Telekom Srbija plans to issue up to €1.2bn in corporate bonds over the course of 2025 and 2026, the state-controlled telecoms operator said ahead of a shareholders' meeting set for early September.

The bond plans come as Serbia’s government pushes to deepen the country’s capital markets. In 2024, the finance ministry, with backing from the World Bank, launched a corporate bond programme encouraging major issuers such as Telekom, oil firm NIS and lender Raiffeisen to tap public markets for financing.

The next issuance by Telekom, which could be denominated in either euros or US dollars, will be subject to shareholder approval during an extraordinary shareholders' assembly scheduled for September 5. If approved, the move would mark the company’s third corporate bond offering.

It remains unclear how much of the €1.2bn target will be raised this year. Under Telekom's current governance structure, only shareholders owning at least one million of the company’s one billion issued shares can take part directly in assembly meetings.

The Serbian government holds a controlling 58.1% stake in the company, while 20% is held as treasury stock. The remaining shares are spread among small private investors, with the largest individual private stakeholder owning just 0.009%.

Telekom Srbija made its debut on international bond markets in October 2024 with a $900mn Eurobond issuance listed on the Dublin Stock Exchange. The deal was oversubscribed within the first hour of trading, making it the first such offering by a company from the Western Balkans.

Its first corporate bond placement took place in 2020 amid the Covid-19 crisis, when the company issued RSD23.5bn ($200mn) in dinar-denominated bonds to qualified domestic investors. Those bonds—due to mature on September 25, 2025—carried a floating rate of three-month BELIBOR plus 2.95 percentage points.

The National Bank of Serbia (NBS) later purchased a portion of the 2020 issue from commercial banks via open market operations. The transaction raised concerns about potential state aid, but Serbia’s Commission for State Aid Control concluded in 2023 that the purchases were conducted at market conditions.

In its 2024 financial report, Telekom Srbija posted a net profit of RSD10bn ($85mn), a nearly 67% decline from the previous year. The drop was attributed to mounting recapitalisation costs—over RSD32bn was used to support subsidiaries, including RSD30.4bn for Arena Channels Group—and higher interest expenses.