By Hamza Hendawi
CyTA, the island’s state-owned telecommunications company, yesterday called on the government to reform the regulations directing its operations, saying it needed total freedom to chart its own policies and deal with future competition.
“CyTA needs to secure the ability to prepare and carry out business plans and budgets, to set rates and formulate regulations for its own internal operations without any form of state intervention,” said Michalakis Zivanaris, the company’s chairman and chief executive.
“It is clear that if we don’t adapt quickly to the constantly changing international market, we shall be forced to pay an extremely high price for a shortsighted policy which ignores modern economic realities,” he warned in an address to the company’s annual general meeting yesterday.
CyTA enjoys a near monopoly on telecommunication services on the island, a fact which, together with its reliable network, explains the authority’s consistent increases in profits in recent years.
Yesterday, Zivanaris said 1997 pre-tax gains increased by 33.2 per cent to £34.9 million from £26.2 million in the previous year. Revenues stood at £125.4 million last year, a 15 per cent increase over 1996.
Cyprus, which opened talks to join the European Union nearly six months ago, has recently told the 15-nation group that its telecommunications market would not be fully open to competition until 2003, the date widely floated for the island’s accession to the EU.
“Time is running out,” Zivanaris told a news conference later. “Once competition enters the market, the authority must be allowed to work without the constraints it has today and which certainly won’t apply to its competitors.”
Rated as one of the more profitable state-owned corporations, CyTA is at present the responsibility of the Communications and Works Ministry.
Calls on the government to turn CyTA, and other profitable state-owned companies such as the Electricity Authority, into a public company before selling off a chunk of it to private investors have grown in recent years.
Such a sell-off, economists and traders say, will give the island’s fledgling stock market a tremendous boost and will attract in droves the foreign investors who have so far spurned the small bourse in search of more rewarding pickings elsewhere.
Zivanaris, however, disclosed yesterday that the Ministry of Communications and Works had begun consultations with CyTA unions over the possibility of turning the authority into a company with a majority stake held by the government. He gave no details, but the prospect of a partial sell-off of CyTA must have come as welcome news to the heads of at least two brokerage firms who attended yesterday’s annual general meeting.
As an example of CyTA’s need to be more flexible, Zivanaris yesterday said the corporation must readjust its rates so they can be competitive.
“One consequence of this rebalancing will be a significant rise in the cost of local telephone calls and a large reduction in international rates.
“Any country failing to make such reductions to its international rates in good time will be by-passed and, as a consequence, its position in the international telecommunications market will be marginalised.”
