Local
articles | 23 May 2015

Cyta will be sold, but not ‘on the cheap’

The process of denationalising semi-state telecoms CyTA is at an advanced stage, Privatisations Commissioner Constandinos Herodotou said recently, at the same time reassuring stakeholders that the organisation will not be sold on the cheap.

Out of the 34 European countries, only Cyprus and Luxembourg have not totally privatised their telecoms industry, Herodotou said, in an address to the fifth Nicosia Economic Congress. The official referenced a number of cases abroad where privatisation has brought about investment in the communications network, new technologies and new products.

In his speech, Herodotou dismissed the notion that CyTA would be “sold off,” noting that his office is working methodically with outside consultants as well as with CyTA management to ensure the organisation commands a fair price once its assets are put up for bid.

CyTA’s worth would be calculated not on its present value, but rather on a five-year business model on the assumption that CyTA is a private concern and taking into account the expected improvements in efficiency from the engagement of strategic investors.

“This will yield the forecasted value five years into the future, that is to say, it [the price] will involve a prepayment on the future value of the organisation,” said Herodotou.

The official also said that expressions of interest in CyTA would be open only to jurisdictions, which recognise the Republic of Cyprus.

A day earlier, the finance minister revealed the broad strokes of how the government intends to denationalise the telecoms provider.

The plan was to create a new structure, in the form of a state company under private law, which would take over the biggest part of the services provided by CyTA. Interested private investors would then bid on this new company.

The government will move forward with privatising CyTA only if it receives a “satisfactory” bid from the private sector, Georgiades said. He did not give a timetable for the process. Through privatisation of state enterprises, Cyprus must raise €1 billion by 2016 and another €0.4 billion by 2018 to help pay down a €10 billion international bailout.

The Electricity Authority (EAC) is another such company slated for privatisation. Workers are fiercely opposed and have threatened broad industrial action, so far averted.

The EAC’s biggest trade union, EPOPAI, will convene today to decide “further actions” to thwart the government plans.

They are concerned over a government bill recently submitted to parliament, which is designed to tighten financial control over state-owned and semi-public enterprises.

The bill contains a clause allowing the government to abolish, merge or sell off departments of these organisations without parliamentary approval. Currently, such action needs the nod from parliament.

Critics say the legislation is really a way for the government to wrest control away from parliament ahead of the privatisation process.

Source: Cyprus Mail

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