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 ADDRESS
BY CYTA CHAIRMAN STAVROS KREMMOS ON THE OCCASION OF THE PRESENTATION OF THE 2005
RESULTS
Electronic
Communications are our Nature!
Ladies
and Gentlemen,
Communications and
Technology
Communication, which is perhaps man’s most
important social need, has been growing easier and easier over the years, thanks
to technology. Today, the mere word "communication"
almost automatically brings to mind electronic means. Electronic communications
now dominate
our daily lives to such an extent that they may be considered a
"natural"
extension of each and every one of us. Today, electronic communications and
the individual have become one, technology and people exist together. Technology
develops our potential for communication while advanced technology gives
communication remarkable immediacy and simplicity.
Advanced technology is
in CYTA’s nature, and as a result the Organisation provides its customers with
services that are in no way inferior to those offered by developed
telecommunications organisations in other countries.
All of us at CYTA
- the
Board, management and staff - feel the burden of responsibility that comes as a
consequence of the Cypriot consumer’s trust in our Organisation. It is this
trust that makes us work hard so that CYTA may continue to be compared
favourably with other companies, not only within Cyprus but abroad too, and to
be considered the model of a successful organisation.
CYTA and Competition
Competition, international and local, has now
become an integral part of the telecommunications market and we face it across
virtually our entire range of services. The presence of competitors keeps us
vigilant and gives us the chance to improve constantly, although it must be
admitted that when CYTA was alone in the market, it never stopped looking to
improve. Our vision was and still is to offer the people of Cyprus services that
are equal to those enjoyed by the citizens of other developed countries, at
competitive prices.
In the past three years,
Cyprus has been required to create a competitive environment comparable to that
which prevails in the European Union and, I believe, it has succeeded. The only
difference is that many European countries needed many more years than Cyprus to
develop such a market.
For the creation of this
new competitive environment, all those involved – various ministries,
telecommunications service providers, the Office of the Commissioner of
Electronic Communications and Postal Regulation and the Commission for the
Protection of Competition – were asked to play their part. The new competitive
environment must not be inferior to that of other European countries. However,
its formation needs to take into account the particular characteristics of our
country such as, for example, the small size of the market and large geographic
spread of customers. One must also take note of the fact that CYTA has
traditionally provided high-quality services at low prices compared to the
European Union and other countries, a fact that for a number of years has been
confirmed by comparative studies carried out by the Organisation of Economic
Cooperation and Development (OECD). Moreover we should not forget that the
ultimate aim of securing healthy competition is serving the consumer through the
provision of quality services at low prices.
CYTA has every reason to
develop relations of good cooperation with all those involved in the regulatory
body – indeed, this is essential – despite the occasional disagreements that it
has submitted concerning specific positions and decisions.
For this reason, it has
had occasion to take legal action against decisions of the relevant bodies. In
no instance does this mean that we doubt the bodies and their authority. CYTA
examines every decision separately and, according to how far it disagrees, has
an obligation, I believe, to appeal to the same regulatory bodies or to use its
legal rights to protect its interests as well as those of its customers and of
the country’s economy.
An
example is last year’s case concerning mobile telephony call charges in which
CYTA was eventually vindicated for its call rates by the Commission for the
Protection of Competition, despite the original ruling that we raise our rates
following complaints from competitors.
Agreements on Content
Procurement
In this constantly developing and changing
environment, CYTA is required to exploit its network so that it not only
transmits voice but content which may, among other things, mean ready channels,
films, sports events and multimedia applications, since telecommunications
organisations worldwide are earning increasingly less revenue from voice
communications.
In the framework of this
strategic aim, we have signed many content procurement agreements and we shall
sign more. All international telecommunications organisations follow such
practice and this is what CYTA intends to do too.
The Organisation’s prime
concern remains the securing of its interests and the development of the
electronic communications sector with the aim of transforming Cyprus into a
Knowledge and Information Society, based on the correct management of a public
resource and the interests of our customers and the country’s economy.
CYTA and Quadruple
Play
During 2005, CYTA responded to the new trends in
international telecommunications by taking an important decision on adopting a
strategy for the provision of innovative and technologically advanced services
based on the convergence of fixed and mobile telephony. A development programme
was drawn up regarding these services, taking into account the commercial and
technical aspects as well as the necessary functionality to support them. The
aim of this strategy is, on the one hand, to increase the Organisation’s
competitiveness as well as its revenue, and on the other to reduce operational
costs.
Specifically, we are
rapidly developing our New Generation Network which will form our basic
infrastructure for our transformation into a so-called TIMES provider
(Telecommunications-Information-Multimedia-Entertainment-Security), which is a
natural development for advanced telecommunications organisations around the
world. With the completion of the New Generation Network we shall make a dynamic
entry into the Quadruple Play sector, providing customers with new, innovative
fixed and mobile voice, data and video services.
Our Social
Responsibility
CYTA is aware of the fact that it is an integral
part of Cypriot society in which it operates and whose trust it wishes to
maintain, in other words to be a socially responsible organisation. For this
reason, for many years now, in addition to its normal activities in the
telecommunications sector, it has been involved in, and actively contributing
to, society at large.
The European Union
proposes a holistic approach to the application of
Corporate Social Responsibility (CSR), namely its integration
in all aspects of everyday business management and relationships with all its
stakeholders. That is why, in 2005, CYTA set about implementing a project for
the Integrated Management of CSR, obtaining consultancy services and planning
the initial steps in this direction. The objective of this project is the
introduction and integration of CSR in the daily operations of the Organisation,
so that it is no longer a separate or add-on activity.
Progress is in our
Nature!
We place particular emphasis within our
Organisation on matters of Corporate Governance. For this reason, although we
have no obligation to comply with the principles of Corporate Governance since
CYTA is not listed on the Stock Exchange, we have nonetheless decided to adopt
them wherever possible and where they do not contravene the provisions of the
Telecommunications Law. The basic reason for this is our firm belief that good
Corporate Governance within our Organisation will enhance our ability to
successfully manage the contemporary challenges that will face us, due to
technological developments and the competitive environment.
To this end we
contributed to CYTA’s forthcoming new legal and regulatory framework. Moreover,
since 2003, when the term of office of the current Board of Directors began, its
operations have been supported by a number of committees, some permanent such as
the Audit Committee, the Communications Committee, the Legal and Regulatory
Committee, the Personnel Committee, etc., and others set up ad hoc on special
issues. Furthermore, to secure the principles of good governance, changes have
been introduced or are in the process of being introduced to the Tenders
Process, to the alternation of members on the Tenders Boards, and changes to
Staff Regulations to improve the Organisation’s functionality.
During 2005 we also
implemented innovative human resource management systems such as flexible
working hours and we completed the CYTA Brand Mapping project. We continued our
active participation in the programmes of European and other research institutes
such as EURESCOM and the Cyprus Research Academic Network.
The Cytamobile-Vodafone
portfolio was enhanced with several new services, the most important being the
Vodafone live! and Vodafone Mobile Connect services. Vodafone live! is a
complete mobile telephone menu facilitating access to a broad range of services
and information, while Vodafone Mobile Connect is aimed chiefly at business
customers and provides wireless connection via Cytamobile-Vodafone’s 3G networks
and GPRS for laptop computer access to the Internet and company intranets as
well as for sending and receiving e-mail and SMS messages.
We also focused on
increasing the presence of CYTANET’s Wi-Fi zone service which provides
high-speed wireless Internet access on premises such as cafes, hotels,
conference centres, etc. We also introduced a new Customer Relations Management
(CRM) system which enables us to provide better quality individual service to
customers.
Regarding the
subsidiaries of Digimed Communications Ltd, the year in review saw the start of
commercial operations by Actel Ltd in Hungary, of CYTA UK Ltd in the UK and by
the online store Emporion Plaza Ltd.
Financial Results for
2005
For CYTA, 2005 was a year of consolidation in the
Cyprus telecommunications market, three years after the introduction of
competition. During the year in review, the Organisation continues to show
satisfactory financial results. It should be noted that in almost all of the
services that CYTA provides, it was obliged to implement a cost-related pricing
policy.
Compared with the 2004
results and as a result of reduced rates, profitability fell from 23% to 16%.
Revenue from services showed a very small reduction of £1,1m or 0,5% while
operational costs rose by £15,1m or 8,4%. As a consequence, the surplus from
services fell by £16,2m or 31%.
The surplus after tax
amounted to £18m, compared to £31m in 2004. Before interest, taxes, depreciation
and amortization, the surplus fell from £95,2m to £72,3m. The EBITDA margin was
31% compared to 41% in 2004. Despite the fall, this figure is considered very
satisfactory.
Capital expenditure
amounted to £56,4m in 2005, compared to £74,4m in 2004 and was financed entirely
by CYTA’s own funds. Capital expenditure exceeded depreciation which was £53m,
representing 24% of the Organisation’s revenue from services.
CYTA’s capital base in
the form of reserves increased by 4% to £475m.
Liquid funds, consisting
of bank deposits and government bonds, increased by £12m to £205m.
Ladies and Gentlemen,
Before closing, allow
me to express warm thanks to our customers who have shown confidence in us for
many years now and choose to continue their cooperation with us. We hope to
remain deserving of their trust.
I would like to thank
Finance Minister Michalis Sarris for his excellent cooperation, Communications
and Works Minister Haris Thrassou who was until recently responsible for CYTA,
and the other Ministries, the House of Representatives, various other
authorities and social groups.
I also extend thanks
to all our associates, Legal Advisers, Auditors and all those others who support
us with their specialist knowledge.
I owe a very big
‘thank you’ to the staff, the management of the Organisation, the employees’
unions and my colleagues on the Board for their superb cooperation. I also like
to congratulate everyone on their hard work and its resulting effectiveness.
Finally, it would be
an omission if I were not to thank the media and the journalists for their
extremely constructive cooperation.
Thank you.
Stavros Kremmos
President
11 July 2006
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