                               Due to intensified sales activities
                               in 2009, both business and private
                               segment have registered growth.


                               T
                                     he revenues in the segment of Key
                                     Accounts (KA) have increased by 10%,
                               the revenues in Small Medium Enterprise
                               (SME) increased by 3%, while in the Small
                               Office Home Office (SOHO) segment they
                               decreased by 7%. The largest growth (of
                               18%) has been registered in residential se-
                               gment thanks to the activities in the pro-
                               cess of local loop unbundling.



                              20%




                              15%




                              10%




                               5%




                               0%




                              -5%




                              -10%




                                     Comment:
                                     The data originates from the Optima Telekom Billing Sy-
                                     stem which includes only revenues from end-users.
                                                                                                   25
                                                                                      Optimatelekom
                                                                                   Annual Report 2009




                                Capital	Investments	and	Projects	in	2009	



Capital investments of Optima Telekom in 2009 amounted to HRK 31
million. The major part pertains to investments in own network mostly
based on the construction of the access network, engaging HRK 24,4
million, while the remaining HRK 4,6 thousand have been invested in
the network core.       rter            rert




                           CAPITAL TECHNICAL INVESTMENTS




                                                            2009 (Kn)    % Share

General investments                                          275.581        1
Capital technical investments                              30.794.124      99
        Access Network                                     24.407.912      79
        Core Network                                        4.673.937      15
        Telecommunications center                            1.712.275      6
TOTAL Investments                                          31.069.705
26




Market	Potential



          Today, Optima has:
          • 241 active collocations

          • A reach of 677.000 active user connections (of the total 1.600.000 in the Republic of Croatia accor-

           ding to the official data published by HAKOM)



          In 2009, Optima installed its equipment in 15 new collocations. Compared with to the 226
          collocations at the end of 2008, this is an increase of 6,6%.




           Number of active                  2006.             2007.             2008.              2009.
           collocations

             CROATIA                          22                 121               226               241
             North                             3                 35                 71                77
             west                              4                 25                42                 42
             East                              10                22                43                 47
             South                             5                 39                70                 75
                                                                              27
                                                               Optimatelekom
                                                            Annual Report 2009




250




200




150




100




50




 0                                            NUMBER OF ACTIVE COLLOCATIONS

      Croatia   North   west   East   South
                                              2008. 2009.
28




                                  Number of   Number of Pairs in
     County              Region
                                    Pairs         Range
     Dubrovačko-ne-
                          Jug      49.037           21.105
     retvanska
     Splitsko-
                          Jug      160.685         90.426
     dalmatinska
     Šibensko-knin-
                          Jug      44.188           14.168
     ska
     Zadarska
                          Jug      65.653           35.633

     Osječko-
                         Istok     100.944         54.094
     baranjska
     Vukovarsko-sri-
                         Istok      57.162          18.559
     jemska
     Virovitičko-po-
                         Istok      27.471          6.974
     dravska
     Požeško-
                         Istok      24.179          3.719
     slavonska
     Brodsko-
                         Istok     47.645           14.089
     posavska
     Grad Zagreb         Sjever    341.110         185.994
     Zagrebačka          Sjever    102.145          32.439
     Međimurska
                         Sjever    34.502           5.831

     Varaždinska
                         Sjever    55.446           27.140

     Bjelovarsko-bilo-
                         Sjever    39.393           9.058
     gorska
     Sisačko-
                         Sjever    58.808           22.565
     moslavačka
     Karlovačka
                         Sjever    46.422           9.399

     Koprivničko-kri-
                         Sjever    36.080           10.260
     ževačka
     Krapinsko-za-
                         Sjever    43.289           2.776
     gorska
     Primorsko-go-
                         Zapad     136.438         64.639
     ranska
     Istarska
                         Zapad     88.459           45.092

     Ličko-              Zapad      21.278          3.162
     senjska
     TOTAL:               OT      1.580.334        677.024
                                                                                            29
                                                                               Optimatelekom
                                                                            Annual Report 2009




                                          4
                            19
                   1                          5



                       27                     4
                                 5                        3
                                                                  25

     24                                               1
               2                     10
17                                                            5
                                                                       13



           1




          17
                       4



                                      46




                                                  8
30




Fiber	Optic	Network



          Today, Optima Telekom has the fiber optic infrastructure in over 100 Cro-
          atian cities, most of which was constructed by its own light-conducting
          cables.


          I
            n the upcoming years, the development strategy focuses on the intensive expansion
            of local fiber optic network to the abovementioned cities as well as of intercity routes
          which enabled expansion of the fiber optic network and Optima’s services to other cities,
          outside the regional centers.


          By the end of 2008, Optima constructed 2.073 kilometers of fiber optic network throug-
          hout Croatia. In 2009, the construction activities continued, and the additional 201 kilo-
          meters of fiber optic have been laid down resulting in a 9,6% increase.


          Today, Optima has the fiber optic infrastructure in more than 100 cities which have been
          connected to core network by own infrastructure and by lines leased from HEP (Croa-
          tian Electric Supply Company), HŽ (Croatian Railways), T-HT and OiV (Transmitters and
          Connections Company), as well as through certain international operators.


          Up to the present day, Optima Telekom has successfully realized over 2.200 kilometers
          of its own fiber optic routes and continues with intensive development the object of whi-
          ch is to offer services to citizens in the entire territory of Croatia.
                                                                                                             31
                                                                                                Optimatelekom
                                                                                             Annual Report 2009




2500



2000



1500



1000



500



  0
                   “2006.“                  “2007.“            “2008.“             “2009.“

       FIBER OPTIC NETwORK IN KILOMETERS




       Optima Telekom fiber optic          2006.      2007.   2008.      2009.   % of changes
       network in kilometers

        CROATIA                            746        1.370   2.073      2.274        10%
        North                              300        540     792        862           9%
        west                               270        500     709        727           3%
        East                                0          80      179        183          2%
        South                               176       250     393        502          28%
32




New	services
OptiTV




                 In September 2009, Optima Telekom launched a digital television ser-
                 vice – OptiTV, which includes both Optima’s voice and DSL services. The
                 digital television service was implemented through Transmitters and
                 Connections, using a state-of-the-art system for compression of digital
                 signal, which provides users highest quality TV signal, which necessarily
                 means the highest quality IPTV service. Conclusive as of December 2009,
                 the OptiTV digital television service was used by 2683 users.



         3000


         2500


         2000


         1500


         1000


          500


           0
                             09/09           10/09                11/09               12/09

                OPTITV - USER INTAKE
                                                                                                        33
                                                                                           Optimatelekom
                                                                                        Annual Report 2009




                                                                         Optima	Direct	d.o.o.	


Optima Direct d.o.o. is a wholly owned subsidiary of Optima Telekom.
After becoming a member of the Group in 2007, the influence of Optima
Direct on business operation grows, especially after migration and reor-
ganization of certain key business processes within the company.

w
        ithin its scope of activities, Optima Direct performs important business functions
        for the purposes of Optima Telekom’s residential segment. These functions per-
tain to:
• Customer care

• Residential (field) sales

• Services provided to third parties



The development of Optima Direct in 2009 has been accompanied by further growth,
which is in accordance with the aggressive strategy of customer base development. On
31 December 2009, the company employed 214 employees who mainly performed call
center, back office and field sales activities.


The business is organized on three separate locations in Zagreb, Varaždin and Osijek,
with the majority of employees employed in the modern call center in Osijek. In this way,
Optima realized positive results by optimizing the usage of business premises and re-
ducing staff expenses which, as a consequence, led to reduction of the call center total
operating expenses.


Apart from the usual tasks in call center domain, the employees of Optima Direct are
carrying out the back office activities for Optima Telekom. It is important to emphasize
that Optima Direct continuously works on development of processes and applications
which of use not only to Optima Telekom, but also to other business partners of Optima
Direct. Professional and educated employees of Optima Direct guarantee the quality of
integrated call center service on the Croatian market. Strategy and objectives of Opti-
ma Direct fit into the long-term strategy of development of the Group. Optima Telekom
continues with strategic determination to develop the company which became affiliated
in 2007, upon recognizing the potential of developing two important participants in tele-
communications market.


Given the global changes and impact of the crisis on the business operations of the Gro-
up, Optima Telekom will use its flexibility and flexibility on Group level and, as need be,
it will respond to all requirements of global movements in order to protect the interests
of the shareholders and maintain its market position.
34




     Residential sales is one of the key segments of Optima Direct which directly positively
     affects the business operation of Optima Telekom. Optima Direct employs 58 employees
     organized regionally in 4 centers (Zagreb, Osijek, Rijeka, Split) and 4 offices (Zadar, Buje,
     Varaždin, Sisak) which are all coordinated with the needs and plans of Optima Telekom.
     The development of this very segment ensures a continuous intake of new contracts and
     reduced dependability of a highly unreliable market of indirect partners. In February
     2009, the entire dealings of Optima Telekom d.d. with indirect partners was migrated
     into Optima Direct d.o.o. which became a single point of residential sales of Optima
     Telekom d.d. services.


     SIGNED LLU CONTRACTS (REqUESTS) PER yEAR


                                                2006     2007            2008            2009

      Total New                                  304     13.303         34.637          22.308

                  % of new                      30,40%   35,20%          60%           73,90%
      Total MIGRATION/UPSELL                     697     24.455         23.116          7.886
                  % of old                      69,60%   64,80%          40%            26,10%
      Total number of customers                 1.001    37.758         57.753          30.194




     One of the fundamental reasons for migration of a part of employees into the affiliated
     company was the development of BPO which has been recognized as a potential model
     of developing the scope of activities of the company and optimization of expenses at Gro-
     up level. Therefore, on the broader market, the following services are provided:
     • Call center (info desk, help desk)

     • Telemarketing

     • TV sales

     • Direct mailing

     • Door2Door Sales


     In 2009, Optima Direct signed several important contracts on providing call center servi-
     ces for third legal persons. Some of the reference projects are: Neckermann kataloška
     prodaja d.o.o., Ford Croatia, Velebit insurance and others.


     In the upcoming years, a significant growth of the share of revenue realized outside the
     Group in overall Optima Direct revenues is expected.
                                                                                                       35
                                                                                          Optimatelekom
                                                                                       Annual Report 2009




                                                                    Regulatory	Framework	


In 2009, the Croatian Agency for Post and Electronic Communications
(the Agency) continued its activities regarding the enactment of regu-
lations material to the business activity of all operators, and naturally,
Optima Telekom as well.


F
    urther significant activities pertain to public debates which the Agency held in
    2009, one of the most important being a public debate about the analysis of rele-
vant markets from March and April of 2009, after which the Agency rendered decisions
designating operators with significant market power. Given that Optima Telekom was
also designated as one of the operators with significant market power in the market of
termination of calls to its own public communication network, we were also imposed a
regulatory obligation to publish the Minimum offer. Apart from that, at the end of De-
cember 2009 a public debate was opened on the enactment of the Decision on the deter-
mination of expense oriented prices for the common use of electronic communication
infrastructure of the infrastructure operator, HT, which was ended at the beginning 2010.
After this, a decision was enacted, regulating the costs of free space and cable channel
pipes quite differently. Given that Optima Telekom is one of the largest users of the HT
infrastructure, this decision and its further application expected in 2010 might have a
significant influence on the future operations of Optima Telekom.


The business activity of Optima Telekom in 2009 was significantly influenced by the ren-
dering of the partial decree by the Agency, which changed the prices of terminating
calls in the HT network and which has been in application since 01.03.2009. This reduced
interconnection costs for Optima Telekom.


Regarding other regulations which could reflect on the company’s operations in the
future, especially regarding the provision of IPTV services, the Law on Electronic Media
and the Law on audio-visual activities should be mentioned. The stated acts regulate
new financial and non-financial obligations for operators.


It can be concluded that 2009 was rather intensive in the regulatory sense, and that such
activity can be expected in 2010, for which retail markets analysis and new amendments
to the Law on Electronic Communications have been announced.
36




Perspective	and	chances	in	2010


          The most recent survey done by the consultancy-audit company Deloitte,
          Telecommunications Trends in 2010, states that we can expect a recovery
          of the economy, but its specific form has yet to be seen.


          T
              he digitalization tempo is another challenge in 2010, in which the telecommunica-
              tion sector has become a key growth instigator. The third challenge consists in the
          adjustment of mobile internet, which is, according to Deloitte, moving too fast despi-
          te unstable times, which entails a significant challenge for the entire sector. Globally
          speaking, telecommunications markets can be roughly divided into those in which this
          sector has reached a kind of saturation point, as in the developed western countries,
          and those in which further growth is expected in the upcoming years. These countries
          include, apart from India and China, some Middle and Eastern European countries, and
          Croatia as well.


          Compared to western Europe, where investments into new technologies have decrea-
          sed, telecom operators in our region still invest significant funds into the placement of
          new technologies on the market. A good example is the broadband network segment,
          which in some countries of the region still leaves sufficient room for growth. The lar-
          gest penetration of broadband networks of 11,8% was recorded in Croatia. Therefore, the
          operators in countries of lower penetration will mostly focus on further breakthrough
          of broadband digital television network, in order to override the gap compared to EU
          members and replace the decrease recorded in the traditional markets.
          In 2010, Optima Telekom expects results from activities directed at the realization of the
          business plan in the sense of growth of the existing base of private users, mostly thro-
          ugh the upgrading of the offer of new services (DSL and OptiTV), with a more significant
          focus on the business users segment. In this segment, Optima Telekom will continue to
          follow market trends in unifying IT and telecommunications solutions which will contri-
          bute to the quality of offred services.
          The implementation of a new access technology, the so-called bitstream, is expected,
          which will also create a precondition to expand the offer to the existing user base.
          The correction of prices for the use of DTK network should open the door for new growth
          and investment projects.
          A better connectivity of cities, presupposing an increase of access capacities to the aim
          of quality digital television service provision to an expected larger number of future
          users.
          In a word, Optima will continue to make the maximum efforts in order to maintain and
          additionally strengthen its market position as the operator with significant market
          power, and all of this - FAIR, as always.
                                                                                                            37
                                                                                               Optimatelekom
                                                                                            Annual Report 2009




                                                                       Corporate	Governance	


On the day of composing of this Report, the members of the company’s
Management Board are: Goran Jovičić, Chairman of the Management
Board and Damir Bokšić and Jadranka Suručić, Members of the Mana-
gement Board. Chairman of the company’s Supervisory Board is Matija
Martić, and Nada Martić is a Member.

Throughout the year, members and functions within the company’s Management Board
changed, so:
• on 16 June Jadranka Suručić became a Member of the Management Board in charge of finance.

• On 28 September, Roland Žuvanić ceased to be a Member of the Supervisory Board.

• On 8 December, the mandate of Management Board Members, Goran Jovičić and Damir Bokšić

 was extended for a period of three years, as of 1 February 2010.



The following changes occurred in the ownership structure:
On 28 December Matija Martić released 50.501 regular shares, and after said release
holds 65,94%, i.e. 1.859.569 of regular shares, and did so:
• In favor of Roland Žuvanić who thereby acquired 30.301 regular shares which represents 1.07%

 of share capital

• in favor of Management Board Chairman Goran Jovičić, who thereby acquired 20.200 regular

 shares which represents 0,71% of share capital.
38




Corporate	Governance	Code	Compliance	Statement



          In its business operations, the company tends to comply, to the greatest
          possible extent, with the Corporate Governance Code published on the
          web pages of Zagreb Stock Exchange, given the circumstances and the
          special features of the company’s business processes. The company ful-
          filled and published Annual Questionnaire on fulfillment of Recommen-
          dations of the Corporate Governance Code on the pages of Zagreb Stock
          Exchange and on the company’s web pages.


          B
               y this statement, it is confirmed that the Company accepts and adheres to reco-
               mmendations of the Corporate Governance Code. The company has not complied
          with the following recommendations due to the objective reasons:


          At the Shareholders Meeting, shareholders have not been given the opportunity to vote
          by means of modern communications technologies; partially due to the fact that it has
          not appeared necessary, partially due to the lack of the inadequate practice concerning
          the application of the relevant provisions regulating conditions for its usage;
          The work of the Supervisory Board has not been regulated by special internal regula-
          tions and there is no framework plan regarding the work of the Supervisory Board. The
          activities of the Board and the dynamics of the sessions are carried out in accordance
          with the needs and applicable regulations;


          The Supervisory Board is not composed mostly of independent members i.e. according
          to the definition contained in the Recommendations. All members of the Supervisory
          Board have been elected at the Shareholders Meeting, in compliance with the procedure
          of announcing names of the candidates.


          The Supervisory Board has no committees due to the fact that particular features of the
          company and the way of carrying out its business operation do not justify constitution of
          such committees. The Supervisory Board gets familiarized, through regular supervising
          activities and Management Board Reports, with all information regarding appointment
          and dismissal of higher executive staff. The Awards Committee is not considered neces-
          sary in this moment due to the fact that, taken into account the results achieved and the
          business plan, the company has no policy of granting awards to the Management Board
          or other executive staff.
                                                                                                      39
                                                                                         Optimatelekom
                                                                                      Annual Report 2009




Audit Committee has not been established as well. The examination of financial state-
ment is entrusted with the auditors who are warning both Supervisory Board and the
Management Board, on any noticed deficiencies.


The internal control has been exercised by means of internal procedures which include
carrying out supervision activities over accurate and timely performance of duties. The-
refore, in the sense of Corporate Governance Code, there is no special organizational
unit which would be entrusted solely with internal control.
40




     Statement	of	persons	responsible	for	reporting	


             In line with articles 410 and 407 of the Capital Markets Act, the Management Board
             Members, Goran Jovičić, Chairman, Damir Bokšić, Member, Jadranka Suručić, Mem-
             ber, jointly declare that according to the best of their knowledge, the financial reports
             for the reporting period have been composed applying the appropriate reporting stan-
             dards, and that they give whole and true account of assets and liabilities, loss and profit,
             financial position and operation of OPTIMA TELEKOM as well as companies included in
             the consolidation.


             The Annual Report contains a true account of development and operation results and
             position of OPTIMA TELEKOM and affiliated companies, as well as the description of the
             most significant uncertainties and the risk factors to which the Group is exposed.




             The Management Board has created and determined the consolidated and non-con-
             solidated Annual Financial Statements both for the company and for the Group. The
             Supervisory Board has adopted the proposed Financial Statements and has advised the
             Management Board accordingly within the prescribed deadline. The annual financial
             statements shall be made available in their entirety and shall be subject to final adoption
             of the Shareholders Meeting.


             The Management Board would like to point pout that the Annual Report contains certain
             statements about future events relating to the financial state, movements in the market
             of electronic communications, results of activities which the Company and the Group are
             currently undertaking to the aim of improving its market position. The said statements
             are based on the Management’s current best knowledge and expectations, but they ca-
             nnot represent any guarantee for their realization.


             The Supervisory Board states that it accepts the Annual Report of the Management
             Board and that the conduct of the Management Board in 2009 was in accordance with
             applicable laws and statutory powers.


             The additional information and important changes the Company publishes on its Inter-
             net pages www.optima.hr/investitori

								
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