Promoting a digital economy and developing secure and efficient global communication networks to support international business are high on the agenda for Cyprus.
Cyprus has successfully exploited its strategic location at the crossroads of Europe, Asia and Africa – establishing it as a thriving international business centre with global connections. This success could not have been achieved without the support of an advanced communications infrastructure. Creating more efficient e-solutions across all sectors is a key goal for Cyprus to also achieve its aim to attract more tech business, as well as foreign investment into Information and Communications Technology (ICT) projects.
Cyprus already hosts a number of ICT companies from the US, Europe, Russia, Australia and many other countries, all running their regional headquarters from the island and servicing clients in Europe, the Middle East and North Africa, and beyond. Innovative start-ups have also started springing up and Cyprus is certainly being noticed outside its borders. With its rapidly growing economy and efforts to improve its telecoms landscape, it is no wonder that TransferWire recently included Cyprus in a list of eight emerging global technology hubs in the world.
Connecting with the World
Cyprus has a fully digital network with reliable high-speed international connectivity via eight fibre optic submarine cables, including the world’s longest optical submarine telecommunications cable, SEA-MEWE-3, which links directly with South East Asia, the Middle East and the rest of Western Europe. Fixed broadband coverage is provided universally, and competition among various cable and DSL operators has resulted in a good offering of high-speed and cost-effective broadband access services throughout the island.
Mobile operators in Cyprus offer high-speed 4G broadband mobile access technology and are constantly updating and evolving their networks, as well as investing in new technologies. Cyprus also boasts some of the most cost-effective call rates within the EU. State-owned operator Cyprus Telecommunication Authority (Cyta) continues to dominate the market offering a full range of telecommunications services. Other key players with a prominent role in the telecoms landscape are MTN, Primetel and Cablenet.
During 2016, the island authorised additional frequency bands (800/2600 MHz), which will allow mobile operators to further enhance their networks in terms of speed, capacity and quality of 4G service. In addition, Cyprus has secured a significant amount from EU structural funds for the deployment of step-change technology, for the roll-out of Fibre-To-The Home (FTTH) networks. By 2020, FTTH networks are expected to extend to every private residence.
The developing satellite communications is another key objective, and investments of companies in the sector have reached €300 million in the last five years. To build up the industry further, Cyprus has constructed a simple, flexible and competitive licensing model resulting in one satellite already in operation and more expected to be placed in new orbital positions during the next two years – providing cutting-edge telecommunication services for niche technologies.
Attracting Tech Business
Increasing numbers of technology companies are choosing to locate their operations in Cyprus, attracted by the island’s cost-effective services, favourable tax and business environment, and its skilled workforce. The local universities provide excellent bachelor and masters programmes in computer sciences, consistently producing tech-savvy candidates to join the ranks of some of the world’s leading ICT companies.
The country’s status as solid international business centre, coupled with its competitive IP-Box Tax Regime, which is fully in line with the 2016 international amendments on IP tax policies, is another advantage for companies, as protecting intellectual property rights is a cornerstone of tech business.
The island’s capital, Nicosia, has been identified as the future centre for ICT and research and development. Many multinationals already have established regional headquarters in Cyprus, using it as a convenient hub for software development, system integration, testing services, disaster recovery, research and development, as well as marketing and sales activities.
Companies such as NCR, AMDOCS, AVG, 3CX, Wargaming and TSYS are just some of the leading names present on the island today. Also international giants such as Microsoft, Oracle, SAP and IBM have been on the ground, supporting Cyprus’ tech evolution for many years, but there is room for further development and growth in the sector.
Fostering a Start-up Ecosystem
In addition to catering to the giants of the global ICT sector, the government also offers financial incentives for innovative small and medium-sized enterprises (SMEs) setting up in Cyprus – and in particular for start-ups. With the rise of business angels and venture capitalists looking to invest risk capital in exchange for equity in promising ideas and products with high market potential, Cyprus has created a new Start-Up Visa scheme to attract more international talent to launch innovative ventures in Cyprus.
These are all moves in the right direction to develop a more dynamic tech landscape, but there is still a long way to go to establish Cyprus as a mature start-up hub, like some of its European counterparts or neighbouring Israel. However, there is increasing backing from both government and the private sector, and the past few years have seen a boost in the provision of funding, support and mentoring opportunities to aspiring entrepreneurs and innovators.
Start-up accelerators such as the Cyprus Business Angels Network, Cypriot Enterprise Link, Chrysalis Leap and Repower Cyprus have all boosted the environment, along with events such as Hack Cyprus Hackathons, the Clean Launchpad Competition, as well as Startup Weekend and Startup Live. Home-grown talent and a burgeoning tech landscape have already launched some inspirational success stories.
Landmark Science and Tech Park
A key development in support of Cyprus’ digital strategy is the creation of the country’s first-ever Science and Technology Park (STP) in Pentakomo, near Limassol. The project is a welcome move and will create applied research and development centres as well as office and support facilities tailored for science and technology companies. A primary objective is also to promote business incubators in a bid to expand the range of opportunities for research and development.
The planned STP provides strategic investors with an interesting opportunity to finance, design, build and manage a landmark project. The tender notice was published in 2015 and has already attracted international interest, and offers various incentives, such as tax breaks, greater flexibility in authorisation procedures and easier application process for residence and employment permits. In addition, investors will have tax-breaks for expenditure on acquiring patents or copyrights, buying shares in innovative businesses and start-ups, and additional breaks for the cost of buying fixed assets to be used in innovative operations.
Adapting to Global Trends
Global demand for bandwidth is growing at an incredible 40% per year, with key drivers being the increase in cloud computing, data transfer and storage, as well as the Internet of Things (IoT). As more data and applications are allocated to the cloud, global cloud IP traffic is expected to quadruple by 2019, according to Cisco’s ‘Global Cloud Index: Forecast and Methodology, 2014-2019’.
Also global data centre IP traffic is set to grow threefold over the next five years, as more companies begin utilising data centres to cut costs and streamline workflows. This in turn will increase the demand on networks to ensure seamless and secure transfers between data centres and business locations. The more connected devices that hit the market, the greater the need for bandwidth. A recent report from McKinsey revealed that IoT could have a potential annual economic impact between US$4 and $US11 trillion in 2025 for factories, large retail operations and cities.
As an international services hub it is crucial for Cyprus to stay ahead of the game and keep up with cutting-edge technology to support its thriving business environment. To meet the demands of the market and to ensure seamless connections, the country’s main telecoms provider Cyta launched new Tier 3 data centres in Nicosia and Limassol in 2017. More current and sophisticated tech solutions are consistently being introduced in Cyprus, with growing interest from abroad for call centres, colocation, hosting and disaster recovery services.
Recognising that the ICT industry is a catalyst to increase productivity and economic growth, Cyprus launched its ‘Digital Strategy’ in 2012, which is in line with the Digital Agenda for Europe and promotes the use of ICT in all sectors of the economy.
The strategy outlines a series of key objectives, which include connecting Cyprus with high-speed networks and promotes competition to create a more sophisticated infrastructure and cost-effective services. Modernising public administration through electronic services is a top priority, and in 2016 Cyprus signed a memorandum with Estonia in the field of e-Governance and ICT. Cyprus will benefit from Estonia’s extensive knowledge and pioneering know-how in e-Governance, which could result in annual savings of 2% of GDP. Digital entrepreneurship is an objective that goes hand in hand with this, and is a move by the government to help businesses increase their productivity and become more competitive in domestic and international markets.
Evolution in Progress
With its strategic geographical location and established framework for technology and research initiatives, Cyprus is perfectly placed to realise the European vision of a digitally democratised society and to see substantial growth in the coming years.
Both the Cyprus University of Technology and the University of Cyprus are providing increasing numbers of highly qualified graduates to meet the sector’s growing demand, while the Cyprus Institute – a world class research establishment – is engaged in several ground-breaking and technologically innovative projects. As the safest destination in the region, Cyprus provides an ideal and secure location to store data and host digital services, and with so much untapped potential the island provides interesting opportunities for tech-savvy investors and innovators.
Cyta: Dominant state-owned provider offering fixed and mobile telephony, Internet and TV in Cyprus, as well as submarine cable and satellite services abroad.
MTN: The first mobile entrant after Cyta, offers integrated telecommunications solutions for mobile, fixed telephony and broadband services, providing pioneering solutions for private and business clients.
Cablenet: An independent alternative telecommunications provider in Cyprus offering broadband, fixed telephony and television services through its wholly owned cable infrastructure.
PrimeTel: Offers fixed and mobile telephony, Internet and TV in Cyprus, while its international network provides network connectivity, data communications and IP-based services.
Hellas Sat: The owner and manager of the Hellas-Sat 2 Hellenic satellite, offering services in Europe, Middle East and South Africa.
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Updated: May 2017