The tabloid Kurir has tried to blackmail United Group and threatened to discredit us if we continue to insist on publishing our answers in full, the Group said.

„Aleksandar Đondović, the editor-in-chief of this tabloid, sent us a threatening email, stating that – ‘The Kurir editorial office has no problem republishing your answers in full if you continue to insist on it, but this will certainly be the subject of journalistic criticism’.”

United Group had sent answers to a set of questions to Kurir on Tuesday, July 21, but the answers were, as the company said, shortened and taken out of context „in order to present United Group as a loser and deceive the public.“

„Regardless of the suggestive questions, which one could assume what purpose they serve, the UG tried to explain the facts about its business, because we advocate for objective journalism and the right of the other side to be heard. Following our request for our answers to be published in full, we have received clear threats which in fact announce a new discrediting campaign. Respecting the public interest, we are publishing all the answers to the questions we have been asked in full,“ United Group said in a statement.

The questions and full answers by the UG follow.

1. United Group continuously reports negative net results in its financial statements. How do you comment on the growing net loss of United Group, observed during periods in which the activity of competition in the local and regional market is growing aggressively?-

– United Group is achieving record-breaking business results that make it by far the most successful telecommunications and media group in the region. According to all indicators, United Group will end 2020 with approximately 10 million users, 11,000 employees and 600 million euro in normalized EBITDA. The net losses you are mentioning are related to the large investments of the Group during the expansion of operations and acquisitions, as the acquisition of each of those companies includes one-time costs of integration of the acquired companies into the Group. As a result of large investments, United Group is achieving record-breaking business results year after year in all operational indicators – especially the growth of revenue and profitability expressed in EBITDA. These and all other financial data are easily verifiable.

Due to good business results, the value of UG is constantly growing, as shown by two transactions on the international market in the last six years. The investment through the purchase of the majority package of UG by KKR, as well as the sale of most of the shares of UG to the BC Partners fund after five years. Not only were these two transactions successful and showed great interest of global investors in UG, but we also have a clear indicator of the growth of the Group’s value in the period from 2014 to 2019.

The purchase transaction by KKR valued UG in 2014 at more than 1 billion euros and in five years the value of the company increased by more than 2.5 times, which was confirmed by the purchase by BC Partners. How difficult it is to attract and satisfy global investors can be seen by the unsuccessful attempts to privatize state-owned telecoms in the region, which we have witnessed in recent years.

2. Liabilities for VAT and other taxes paid by United Group amount to approx. 10 million euros. Has the balance of these liabilities been reduced or increased to date?

– United Group regularly pays VAT and all other tax liabilities, which is why there are no overdue liabilities. The volume of liabilities changes dynamically during the year in accordance with the volume of business activities.

3. Are the allegations true that United Group entities paid a loan of 30 million euro to Mr. Solak, thus formally avoiding the obligation to pay dividend tax in the amount of 4.5 million euro? Was the loan repaid to the company in Q1 2020 in accordance with the agreement?

– United Group, in accordance with international accounting standards, regularly reports all transactions with related parties so that all transactions can be seen in our quarterly and annual reports. Mr. Dragan Šolak returned the loan you mention in full to United Group in March 2019, along with contractual interests. United Group has no loan claims from Mr. Solak.

4. In January 2020, United Group needed additional financing and additional borrowing through bonds in the amount of approx. 1.8 billion euros. Are the bonds in question presented as a „high yield-junk bond“ or bonds with a high yield?

– All bonds issued by United Group since 2014 are considered „high-yield“, which is a standard categorization of bonds on the market outside the investment-grade ranking. United Group emerges in world capital markets as a private company that guarantees investors only with its results and assets.

So far, there has been tremendous trust in the United Group and its business plans by global capital markets, both in the amounts offered for UG bonds and in the low price demanded for them. There is no private company from the region with such successful results of raising capital on world markets. United Group bonds do not represent “junk bonds” that carry bonds with a rating of C and below.

5. In relation with the previous question, for all three tranches of bonds at the beginning of June there was a significant drop in price, i.e. bonds were traded significantly below their nominal value. What is the reason for the decline in the market value of United Group corporate bonds?

– The reason for the decline in market values ​​of bonds, as everywhere in the world, is the atmosphere caused by the coronavirus. The current trend in the world economy is that bond prices have gotten close to nominal values, but we believe that everything will return to the pre-pandemic level when the situation regarding the virus calms down globally.

6. Essentially, the entire operating business and revenue generation of United Group is realized in the territories of Serbia, Croatia, BiH, Slovenia and Montenegro. The formal legal business of UG is organized through as many as 65 legal entities, of which 18 are registered in tax havens (Cyprus, Malta, Luxembourg, etc.). The decision to organize business in this way, through a very complex organizational structure with high costs of maintenance and payment of business, had to be calculated. What are the annual tax optimizations and tax savings due to such organized business?

– We pay all taxes regularly, audit reports are also always regular and without qualifications. The strength of the company whose majority co-owner is BC Partners as one of the largest investment funds is clear. When they invested in the United Group, they expressed their satisfaction with the management team, the high quality of services and diversity. One of the best indicators of the company’s quality is the fact that the EBRD is investing in minority stakes in United Group for the fourth time in a row. By the way, the countries you mention are, according to the regulations of the Republic of Serbia, not tax havens, ie countries with a preferential tax system, since they are not on the List of the Ministry of Finance.

7. In 2019, the Commission for Protection of Competition conducted an investigation into the use of the dominant market-monopoly position of the United Group due to the decision of UG to raise its prices, which was not justified by rising costs. Does UG still achieve above-average ARPU on the market, which is significantly higher than that achieved by the competition?

– The procedure conducted by the Commission for Protection of Competition was completed in 2019, as after almost 18 months, it determined that SBB did not abuse its dominant position by raising the prices of its services. On the other hand, we think that the question of how they allowed Telekom to buy a large number of small operators in 2018 and 2019 would make a lot more sense since it left entire parts of Serbia without effective competition in the way that users can now choose between Telekom and Telekom’s Supernova.

We remind you that when SBB bought IKOM, the Commission issued an order that there could be only one network. Another interesting question for the Commission is how it is that all mobile operators in Serbia are raising prices at the same time without the Commission reacting to it.

8. United Group was sued in proceedings with JKP Beogradske Elektrane and EPS distribution in connection with the unauthorized use of their infrastructure by United Group. The amount sued for is 11 million euros, and the management of UG is convinced that this dispute will be won and no financial implications in accordance with the requirements of accounting standards are reflected in the financial statements of United Group. On what is this confidence of the management based so that these disputes are treated as non-existent from the reporting perspective?

– To a question posed this way, we can express suspicion that your editorial office has some information about what the verdict will be, so it would be important for you to reveal information about the trial that is not available to the public before we answer.

Kurir also had questions regarding N1.

– N1 TV has an independent editorial policy and you can ask them questions about their programming. United Group has never, nor would it, attempt to misuse the media in its possession. Media, journalists and editors must have the conditions to work freely and in the interest of the citizens. That is our firm and lasting commitment.

You can ask our colleagues from N1 about everything else that interests you. They would surely look forward to this contact.

N1 TV operates as part of the United Group