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Cyta Hellas sale

By George Telaveris

While Greek telecom companies express interest for the Cyprus telecommunication authority (Cyta) subsidiary Cyta Hellas, in Nicosia the board is deeply concerned about the way forward.

State telecom company Cyta appointed global giants McKinsey and, PwC as advisers to the selloff of Cyta Hellas and according to a source within the company, their report will be ready by September.

“We have the following options: either sell the company as a whole, or merge with another telecom in a joint venture,” sources in position to know told the Cyprus Weekly.

A complete sale of the company at a discounted price will force the company to record millions in damages on the €300-million investments it has in Greece and could threaten its capital base.

“Cyta will be looking for a joint venture that will allow them to retain the capital investment or, if that is not possible, they will be looking to maximize their profits from asset selling,” said the same source.

Already, Cyta’s competitors in Greece – Wind Hellas, Forthnet and  Vodafone Greece – have expressed interest to buy the company, while at the same time, Cyta will be looking for potential investors from abroad.

“Cyta’s most important asset is its client base for broadband services that numbered 380,000 active customers by the end of 2016,” a person familiar with the matter told the Cyprus Weekly.

Among the more important assets of Cyta Hellas is the call centre, the real estate it owns in Greece and its extensive network.

Its fibre-optics network stretches from Crete to the Balkans and is connected with Cyta networks in the Eastern Mediterranean. Currently, there are thoughts within the board that it might actually be better for the authority to sub-rent rather than sell.

Cyta has given a mandate to its advisers that a shortlist of potential investors be put together as soon as possible, including foreign investors who have subsidiaries in Greece.

In addition, potential investors will undergo a due diligence process from McKinsey and PwC auditors in the coming weeks, and the board aims to sell its money-losing subsidiary by the end of the year.

The government announced its intention to sell Cyta Hellas in November 2016 after the unit failed to break even for yet another year. In January the authority informed the parliament it will need another €15.6 million to cover needs for 2016.

Cyta Hellas was established in 2008, just few months before the global financial crises forced Greece to request a bail-out from European partners and the International Monetary Fund (IMF).

Ever since, Cyta has been directly or indirectly subsidising its Greek subsidiary hoping to recover its investment.

 

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