Public Company Secrets

"If Franjo Tudjman and Alija Izetbegovic had sent their greatest telephony experts to Serbia, who absolutely abhor the Serbs, with a task to bring as much harm as possible upon Serbia, they couldn't have conceived to do what the Serbs had done to themselves," says engineer Tihomir Zivanovic, councilor at the republican Ministry of Transport and Communications. At the beginning of February even such a population of Serbia was almost halved due to the January telephone bills which arrived then. The amounts were twice the usual ones.

Now how did this come about if it had not been announced anywhere that telephone prices had risen? They haven't, at least not officially. The price of a telephone impulse has not been changed since March 22 of last year, when the eighteen-day-long price increase process was concluded at close to 200 percent. Therefore, an impulse still costs 7.1 para. The only thing, as announced in the Official Gazette of FRY, is that the board of directors of the Association of Yugoslav PTT traffic has -as of New Year's eve- changed the zone order of inter-town calls and ascertained the duration of an impulse for each of them. Two old zones are thus paired together in a new one, so that now only three exist instead of six. The duration of an impulse is shortened so that now for the new first zone it lasts 30 seconds. This zone was formed by merging the first, in which an impulse lasted 45 seconds, and the second, where an impulse lasted 36 seconds. The second zone, according to the new nomenclature, is made up of the former third (an impulse lasted 30 seconds) and fourth (with an impulse of 18 seconds). Now an impulse for this group lasts 15 seconds. In the new third zone an impulse lasts 8 seconds instead of the former 15 for the fifth and 12 for the sixth zone.

This is actually how the prices for inter-town calls increased by between 20 and 100 percent, depending on the distance. The traffic with foreign countries has "increased" as well so that for one minute of conversation with Germany the "device for idiots" at the telephone exchange ticks off 100.67 times, which costs the citizens 7.35 and companies 14.70 dinars. A call from Germany is one and a half, that is, three times cheaper. "This drastically escalates costs to our exporters who need to conduct business talks with their foreign partners in order to get a deal through," explains Stojan Stamenkovic from the Institute of Economic Sciences. Let us remind ourselves that the Federal Customs Administration proclaimed on March 6 the Sremsko-Baranjska region and the Serbian Republic as foreign countries. The explanation of this decision states that it shall produce inflation of a mere 0.1 percent. On the other hand, as the same explanation states, PTT would have concluded its business year of 1996 with a 700 million dinars loss if this change had not been implemented. How has the long-suffering local telecommunications company found itself in such an unenviable situation? "The fixed costs of technical maintenance are 3.5 million dinars per month, and another 12.9 million dinars are needed to cover the salaries of technical personnel. Therefore the maintenance of the existing system costs 16.4 million," calculates engineer Zivanovic. By simply multiplying the number 2 million, which is the number of telephone subscribers in Serbia, with the number 50, a gracious estimate of an average monthly phone bill, we come to the result of 100 million dinars per month. What happens to the rather large difference of some eighty million? Telephony also has the post office on its back which, according to the study on the transformation of this public company which the union had ordered from the Institute of Economic Science (the study has not been completed since the company managers had simply stopped forwarding all the necessary data to the Institute), acquires only a 15 percent profit, yet when word is of spending the joint money it participates with 40 percent. Since the study was written prior to the latest rise in prices, we can only suppose that it related to the telephony's overall profit of 60 million dinars. That means that the entire PTT was earning around 75 million. The current director Aleksa Jokic had, as the Minister of Traffic, at the beginning of last year, sworn that prices would not rise above the level necessary for simple reproduction. Therefore, the post office costs around 30 million dinars per month, of which it has to hand half of it over to the telephony. In this calculation almost 45 million dinars per month are still lying hidden somewhere, at least, which amounts to 540 million per year. Along with those 700 million potential losses that makes over a billion two hundred million dinars which are spent somewhere.

Maybe the overly ambitious project of modernization and expansion of the telephone network is to blame. In 1996 digital exchanges were bought with a total capacity of up to 700 thousand lines, 300 thousand from the French Alcatel company, the same number from Siemens and the rest from the local Pupin company. That is twice as much than the former, large Yugoslavia installed in its best years. All of that had cost, according to the words of Milorad Jaksic, who until recently was the first man of PTT, two billion one hundred million German marks. Meaning, three thousand marks per number. Citizens who wanted a phone line had to pay half of that amount - 1500 marks, and one hundred thousand firms, if we can rely on data supplied by the regime media, covered the overall cost. By that operation PTT acquired from its future subscribers, as the calculator shows, around one billion two hundred million marks and deposited it in Beobanka. "Our half of the investment," they said "are the exchanges".

PTT had managed to come to an agreement with its foreign partners on deferred payment: one fourth in advance, the same amount following the equipment's delivery, and the rest in four six-monthly installments. In order to get the exchanges, half of that sum needed to be paid in, meaning, 450 million marks? Hardly, since the contract with Pupin states 147 million dinars for one hundred thousand lines (which is close to one hundred thousand numbers, since connections between exchanges are calculated as well), 1470 dinars per line. From that amount PTT still owes 50 million to Pupin. The contract which was signed with Alcatel last March was worth around 55 million marks. We won't even go into the fact that the exchanges which were installed in Sabac and Uzice were second hand. All these deals were concluded in private, without a public tender. "I took part in one tendering for the purchase of equipment in Hungary", says Tihomir Zivanovic, "over 40 of the best known international manufacturers applied."

It would have been logical, regardless of the amount of money, if PTT, after the exchanges (at least Alcatel's) arrived and were installed, had hurried to connect its subscribers and start collecting profit off it which was needed to pay the installments from the agreement, but it didn't. "Less than 50 thousand numbers were connected," says engineer Zivanovic.

The losses which are worrying PTT managers are at least partially the losses shared by the other "public giants". In January the public company became richer, having acquired the hotel Srebrenica on Kopaonik which was formerly owned by Genex. In the hotel whose staff has been on a forced vacation for a longer period of time - since Srebrenica cannot be reached in high season due to the snow - PTT employees shall vacation. The amount was covered by deleting the unpaid telephone bill of the collapsing Genex company. Hadzi Dragan Antic met Politika's unpaid bills of 5.1 million marks by transferring 10 percent of ownership over this media house to PTT, as the managers explained to the union.

This "humanitarian" action was joined by the republican government, which increased PTT's obligation towards the pension fund from 150 to 260 million dinars, on the basis of telephone impulse tax. "That is para-fixed profit," says Stojan Stamenkovic, "since it doesn't show anywhere". The government obviously had no other choice, since the fund is short of two and a half billion dinars, since no one is paying anything. No money.

That's still not the end of it. The president of the Chamber of Commerce of Serbia Vlajko Stojiljkovic assessed on March 4 that telephone prices were too high and needed to be cut down, and funds thus far collected were to be directed towards the electric power industry! He never mentioned the citizens who were paying overpriced bills.

Since all are looking at the funds of the telephone subscribers as being everyone's ownership, it wouldn't be surprising if it turns out that the stories are true which state that the sports club Crvena Zvezda's travel expenses were covered at the postal-telephone expense. Anyway, Milorad Jaksic is still president of the board of directors there. Recently another actor joined the game. Predrag Manojlovic was appointed deputy general director of JP PTT Serbia for economic issues, otherwise the general secretary of the Partizan sports club.

Try talking about these things with a PTT employee. They will say that only the department of information is authorized to issue any statements. The department will tell you that they cannot say anything without the director Tanja Blecic, and she is at a meeting. As one of the councilors of the general manager said: "I know everything, but I can't say a thing".