Cyprus Mail

Citigroup to start CyTA privatisation ball rolling

Unions have complained about the lack of transparency in the process

By Angelos Anastasiou

CITIGROUP has been selected by the Cyprus Privatisation Unit to initiate the process of privatising the Cyprus Telecommunications Authority (CyTA), the Cyprus News Agency (CNA) reported on Monday.

According to sources cited by CNA, the procedure attracted all top names in the field of mergers & acquisitions (M&A), such as UBS, JP Morgan, Merril Lynch, HSBC, Nomura and Barclays Capital.

As experts in M&A told CNA, attracting such global names was considered a great success for the whole process.

Citigroup will have the leading role in the process, which is expected to be completed by the end of the year with the final act of selling the state telecoms company.

Citi will be accompanied by auditing firm PWC, which will carry out the due diligence study -an evaluation of the organisation, its structure and progress.

In all, four consultancies will carry out the process: Citi as financial advisor, PWC as auditor, a legal advisor and a consultant on technical issues. The remaining two advisers are expected to be selected shortly.

The role of the financial advisor is of great importance, as according to experts it enhances the chances of a successful process, since the prestige and size of the financial advisor is directly linked to the quality and power of prospective investors.

“The choice of such a big and qualified firm ensures that the whole process will take place in the best way possible, which creates good conditions for attracting serious strategic investors,” sources cited by CNA said.

CyTA’s privatisation is scheduled begin with the selection of the four consultants, followed by the conversion of the company from a state-owned enterprise to a private corporation with the state as the only shareholder, and the tender notice.

“Our schedule for this year includes some very significant developments,” Finance Minister Harris Georgiades told state radio on Monday. “Consultants have been selected for both CyTA and the Cyprus Ports Authority.”

Following a €10-billion emergency bailout loan from international creditors in 2013, Cyprus has committed to raising €1.4 billion by 2016 through a privatisations’ programme. In addition to CyTA and the CPA, other organisations slated for sale include power company EAC, and other minor state-owned enterprises.

Predictably, the announcement mobilised the militant employee unions, which had voiced fervent opposition when the privatisations framework was being voted into law, and warned that they would not allow the government to implement its plans.

“I would like to note the lack of transparency – a veil of secrecy, even – imposed by both the finance minister and the government,” said CyTA union boss Alecos Tryfonides. “Over the past year, after the privatisations bill was voted into law, the president himself had issued instructions to the finance minister for intensive deliberations with ourselves and the labour minister. There have been no meetings, and no contacts since.”

According to Tryfonides, the unions question the wisdom of selling state assets, as opposed to strengthening the organisation so as to ensure profit maximisation in the long-run.

“I ask the government and the people of Cyprus: can selling the best and largest state organisation be considered an investment?” said Tryfonides. “Or is strengthening said organisation the better option? Words will be stripped of all meaning with such arguments.”

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