Serbia’s state-owned telecoms giant Telekom Srbija and Chinese Huawei launched a €150mn three-year ALL-IP transformation project to develop the landline network in Serbia on October 5. This is the first large-scale cooperation in the information and communication technology sector between China and Serbia.

It is not clear exactly how much Huawei will invest, but the deal with the Serbian telco was announced on September 26 by the Chinese ambassador to Serbia Li Manchang as the "next large Chinese investment in Serbia", following the recent acquisition of Zelezara Smederevo, Serbia’s only steel mill by China’s Hebei Iron and Steel Group (HBIS). Huawei has also expressed an interest in investing into Serbian Railways. 

According to Telekom Srbija general director Predrag Culibrk, the telco will invest €150mn in fixed internet and multimedia, which will cover more than a million homes and other buildings in numerous cities, and significantly increase internet speed.

The framework agreement between Telekom Srbija and Huawei for the ALL-IP project was signed during Chinese President Xi Jinping’s visit to Serbia in June. Culibrk said that the two sides signed amendments on October 5, creating a legal framework for his company to purchase equipment, services and infrastructure from Huawei.

"The aim of this project is to modernise the existing fixed network of Telekom Serbia, that will thus improve its service and provide its users with a much faster network with various performances, high quality video, as well as introduce smart home solutions and improve quality of living and the communication of Serbian people," senior vice-president of Huawei, Tang Xiaoming said at the project presentation on October 5, the authorised Chinese government portal reported.

Tang explained that all preparations had been completed for Telekom Srbija and local companies to work together with Huawei on the project.

"Having in mind that political conditions are very good, as an ambassador, I can say we have to invest much more effort and give our best in order to advance the bilateral relations of Serbia and China," Li said. 

The Serbian government decided in July 2015 to privatise its 58.11% stake in Telekom Srbija, aiming to accelerate its development, increase competitiveness and avoid a state-led restructuring. However, in December officials decided not to sell the stake because the best price offered - by an unnamed US investment fund - was unsatisfactory. The next attempt is planned in 2020, a year after the Huawei project is completed. 

According to Serbia’s Prime Minister Aleksandar Vucic, the joint project to modernise the Serbian telecommunications system, shows that China is "not only a sincere friend of Serbia, but also a strategic partner."

“After the Smederevo steel mill, this is a new start of cooperation,” Vucic said at the project presentation event, adding that Chinese companies interested in the Serbian livestock industry and the chemical and mining sectors will come to Serbia in mid-October, the Serbian government reported on October 5.

“The important thing is that Telekom Srbija will be competitive both in the country and in the region,” Vucic added.

China is on the Serbian government's list of potential investors, as Belgrade aims to attract as much foreign investment as possible in order to boost the economy. China and Serbia signed 22 bilateral agreements during Xi’s three-day visit to Belgrade in June.