Gold Magazine April - May 2013, Issue 25 | Page 51

viously not a situation that anyone – the
government, the first or the second investors – would have planned or wanted. So
these things need to be thought through
extremely carefully.”
There has been a small number of
cases where private equity has been the
route to privatise a telecommunications
company and, in the majority of those
cases, Rolf Meakin holds the view that it
has not worked. “In private equity there
is typically a three-year time horizon to
realise the value of the investment,” he
explains, “and it’s not long enough, either
from a capital point of view or from a human resources and restructuring point of
view either. My personal opinion is that
telecoms is a long-term, capital-intensive
business so it makes sense to have investors with that sort of time horizon.”
And there is no shortage of success stories, one of which is already being cited as
a potential model for Cyta and other stateowned organisations in Cyprus: Portugal
Telecom. Meakin first worked with the
company in 1988 and, he recalls, “Portugal Telecom was very similar to Cyta in
terms of being a 100% state-owned agency (actually two agencies geographically
dividing the country) which privatised
through an IPO in 1995. In preparation
for that, the company was merged and

corporatized, which is a necessary step that
Cyta will need to go through as well, and
then it was sold on the stock market. The
company has maintained a very strong
financial performance and it is one of the
leading companies in Portugal. Moreover,
it has now made significant investments in
Brazil – a much bigger market – which it
would never have been able to do it if had
remained in state hands. It is quite highly
regarded in the industry in terms of its (all
Portuguese) management capability so I
would point to it as a mid-sized company
that took the step of privatisation, which
wasn’t an obvious thing for Portugal to
do, and it’s gone pretty well.”
While there are various privatisation
schemes available to Cyprus, Meakin
is keen to point out that most of them
explicitly provide for the people working
in the business to participate in its new
ownership.
“It’s done in different ways,” he explains. “There are different types of employee share ownership plans. With a listing on the stock market you directly have
a value of the sha ɔ