AUDITOR GENERAL, Chrystalla Yiorkadji, told the Cyprus Mail yesterday that more than a year ago her office reported that CyTA has been making super profits for the last ten years, while the law states their charges should be set at a level to cover costs and plans for expansion.
The statement came after the Competition Commission announced on Tuesday it was imposing a penalty of £20 million on the semi-governmental telecoms monopoly, CyTA, for abusing their dominant position, raking in £64 million in net profit for 2000 alone.
“Regardless of the laws on competition, a prudent and sensible provision exists under Article 19 of the Inland Telecommunications Law which states that all charges should be set at such levels as to cover the expenses of CyTA and to allow for any extensions and depreciations,” said Yorkadji.
“And we agreed that organisations like CyTA need to make investments, but our point was that for the last ten years CyTA was making surpluses: they were making huge investments while still having aside something like £200 million,” she said.
Yorkadji maintained that CyTA should return to the consumers any surpluses made in the form of a reduction in charges, noting that the Audit Office has been making this point for the last four years but got very little attention for it.
“But we are glad that our view has been verified. If CyTA decides at anytime to review the charges they can use the money made to finance that decision,” she added.
However, Yorkadji acknowledged that the demand for services, especially of mobile phones, has increased tremendously, far beyond the estimates of CyTA.
But not all profits were from the sale of telecommunications services, as the Competition Commission claims, she said, adding that, last year, a large amount of surplus came from the sale of investments abroad.
House Trade Committee chairman, Lefteris Christoforou, said yesterday that CyTA should deal with the essence and not the legality of the decision, which was that CyTA was overcharging consumers.
A source told the Cyprus Mail that CyTA’s response was that the rates they applied were voted and approved by parliament earlier this year, where they had figures of previous years in front of them, and knew or ought to have known that CyTA had these surpluses.
Yiorkadji noted that the Electricity Authority of Cyprus (EAC) came under a similar legal provision but that they were making investments of a greater volume than their surpluses.
President of the Pancyprian Association of Retail Telecom Companies (PARTC), Ioannis Diakos, charged deputies with failing to do their job, by not holding CyTA to account while approving their budget. The PARTC is taking the Competition Commission to the Supreme Court for delaying the decision to impose a penalty, given that the association approached it back in December 2000.
“CyTA was allowed to make inflated profits as a non-profit organisation and enter into the business of selling mobile phones, using their dominant position in the market to take over the retail market,” said Diakos.
“How can we compete when they open up a retail shop in the customer service office, allow customers to pay through their existing account and send out advertising leaflets to all their customers?” he asked.
Diakos said that the penalty has come after PARTC applied pressure on the government through the European Union not to close the 28th chapter on competition until this was settled. “We need to clarify and define the role and responsibilities of deputies, the Auditor general, the Competition Commission and the Telecoms Regulator in order to maintain a proper check on competition in the market,” said Diakos.
Permanent Secretary of the Consumers Association, Dinos Ioannou, hailed the decision to fine CyTA, demanding its implementation immediately and that consumers be reimbursed for overcharging over the years. “We are not sure how consumers will benefit directly from the £20 million penalty but we shall insist that consumers receive the amount they have been overcharged,” said Ioannou.
The £20 million fine, if not overturned, will go to the consolidated fund of the government, an official term meaning it gets added to the state revenue bucket.
“If CyTA had paid necessary attention to what was said then they would have given back through consumer services the surpluses they had made, now the benefit goes straight to the state,” said Yiorkadji.
The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.
