The Cyprus government took a bold step on Wednesday towards liberalizing the lucrative telecommunications market by nominating the Permanent Secretary of the Ministry of Communications as the new regulator of the sector.
So far, all basic telecoms services and infrastructure have been the sole responsibility of the Cyprus Telecommunications Authority semi-state monopoly.
Parliament is discussing the corporatization of CyTA, backed by more than 90 per cent of the staff, according to Communications Minister Averof Neophytou.
Announcing the Cabinet decision for the regulator, government spokesman Michalis Papapetrou said the nominee, Vassos Pyrgos, will be employed under a five-year contract.
Cyprus, which opened accession negotiations with the EU in 1998, is liberalizing sectors such as telecommunications to harmonize itself with EU norms and regulations.
Fixed and mobile telephony are handled by the CyTA monopoly. Fixed telephony, with 437,000 subscribers, has a market penetration of 64 percent. Mobile telephony has a market penetration of 44 percent with 301,000 subscribers.
Basic communications services (satellite links, undersea cables) are also a CyTA monopoly, while all other commercial services (Internet, retailing) are also offered by private companies.
Testifying during a house communications committee briefing Tuesday, Neophytou said the CyTA corporatization plan is the only to deal with the challenges of liberalization and deregulation.
A limited liability company will be set up to hold the assets and liabilities of CyTA after the land and other assets have been valued.
Employees can move to the new company, retire or serve as employees of the old CyTA. Of the share capital, 6 percent will be offered to staff and those with CyTA pensions.
Staff will appoint one member to the 11-member board, but their shares are non-transferable and non-negotiable. The rest of the share capital will be held by the state. The Council of Ministers will not have the right to transfer, sell or negotiate the shares to a third party.
"We hope that the state will provide us with the necessary autonomy and flexibility to transform CyTA into a public limited company and the limitation of the relationship between the major- owner, the state, and CYTA Ltd into a strictly financial one," Chairman Stathis Papadakis said recently.
Despite reductions to the CYTAGSM mobile service and the introduction of two new charge packages, as well as cuts of up to 55 percent on international call rates, total revenue in 2000 rose 29.7 million Cyprus pounds (US$45 million), or 16.6 percent, to C?208.7 million. Expenses reached C?118 million, up 1.7 percent.
CyTA is a shareholder in the satellite operator, Intelsat, other international telecom cables and the undersea Black Sea Fibre Optic Cable System, for which it was recently appointed as commercial operator.
The BSFOCS' 1300km long cable will connect Varna in Bulgaria with Odessa in the Ukraine and Novorossyisk in Russia.
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