1. Telcro Grupa – launching of the first
MVNO in Croatia
Published materials and articles

2. Contents
Title: “Telcro takes Vipnet to arbitrage” ( 07.04.2007.).......................................................................... 3
Title: “Telcro will be the first MVNO in Croatia” (27.06.2007.)............................................................... 5
Title: “Telcro to become first Croatian MVNO” (29.06.2007.)................................................................ 7
Title: “Telcro entering market connecting Komiza with New York and San Pedro” (23.08.2007.)......... 8
Title: “Telcro seeks arbitration for access to VIPnet network” (05.10.2007.)....................................... 10
Title: “Virtual operator Telcro beats T-Mobile” (11.11.2008.).............................................................. 11

3. Title: “Telcro takes Vipnet to arbitrage” ( 07.04.2007.)
Publisher: business.hr
Date: April 7th
2007
Author: Dražen Tomić
Circulation: 11.500, weekly
NO ACCESS
“Telcro takes Vipnet to arbitrage”
Vipnet rejects to allow network access to Telcro with argumentation that virtual mobile networks
operators are a threat to further development of telecommunications
Due to its argument with Vipnet, first Croatian mobile virtual network operator, Telcro, will have to
wait for regulator’s (HAT – Croatian regulatory telecommunications agency) decision. As Kresimir
Profaca, Telcro’s director has told business.hr that Telcro tried
to reach agreement with Vipnet on network access, but after
Vipnet refused the access Telcro took case for arbitration to
HAT. This arbitration was confirmed by HAT and HAT’s council
member Juraj Mužina expects quick resolution as he states
that the law is very clear in this case.
Waiting for regulator’s action
“The process of application for the network access for virtual
mobile network operators is defined by the existing regulatory
framework for network access. The Law on
Telecommunications and the Bylaws on Access and the
Interconnection state that the operators with significant
market power have to approve the request for special
interface or the special access to the network if it is
technically viable and if it does not violate the non-
discriminatory policy” Mužina explains.
Together with T-Mobile, Vipnet is designated as the significant
market power player on the mobile telephony market.
Mužina states that accordingly to the Law on
Telecommunications, mobile virtual network operators can
provide public telecom services provided that they have signed a contract with concessionaire of
public telecom services in mobile network and acquired license.
“Telcro Grupa is communicating with all mobile network operators on the Croatian market, however
we cannot disclose further information at the moment”, was the diplomatic answer Kresimir Profaca
has given.
Due to its role, regulator being the key entity that assures fair market competition is enforced as well
as that the best products and services are available to Croatian market, it is quite common and
legitimate that the regulator also arbitrates the process of opening the market for virtual operators,
Profaca explains.
Croatian regulatory framework is advanced and mechanisms to resolve the issue of virtual operators
in the best possible way for the future of Croatian telecom market are already in place, Profaca
explains and continues that Telcro Grupa regards previous decisions of the regulator to be exactly in
that direction.
However, Vipnet has been very direct in their response and they claim that MVNO (Mobile Virtual
Network Operators) model is a threat to the development for telecommunications because it is a
KREŠIMIR PROFACA, director of Telcro,
points out to Virgin Mobile as a successful
concept of MVNO

4. model that does not invest in the infrastructure. The examples of MVNO models in the rest of Europe
have proven that such business model is not sustainable, Dubravka Jusić, director of Vipnet’s
corporate communications explains.
Vipnet’s argumentation
Vipnet is emphasizing that by signing an agreement on national roaming with Tele2 they proved their
willingness to cooperate.
“That is another example of Vipnet’s contribution towards liberalization of telecom market in
Croatia” says Dubrvka Jusić.
That things are not as such as Vipnet states them to be indicates study given by reputable research
agency Informa Telecoms which states that the number of MVNO subscribers will raise to 135 million
by 2011 from current 60 million.
As an example of successful MVNO case Profaca is mentioning Virgin Mobile that is very successful in
both Great Britain and the United States and in the United States it is getting ready for IPO. It is
estimated that the valuation of 42% of its USA business will be around 467,5 million dollars, while the
entire company is valuated at one billion dollars.

5. Title: “Telcro will be the first MVNO in Croatia” (27.06.2007.)
Publisher: Poslovni dnevnik
Online: http://www.poslovni.hr/hrvatska/telcro-ce-biti-prvi-virtualni-mobilni-operator-u-rh-46649
Date: June 27th
2007
Author: Bernard Ivezić
Circulation: 7.500 daily
Telcro will be the first virtual mobile operator in RH (Republic of Croatia)
Supported by 20 angel investors and two investment funds Telcro is expecting to start operations
by the summer of 2009
T-Mobile, Vipet and Tele2 are getting more competition. Two years after the full liberalization of
fixed line telecommunications has started, preparations for the full liberalization of mobile
telecommunications are on the way. It has come to the attention to “Poslovni dnevnik” that new
player on the market, Telcro Grupa, is planning to become a first virtual mobile network operator
(MVNO) in Croatia.
MVNO is a company that provides mobile telecommunication services through the infrastructure of
other mobile operators and then it competes with
them on the basis of better services of price. Telcro
Grupa has initiated discussions with all three mobile
operators, Kalmeta’s ministry (i.e. Ministry of
telecommunications) and Croatian agency for
telecommunications. By the end of the year they are
planning to have staff of five employees and sign a
contract with one of the operators and start their
operations.
CALL CENTER IN CROATIA “I am expecting that Telcro
will start offering its services by the summer of 2009.
In that case we have enough time to negotiate
commercially viable contract on network access from
one of the mobile operators. I am an optimist
because MVNO entry to the Croatian telecom market
represents inception of its full liberalization which is
the goal of both telecom agency and the government”
stated Kresimir Profaca executive director of Telcro
Grupa. However, emphasized optimism of the new
telecom leader has firm grounds. Besides T-HT, Telcro Grupa is the only telecom in Croatia that has
operations abroad as well. T-HT has the shares in Mostar in Bosnia and Herzegovina and Telcro has
its counterpart in the USA. However, besides its headquarters, Telcro will place its complete
operations in Croatia as well: call center, marketing and development for the entire group. In the
USA there will remain only the sales offices for that market.
Furthermore, the project has firm financial background and supporters. Telcro Grupa has received
angel investments from 20 investors, 15 of which are from Croatia or have Croatian roots living in
USA. Project was supported by two US investment funds as well, one of which has more than 2 billion
USD in its portfolio. Finally, Telcro does not have to have spectacular results in order to have
profitable business.
LOW COST “Unlike classic network operators, Telcro needs only several tens of thousands of
subscribers in order to be successful. On the other hand, classical mobile network operator needs
close to a million subscribers to be successful. This is due to the fact that MVNO has different
business model. With its lower priced services it is targeting a specific group of customers and due to
PROFACA We need only several tens of thousands of
users

6. its low cost structure it can achieve significant profitability” says Profaca. He is stating that for MVNO
business it does not matter what is the current penetration of mobile telecom services because that
does not represent the development of the market. “Looking at the penetration numbers, one would
conclude that each Croatian has one mobile phone, but in reality about 30-40 percent of population
does not have mobile phone. MVNOs usually enter the market when that number drops to about 20
percent, but that varies from country to country.
In Denmark that was at 20 percent, but in Croatia the statistics are also influenced by large number
of tourists present in the summer hence, I believe that the right time for MVNOs is now” Profaca
concluded.

7. Title: “Telcro to become first Croatian MVNO” (29.06.2007.)
Publisher: Telecompaper
Date: June 29th
2007
Online: http://www.telecompaper.com/news/telcro-to-become-first-croatian-mvno--561490
Website visitors: 300.000*
Telcro to become first Croatian MVNO
Friday 29 June 2007 | 09:57 CET | News
Croatian mobile operators T-Mobile, Vipnet and Tele2 are set to get competition, following the
announcement of the launch of the country's first MVNO. According to daily Poslovni, the Telcro
group has established initial contacts with all three mobile operators, the Communications Ministry
and the Croatian Telecommunications Agency. "I expect that Telcro will start commercial operations
by the summer of 2009. This gives us enough time to sign an agreement for the leasing of
infrastructure from one of the existing mobile operators," said Kresimir Profaca, executive director
of the Telcro group. So far, 20 Croatian investors and two US investments funds have financially
supported the project.
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8. Title: “Telcro entering market connecting Komiza with New York and San Pedro” (23.08.2007.)
Publisher: Lider
Date: August 23rd
2007
Online: http://liderpress.hr/arhiva/24316/
Circulation: 10.000, weekly
Telcro entering market connecting Komiza with New York and San Pedro
First specific group of subscribers that Telcro is planning to acquire are Croatians living in USA and
their relatives in Croatia
We have a first mobile network operator in Croatia that will not put its base stations on your building
nor on the building of your neighbor… We are talking about Telcro who is the first virtual mobile
network operator which means that in order to offer its services it will be renting the infrastructure
from other GSM operators as opposed to building their own.
- This is the reason why we do not have large investments hence we need much less
subscribers on our network than the classical operator needs – Goran Gašparović, financial
manager of Telcro explains the advantages of Telcro
Focus on the specific population
Just like in the developed countries where virtual operators already exist, Telcro is planning to find
their niche market as well. We have an exclusive information that first niche Telcro is planning to
explore are Croatians living in the USA and their relatives in Croatia. Except in Croatia, Telcro has its
employees in USA as well, so it will start offering its services in the cities where most Croatian
emigrants live. Notoriously, it is the fact that if you have relatives in the USA that they cannot even
send you a text message.
- We are still exploring which segments we will be targeting in Croatia. Even though there is a
certain differentiation among operators, so for example we have Tele2 which is the
cheapest, Vipnet is oriented towards younger population, they are still targeting everyone.
We will be targeting much smaller groups of users and for now we have several marketing
plans and their launch schedule will depend on when we will start commercial service –
stated Krešimir Profaca, Telcro’s general manager and he added that in the Western markets
it is common that virtual operators (Virtual Mobile Network Operator – VMNO) are focused
on certain population group, that being ethnical, professional, interest group or age group,
hence in Germany they have operator focused on Turkish immigrant workers, while on the
other hand there are operators focused on certain football club fans or readers of certain
newspapers.

9. - Our services will be mainly focused towards certain groups of users – Profaca explained the
advantages of the smaller number of users on the example of the operator focused on
students and how that operator does not need to offer services suitable for business people
for example. In that way one can better tailor its services.
- It is our goal to recognize certain subscriber base that is not covered by big operators
adequately – Profaca points out.
However, due to the fact that the negotiations are still ongoing he could not tell us whose network
will Telcro be renting. Also, due the ongoing negotiations, he could not tell us what prices will be
offered by Telcro, although he did explain thoroughly what are the possible models of leasing the
infrastructure. Nevertheless he did point out that their prices will be tailored towards certain user
group.
Correction on data about high penetration
- Although some of the data shows that for 100 inhabitants there is 105 mobile phones in
Croatia, we are not talking about mobile phones here, but about SIM cards. Research that
has recently been published by agency GfK is showing that 70 to 75 percent of the
population has a mobile phone and some of them have two hence the penetration of 105
percent. On the other side, the fact that there is 30 percent of population that does not own
a mobile phone leaves us certain room in the market – says Bojan Mati, member of the
management board in Telcro Grupa. Mati also told us that the registration for virtual
operator in Croatia did not go smoothly as it was the case in the United States so they have
already started the process of printing the SIM cards. We have also found out that they will
first offer its services to Croatian emigrants in New York and then in Chicago, while San Pedro
that is very populated by Croatian ascendants of fishermen from Komiža, will be the third
destination where Telcro’s mobile phones will appear.
Entry of Zaba in telecommunications
Members of the Telcro management team considers Zaba’s mobile offering so called “1 for all” that
was promoted in the commercial “Pa prek’ Zabe” (via Zaba), to be a branded reselling which they
consider to be the first step towards VMNO, i.e. brand here is the only thing Zaba is offering while
the rest of the value chain (billing, pricing etc.) belongs to T-Mobile. However, they consider this to
be the proof of concept that there is a room for virtual operators in the market, like that there are
three of them already in Slovenia.

10. Title: “Telcro seeks arbitration for access to VIPnet network” (05.10.2007.)
Publisher: Telecompaper
Date: October 5th
2007
Online: http://www.telecompaper.com/news/telcro-seeks-arbitration-for-access-to-vipnet-network--573863
Website visitors: 300.000*
Telcro seeks arbitration for access to VIPnet network
Friday 5 October 2007 | 11:04 CET | News
Croatia's Telcro Group had filed a request for arbitration with the Croatian telecommunications
agency after mobile network operator VIPnet refused to give Telcro access to its network, writes
Croatia Business.hr. Telcro is looking to launch as a mobile virtual network operator (MVNO) in
Croatia but has failed to agree terms with VIPnet, which believes MVNOs pose a threat to the
development of the country's telecommunications market. Telcro will now have to wait for the
agency's decision before it can launch commercial services. Telcro director Kresimir Profaca
confirmed the arbitration case to Croatia Business.hr. Juraj Muzina, telecoms agency council
member, has also confirmed the dispute, saying he expects the dispute to be resolved quickly.
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The website attracts around 300,000+ visitors monthly (200,000+ unique visitors), with more than
half a million page views.

11. Title: “Virtual operator Telcro beats T-Mobile” (11.11.2008.)
Publisher: business.hr
Date: November 11th
2008
Author: Dražen Tomić
Circulation: 11.500, weekly
Virtual mobile operator Telcro beats T-Mobile
ODLUKA AGENCIJE Croatian agency for postal and electronic communications has delivered motion
by which Telcro is given access to T-Mobile network and similar decision is expected in Telcro’s
arbitration with Vipnet, what is prerequisite for service offering in which Telcro plans to invest 3
million euros
Telcro, mobile virtual network operator (MVNO), managed to get access to T-Mobile’s network. This
was achieved after a long and demanding struggle with T-Mobile and due to final decision by
Croatian agency for postal and electronic telecommunications that was put in motion in October.
This access is prerequisite for the start of the
commercial services, business in which Telcro plans to
invest 3 million euros, stated Kresimir Profaca director
of the firm.
This virtual operator – that will rent the infrastructure
from the other operators – expects similar decision in
the case with its arbitration with Vipnet, where the
agreement has not been reached also.
Six months
Profaca is expecting that the negotiations on
commercial terms of usage of operators’ network will
last up to six months.
“Although the framework for the MVNOs exists for a
few years now in Croatia and it specifies the
obligations of the significant market power operators
towards virtual operators it has yet to be
implemented in practice. Hence, this motion by the
regulator represents first executive order towards the
virtual operators in Croatia and we consider it
important not only for Telcro Grupa but for the entire
development of the mobile communications in
Croatia” states Profaca.
The total investment during the period of five years
could reach the total of 20 million euros. Profaca did
not say much about the business plan but we can
expect that the firm will be oriented towards the
customers that spend less on telecom services. From
the available information Telcro could get the wholesale price (from either T-Mobile or Vipnet) in the
range of 30-50 percent cheaper than the retail price, which would allow it enough margin to have
profitable business. The service that Telcro needs from the operators is similar to the one that Tele2
is basically using due to the fact that it does not have completed its network infrastructure.
Getting ready for K-Mobile
T-Mobile did not want to comment on the HAKOM’s decision. However, the word on the street is
that T-Mobile will not have any trouble adjusting their network for the MVNOs because they are
Although the framework for the MVNOs exists for a
few years now in Croatia and it specifies the
obligations of the significant market power
operators towards virtual operators it has yet to be
implemented in practice
KREŠIMIR PROFACA, director of virtual
mobile operator Telcro

12. already ready for the long awaited but never realized project of K-Mobile, project in cooperation with
Agrokor and EPH.
Today, on average in the European markets virtual operators hold about 10 percent of the total
market share while in the most developed northern European markets they hold even 20 percent of
the market share. Mobile operators that were early adopters of the MVNOs and who have developed
sound wholesale strategy were real winners of the game and they gained significant market
advantage in both revenue and the number of subscribers, states Profaca.