Serbia: It’s Hard to Tell Who Owns Some of Country’s Biggest ISPs

Four of the 10 biggest internet service providers (ISPs) in Serbia have hidden ownership via companies registered in offshore destinations or private equity firms, while two others are connected to questionable owners or activities.

Now the Serbian government is preparing to privatize Telekom, the biggest state-owned telecommunications company. It’s early to say who might buy it, but given the high prevalence of murky private ownership, it may well be a mysterious company from Panama or some other exotic destination.

Offshore paradise for Internet owners

It’s interesting that so many domestic ISPs operate in secrecy, given their unfettered access to users’ highly personal data. While state institutions control the use and sharing of this data, they don’t seem overly interested in who owns the ISPs, some of which disappear into a maze of offshore companies, proxies and lawyers obscuring the real owners.

There are more than 200 ISPs in Serbia but many are small companies, with very little influence. Ten can be described as leaders. Two are state-owned, Telekom and Pošta Net; two others are owned by European communication companies, the Telekom Austria Group (VIP) and Norway’s Telenor Group. Four others are owned by offshores or private equity firms.

That was the case with Sat-Trakt, a company formerly based in the small Serbian town of Bačka Topola. Until recently, its ownership chain led to a company registered offshore in Cyprus, STSE Investment. The Cyprus company is owned by a Panama-based foundation, also named STSE. Its true owner is hidden behind lawyers whose names are listed in the Panamanian business registry.

One of them is a partner in the law office Dankovic Jovanovic Tomic, which notes on its website that it participated in the takeover of Sat-Trakt by the Cyprus fund, STSE. The site also notes that the firm has experience in privatizations, founding companies and real estate.

In late December 2015, ownership of Sat-Trakt changed. The majority owner became Јános Zsemberi who previously held 6 percent; STSE kept just 10 percent.

Another example of a complicated ownership structure is Serbian Broadband (SBB), which is nearly as big as Telekom. Owned by the New York-based private equity firm Kohlberg Kravis Roberts & Co. L.P. (KKR), SBB over the last couple of years has bought several smaller providers and internet hosting firms which serve different parts of Serbia.

KKR also founded the cable TV station N1, which has a deal with America’s CNN to broadcast programs. Previously, SBB was owned by another private equity firm, Mid Europa Partners. Both equity firms owned SBB through the Netherland United Group, a telecommunications leader in southeastern Europe with subsidiaries in Balkan countries.

All of these transactions were routed through different offshore companies to end up in private equity firms, some of whose investors are anonymous. Others are not; one of the best-known investors in the Netherlands United Group is the European Bank for Reconstruction and Development (EBRD).

Another equity fund that owns ISPs in Serbia is 7L Capital Partners, which holds Beotelnet through the Cyprus-registered company, Kerseyco. Like SBB, its investors are unknown. Kerseyco owns one other Serbian ISP, Veratnet.

Problematic owners and unlawful deals

While Serbian ISPs seem scandal-free, the same cannot be said of their owners.

Bogoljub Karić, who accumulated his wealth during the Slobodan Milošević era, fled the country in 2006 when the state began to investigate his businesses. He is now living in Moscow, awaiting court rulings. He and his family retain about 17 percent of one of the 10 biggest ISPs, Yunet International (the state holds a larger stake). The family’s former bank, Astra, holds more than 60 percent of the shares but is now in liquidation.

A more notorious case involves a Slovenian-owned company, Nuba Invest. In 2012, organized crime prosecutors opened an investigation into how Nuba obtained permits to build a network of fiber-optic cables on strategic routes: from Belgrade to the borders with Croatia, Romania, Hungary, Bulgaria and Macedonia.

Investigators say Nuba Invest illegally obtained the permits and edged out competitors thanks to help from influential people in Serbia, including Oliver Dulić, at that time Serbian Minister of Environment and Spatial Planning. Dulić and several associates are awaiting trial in this deal.

One broadband provider licensed to operate in Serbia cropped up in US National Security Agency (NSA) secret documents released by Edward Snowden in 2013.

Level 3 Communications is the third largest provider of fiber-optic broadband in the United States by coverage area. Snowden’s documents indicated the NSA gained access to Google and Yahoo data centers, seeking communications between users by tapping fiber-optic cables that connected the centers.

The cables tapped were owned by Level 3, which declined to comment on the issue after media exposed it in 2013. At about that time, Level 3 received its license to operate in Serbia.


This story has been updated to reflect a change of ownership that occurred during the editing of this story.

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