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Competitive telecoms: the most important asset of the Cypriot economy

Interview - September 8, 2015

Looking to establish itself as an important national and regional player, the Cyprus Telecommunication Authority (Cyta) is consolidating and facilitating Cyprus’ efforts to position itself as an international business hub. CEO Michalis Ε. Achilleos provides an insight into the industry’s advantages and how Cyprus’ premier semi-governmental organization (SGO) is due to complete its restructuring whilst upgrading telecom services across the island, as well as its high-speed submarine and satellite connections.


What is the strategic focus for Cyta moving forward?

Cyta is a service provider of the whole spectrum of electronic communication products, ranging from fixed and mobile communications to internet service provision and digital applications, customized, in support of every sector of the economy. We have always been characterized by our ability to develop and maintain state-of-the-art infrastructure. This, along with our highly skilled personnel and the fact that we offer customer-oriented solutions, constitutes a sound base that allows us to play a key role in the improvement of Cyprus’ economy. At this time, our main focus is the introduction of new generation technologies, on an island-wide coverage. We are deploying state-of-the-art infrastructure for broadband and mobile communication services fostering high-speed digital and media applications.

Yet, it is also true that Cyprus has become an important telecommunications hub in the Eastern Mediterranean and a telecommunication center of excellence due to Cyta’s international network, which is considered to be amongst the most technologically advanced in Europe. Only to add to this point is that we are connected to 10 submarine fiber-optic cable systems within the area.

Enhancing our role as a telecommunications center is among our major priorities, and certainly the reason we maintain three landing stations for submarine cables. We are continuously upgrading our existing submarine cables and introducing new submarine cables. Now, we are in discussions about the introduction of three new submarine cables with the latest technology, as well as two satellite stations that offer services covering all the satellite systems in the area. Cyprus is an island, so reliable communications are essential in order to stay connected and do business with the rest of the world. 

There have been a number of key developments with regards to privatization and whether it will in fact go ahead by early 2016. What is your perspective on Cyta’s move towards privatization?

In the process towards privatization, it is important to consider when and how it will take place.

In this respect timing is vital. An efficient privatization can take place when Cyta is at the highest enterprise value, and certainly a privatization when Cyta is undergoing restructuring cannot prove to be beneficial. According to our plan, we consider that in the next six or eight months, we will have completed the restructuring process concerned, and we will be heading towards sustainable development again. When we consider the way it will be done, then I consider a partial privatization will take place. And this, I believe, is moving in the right direction, considering that Cyta is the most important asset of the Cyprus economy and the country as a whole today.

We have supported the Cypriot economy since the establishment of the Republic of Cyprus, in 1960. During these 55 years, we have not received or asked for financial support, or a loan from the government. Cyta has been a self-sustaining company even in times of tremendous economic challenges. Of course, there are areas where we can always be more efficient and more effective. 

Regarding the concerns around privatization, we are reassured by international experience in respective telecom organizations, and we are confident of a promising future, capitalizing on Cyta’s assets and foremost on the high caliber and expert personnel, laying down the foundations for a strong comparative advantage. Our expert personnel are capable of enduring demanding conditions, thus we consider the reforms under way due to the restructuring are contributing to our efforts to continually increase our performance.

We are already working almost as a private company, in a fully competitive environment, and we managed not only to survive, but also to thrive. The Council of Ministers appoints the Cyta Board of Directors, and the Board is responsible for the operation of Cyta. Please consider this fact: We are the only telecommunications company in the European Union owned 100% by the state, and remain among the top 20% in terms of profitability in Europe. This is something that everybody keeps wondering: how does a state-owned company do so well? I would say it is very much the people and the culture of the company. We believe in our people, we believe in the knowledge that exists today in Cyta, and we believe in what we can do. According to the Technical Advisors to the Commissioner for Privatizations, our networks are among the best in Europe; the way we designed them, the way we built them, and the resilience that they have. 

With strong competition on the island making the introduction of new services even more important, how has Cyta progressed with regards to the 4G-network rollout?

We are now in the phase of introducing 4G technology and we are currently undergoing testing. In a few weeks, we will be fully operational. We are introducing new technologies and upgrading all of our fixed networks, all of our core networks, and all of our mobile networks. We are carrying out these plans concurrently, which means it is a huge project. It takes core competence, discipline and deep-rooted expertise in our field to achieve such widespread upgrading all at the same time. We can do it. According to our planning, by the end of the year, we will have deployed 4G in most urban areas, sub-urban areas, and in the major rural areas.

When we launch new services, our foremost aim is to provide customer-centric, reliable solutions to the Cypriot consumer, differentiated with the customer care, the knowledge and support from Cyta’s experts, which are among the most qualified in the industry.

In this respect we are competing against ourselves, because these values have always been a strong competitive advantage for Cyta, recognized by our customers.

The competition arrived in Cyprus almost 10 years ago with Cyprus joining the EU, but it also gave Cyta the opportunity to look abroad. How will the subsidiaries, including those in Greece, and in the UK, fit into the future of the company?

When the market was opened up with EU accession, we set out a strategy for value maximization and operational efficiency thinking about how we could improve and generate new revenue streams. Apart from launching new services, which is the approach we have introduced in the local market and still maintain, we decided to establish subsidiaries to facilitate and create the conditions and functions necessary for commercial operations in countries abroad.

The qualified aim for the establishment of the subsidiaries in Greece and in the UK is business development and the generation of new revenue streams. The biggest expansion was in Greece, where we started in 2007. We also established ourselves in the UK through Cyta UK, which offers services to the Greek-speaking community living in the UK; there are around 270,000 Cypriots who live there.

It was a trying time when we first launched services in the Greek market, as the country’s economy escalated into deep crisis; however, we managed to deal with the challenge and we now offer services to almost all of Greece. We offer voice, data, television (IPTV), and mobile services in Greece.

Apart from these two subsidiaries abroad, we have other subsidiaries operating in the local Cyprus market. We have Iris, which specializes on the provision of satellite services abroad; Cytacom, which operates locally in Cyprus; and Cytaglobal Hellas, which offers mainly wholesale services in Greece.

The priorities of the strategy for these establishments are focused on the integration of the production chain, complementing and enhancing Cyta’s portfolio of electronic communication services, with value-added services and the provision of end-to-end solutions.

The Cyprus brand in its current form is that of a “sun and sea” tourism destination, whereas its business reputation has been severely damaged. What is your perspective on the evolution of brand Cyprus?

The Cyprus’ brand is as you say one of tourism. However, Cyprus is so much more than a tourist destination. Cyprus is also a business center and an attractive investment destination. In support of this effort, the Cyprus government offers very good opportunities for companies to invest, such as, removing regulation barriers in setting up enterprises, maintaining a favorable taxation system and further expanding the avoidance of double taxation treaties with a number of countries. Another distinguishing factor making Cyprus an attractive investment destination is the widespread professional services on offer, and as I said before, the high caliber of people among the university-educated human resources that are found in abundance in the local population speaking multiple European languages fluently, English being the most common.

Of course, with regards to our contribution to the brand, we ensure that Cyprus is renowned for its significant telecom infrastructure, making the republic very attractive for businesses wishing to establish operations. We offer a broad range of reliable business services enhanced with superb international connectivity. In a nutshell, Cyprus is without doubt the best place on earth to live and work.

What is your perspective on the economic recovery of Cyprus?

Resilience has indeed been the key to our recovery; we realized that we have to stand up on our own feet. We knew that we have to make changes ourselves, because nobody else will do it for us. We know that unless we work ourselves, no one will come to the rescue. That is why we have done everything we could in the last two or three years to overcome the crisis We never had the street petitions and violence that were seen elsewhere in the world by those who faced severe austerity measures and tough economic reforms. We worked together and tried our best to get the economy back on track.