The telecommunications network in Bosnia and Herzegovina was severed during the war. The Dayton/Paris Peace Agreement of 1995 made the reconnection of the inter-Entity telecommunications network a basic requirement for the peace process in Annex 9. Formerly the core of the telecommunications network in Bosnia and Herzegovina was run by the PTT Company, established as a business system consisting of a general directorate with 13 regional PTT companies and employing 11,750 staff. The state-owned enterprise has since been divided into three companies with headquarters in Sarajevo, Mostar and Pale.

A study carried out in 1996 indicated that approximately 200,000 lines out of 700,000 were out of service in that year. The European Bank for Reconstruction and Development (EBRD), which leads the Telecommunications Task Force in Bosnia and Herzegovina, has developed a master plan for this sector, which has been grouped into specific sub-projects. These are principally to reconstruct local and zonal networks, including the local switching. With the support of the EC and the EBRD progress has been made in the technical and regulatory rehabilitation of the sector despite early difficulties between the three ethnic authorities to agree on inter-connections and a common set of telecommunications regulations. The EC telecommunication rehabilitation programme is implementing projects that assist in the rebuilding process through the reconnection of inter-Entity links between the Federation and the Republika Srpska, with the provision of a range of basic telephone services for the community, businesses and state organisations across inter-Entity boundary lines. The basic aim of the rehabilitation programme is to unify the country, provide the people from different regions with the possibility of communication, and provide an incentive for the return of refugees.

Since 1996 the EC has committed over 16 MEURO to the reconstruction process of the telecommunications network in the country. In 1996 the EC Essential Aid Programme (EAP) committed 8 MEURO toward the rehabilitation of Bosnia and Herzegovina’s inter-Entity and regional telecommunications network. Approximately 4 MEURO was allocated to the re-establishment of the long distance radio-relay network in the Republika Srpska with inter-Entity connection to the Federation of Bosnia Herzegovina, in order to provide basic emergency, business, and public services. It also included a component for institutional strengthening and management training. The reconstruction of the network was deemed to be of the highest priority in order to reconnect communications between the people of the two Entities after four years of silence, to provide communications prior to the 1997 municipal elections, and to encourage business communications between the Entities to assist in economic recovery.

A further 8.1 MEURO were allocated in 1997. 1.1 Meuro was allocated to continue the inter-Entity re-connection programme. The EC also funded a parallel project in the Federation, including the re-establishment of local switches and access networks, the reconstruction of key telecom pylons for cross Entity connection, reinstatement of telephone connections in war-damaged areas, and a development plan for the telecommunication companies. An additional allocation of 7 MEURO was made for the rehabilitation and upgrading of switches and networks in regions designated as priority return areas.

In 1998 an intensive implementation was carried out.

All projects still ongoing in 1999 are close to their completion. The EC has concluded that telecommunication sector is strengthened and profitable enough to carry on using appropriate loan funds rather than grants in the forthcoming period. The future of telecommunication sector in Bosnia and Herzegovina would be forwarded to EBRD and potential commercial investors.