Cyprus telco CyTA to launch new services in December

— Turnover up at CYP 249 mln, profit in ’06 at CYP 34.2 mln

 

CyTA, the state-owned telecom, is to launch new products and services by the end of the year, such as video-conferencing and voice over IP, following the successful launch of Safe Internet, Vodafone Mobile Connect, Cytanet’s WiFi, i-choice and miVision services last year, said CyTA Chairman Stavros Kremmos.

Presenting the annual report for 2006, Kremmos said last year was a successful year for the telecom giant with total revenue up 8% YoY to CYP 249.18 mln (EUR 425.7 mln) from CYP 230.4 mln in 2005.

Costs were steady at CYP 209.5 mln (EUR 357.95 mln) for 2006, marginally down from CYP 212.2 mln in 2005. EBITDA were up 29% at CYP 93 mln in 2006 from CYP 72 mln in 2005. Operating profits were up at CYP 39 mln from CYP 18.2 mln in 2005. Including gains from other income and finance income amounting to CYP 9.7 mln on CyTA’s huge cash reserves of CYP 135 mln, the total surplus after tax was up at CYP 34.22 mln (EUR 58.4 mln) in 2006 from CYP 18.31 mln in 2005.

Kremmos said CyTA continues to shoulder the cost of its development plan amounting CYP 54 mln from its own resources. During 2006, he said CyTA transferred CYP 55 mln in the form of dividend to the state.

 

— 5-year contract

 

Referring to plans by CyTA’s General Manager Nicos Timotheou to opt for early retirement, Kremmos said the delay in the appointment of a successor is due to confusion surrounding the interpretation of the Law, which is not specific in the case of CyTA and it is not clear if the new General Manager will be a career person promoted from within or an appointment from outside.

“I believe that the new person will be on a contract of five years, but the final issue will need to be cleared with the Ministry,” said Kremmos, ruling out any discussion on whether or not he is a candidate to become Executive Chairman.

“I have no such ambitions and will not seek such a position even if one is created,” he said.

 

— Return on capital

 

Following accusations that CyTA is delaying price hikes in its fixed line service and proceeding with other price distortions to hamper competition in the market, Kremmos said CyTA has given its detailed cost analysis to the Telecom Regulator.

“Our charges are levied after taking into account our costs, which have been provided to the Regulator and contain a specific degree of profit margin. The only difference of opinion is on the point raised by the Regulator who wants us to account for a 13% return on capital on top of a satisfactory gross profit, which is something that is being discussed now,” he said.

CyTA’s capital or reserves as at end of 2006 amounted to CYP 454 mln (EUR 775 mln) after the surplus of CYP 34 mln were added to the 2005 reserve balance of CYP 474 mln, but which was reduced by the CYP 55 mln transfer to the state in the form of a dividend.

A 13% return on capital of CYP 454 mln would amount to CYP 59 mln, which if implemented, would force CyTA to proceed with a massive hike in rates, which would accelerate the market penetration of its competitors.