CYPRUS awarded its first private sector GSM licence to the Lebanese-backed Scancom group yesterday, beating its rival, a unit of Greece’s Cosmote, which had been widely seen as the favourite. In the island’s first foray into telecoms deregulation, Scancom placed a winning £12.75 million bid for the 20-year concession, more than double the minimum £5.7 million set by regulators when bidding began on Wednesday.
Cosmote pulled out at £12 million. Scancom, which is active in Africa but not widely known elsewhere, is backed by Lebanese financiers said to have close links to Prime Minister Rafik al-Hariri. One of its majority shareholders is Investcom, a company based in Luxembourg. “We expect to invest tens of millions of dollars to develop our market,” Investcom Executive Director Jamal Ramadan told Reuters.
Scancom will compete for market share with CyTA, the state-backed incumbent which now has a virtual monopoly on fixed and mobile services on the eastern Mediterranean island. Among a population of some 750,000, some 65 per cent of islanders subscribe to the CyTA GSM service. “We would target a market share of anything between 33 and 40 per cent,” Ramadan said.
Cyprus joins the European Union in May 2004 and has pledged to open up the mobile market to competition by then. Past delays in deregulation had brought sharp rebukes from Brussels. “We are pleased with the outcome. The process was a success, both in terms of the auction amount and because we met our obligation to Brussels,” said Telecoms Regulator Vassos Pyrgos. Cosmote, a name which instantly registers with most Greek
Cypriots with close links to Greece, bowed out in the 11th round. “Cosmote decided not to participate in subsequent rounds of the auction process, as a higher offer would not meet the return criteria set in its business plan,” the company said. Scancom has 30 days to start meeting its financial obligations of either paying the licence fee or opting to pay a 20 per cent downpayment, and the rest spread out over a four-year period. Until then, it will be regarded as the “provisional” winner of the race.
“We believe the licence fee went to its fair value. It was in accordance with our expectations,” said Stelios Himonas, head of telecommunications at the Ministry of Communications and Works. CyTA is now obliged to pay the same amount as Scancom for a licence with the same payment conditions. (R)
