TELECOMS: Epic times for MTN’s new Cyprus owners

Fifteen years after it entered the Cyprus market as the first private telecom operator, challenging the monopoly of state-owned Cyta, MTN has been rebranded as Epic following a Euros 260 mln takeover, with ownership once again in European hands.

Since the July 12, 2004 auction, winning the island’s second mobile phone license after 11 rounds of bidding and a cost of CYP 12.75 mln (Euros 21.78 mln), then-Areeba, a wholly-owned subsidiary of Investcom LLC Luxembourg, has come a long way and seen several milestones as it was first acquired by South-Africa-based MTN Group on May 2, 2006.

Since 2008, MTN Cyprus absorbed the retail operations of Infotel (Germanos chain of telco stores) and business broadband provider OTEnet Cyprus.

In February 2013, joint venture partners, the Shacolas Group and Panos Germanos of Greece, sold the remaining 50% in MTN Cyprus to the MTN Group, making it a wholly-owned subsidiary of the South Africa-based telecom giant in a deal worth Euros 73 mln.

But MTN has always remained second-best, never challenging all-out Cyta’s dominance, that has been an integral part of society since the British Colonial government established its predecessor, Cable & Wireless.

On the other hand, Cyta has somewhat enjoyed a level of complacency, aware that its rivals would not, or could not topple it from the throne of Cyprus telecoms, leaving the runners-up content with second place and a steady revenue stream, with lower overheads than the state-owned telco, that will remain uncompetitive as long as it cannot split its retail operations from the network ownership.

However, Cyta has been suffering from a receding market share, with the regulator GERIET’s data showing that of the 1,200,378 mobile users in the country in December 2018, the state-owned telco commanded a 54.22% share, enjoying a minor uptick in almost a decade, while MTN (now Epic) saw its market share drop marginally to 34.79% in December from 35.3% in June 2018.

Interestingly, and despite the introduction of higher-speed internet access on the island, presently at 4G and 4.5G, Cyta continues to sweep the market when it comes to broadband telephony, with a whopping 90% market share at the end of Q4 2018, with all other providers sharing the rest of the field.

The fact that it continues to command more than half the market in all areas of telecommunications, is the only advantage that the state-owned telco enjoys, with politicians and government unprepared to privatise it, and the potential of bringing in ‘strategic’ investors dwindling by the day.

While presenting the government’s 2019 budget in Parliament last December, Finance Minister Harris Georgiades said that the proposal for partial privatisation of Cyta will be revisited and efforts to attract a strategic investor will be made.

With a 20-point gap on Cyta difficult to close by the second mobile operator, new shareholders Monaco Telecom must now decide what it is that they want and how they plan to achieve it.

First and foremost, Epic needs to improve MTN’s reputation when it comes to customer service, which CEO Thanos Chronopoulos highlighted in his speech during the launch of the Epic rebranding in Nicosia last week.

He said the three main pillars of change are infrastructure, customer experience and internal operations.

With an investment of over Euros 40 mln, we are creating a super-fast network with ten times more capacity. Essentially, we are talking about a brand new network that will gradually cover the whole of the Republic of Cyprus and will upgrade the customers’ daily communication experience.

Secondly, we are decisively focused on the customers. This requires emphasis on immediacy, flexibility and speed to meet and exceed the customers’ needs.

Finally, we are restructuring radically our internal operations. We are implementing new, unified tools to help us keep track of the customers’ requests from beginning to the end, ensuring they receive the best possible services, said Chronopoulos.

Monaco Telecom is 55% owned by French billionaire Xavier Niel, founder and largest shareholder of Paris-based telco Iliad trading under the Free brand (France’s second-largest ISP, and third mobile operator). The Principality of Monaco maintains the remaining stake.

Neil � with a net worth of $5.6 bln � has a portfolio that includes Orange Switzerland, which he acquired in 2014 for $2.9 bln and renamed Salt, and a controlling interest in French newspaper Le Monde.

5G still far away

The next biggest challenge for Epic and Neil will be the rollout of 5G in Cyprus.

Telecom experts argue that companies are not in a position to adopt 5G technologies by 2020, a goal set by the EU, as providers and the market are not ready for the upgraded mobile internet technology, with the US-China standoff over Huawei being the main obstacle.

In comments in May, Electronic Communications and Postal Office Commissioner George Michaelides said that if any limitation is applied on Chinese firm Huawei’s product promotion (over security fears), that would see 5G growth delayed both in Europe and Cyprus.

Currently, more than 90% of consumers in Cyprus are served in one way or another by Huawei products, while companies such as MTN/Epic and Cyta (4G) rely on infrastructure equipment from the Chinese communication giants.

Michaelides said the problem arises as Huawei is the only company which produces equipment for all stages of implementing 5G technologies.

Cyta has put the 5G network at the forefront of its challenges for 2019, as the authority has been working on setting up a pilot network.

MTN/Epic, earlier in the year, announced that new developments are expected on 5G as a result of the company’s recent strategic partnership with Huawei for the development of the 5G network in Cyprus.

In May, Cablenet acquired a set of frequencies which can be used for 5G technology after an auction process.

According to sources close to the procedure, Cablenet will pay EUR 7 mln for the frequencies.

Primetel announced last September that it would launch the first 5G pilot platform in the framework of the European Union’s Strategic Research and Innovation Plan dubbed “Horizon 2020”.

The 5Genesis project is a pilot platform to test out the bloc’s readiness to implement 5G technology in the European Union.

The program is to be carried out in five locations, Athens, Malaga, Berlin, Surrey and Limassol.

Source: The Financial Mirror