Vodafone-Panafon to go for full control

Vodafone-Panafon’s Vice President and Managing Director Giorgos Koronias does not think any big business deals are on the way in the domestic telecoms market, given a lack of liquidity and intense competition among newcomers. In an interview with Kathimerini, he confirmed rumors that the parent Vodafone company will delist its Greek subsidiary from the Athens bourse by the end of the year. He admits that mobile telephony subscribers have valid complaints, but blames them on excessive public sensitivity to the issue of electromagnetic radiation, which prevents companies from improving their infrastructure. Koronias started in what was then Panafon with a three-month contract in 1992; today he is one of Greece’s best-paid executives, with an annual salary estimated at around 1 million euros. Vodadone marked the 10th anniversary of its presence in Greece a few days ago. You have been a central figure in the firm – and the mobile telecoms market in Greece for that matter – since day one. There have been some rumors that you are planning to move to other fields. What is your answer and what events of the first days do you still remember? The endeavor of launching mobile telephony in Greece presented particular intrinsic difficulties. Panafon was never just a job for me; it was something like a family. I started by signing a three-month contract which was followed by an open-ended one after it expired. Since then, I have never pondered whether to stay or leave. At first, there were difficulties emanating from the different cultures of the three nationalities participating in the company (the British Vodafone, France Telecom and Greece’s Intracom and Lambrakis Press), but we followed a single strategy that enabled us overcome problems. How would you describe the style of management you apply in Vodafone? I have no single way to describe the style of management because I have not studied management; I have simply conducted management according to requirements during my professional career. Are there no guidelines from the Vodafone group? The parent company has a particularly solid stance on this issue. First of all, it sets out a vision summed up by the following: Let’s be the top mobile telecoms firm in the world – improving the life of our customers and helping individuals, businesses and communities become more interconnected and communicate better in a world that is continuously on the move. This is the vision of the Vodafone group. Then we set out the values on which this vision is based: Passion for employees, passion for customers, passion for the world around us and passion for results. We aim to have the best people because we unshakeably believe they are one of the company’s biggest assets. We also want to be customer-oriented and design pioneering products and services that give added value to our customers. How do you judge the National Telecommunications and Posts Commission (EETT) from its performance to date? Currently, there is a process of reorganization for the incorporation of some EU directives. We are in a transitional period, having started a consultation process for the legal framework. I believe EETT has a decisive role to play in this process. The problem is that if the companies of the sector do not agree with the decisions of the particular authority, the way for them to express themselves and be vindicated is through administrative courts, which, of course, rarely possess the specialized knowledge and ability to reach decisions. EETT has to be a really independent authority but there is a necessity for a superior mechanism that will deal with the legality of EETT’s decisions. For two years now, we have been hearing various announcements, with an impact on the stock market, that Vodafone will delist Vodafone-Panafon from the Athens bourse with a public offer. And of course, any offer will primarily include the big Greek shareholder, Intracom, which holds a 9.5-percent interest. What is your comment? The Vodafone group made a strategic decision to adopt a common name in all the markets it has a presence. It will buy out any minorities and delist the respective companies from the stock market after acquiring 100-percent control. What method was adopted for this in other countries? It was done through public offers, with a maximum premium of three percent. In Greece, we shall follow the same procedure as in Sweden, Spain and Portugal. The Vodafone group intends to raise its stake in Greece and in the last three months, it has increased from 61 percent to 65 percent. It aims to buyout the interests of the minority Greek shareholders. When do you see the delisting taking place? This depends on both buyer and seller. At any rate, I would like to point out that the Greek company represents just 2.5 percent of the parent. I say this just to demonstrate how small the issue of the public offer is for Vodafone, although it has a particular weight for our own stock market. I asked this question because with the transfer of this strategy that has been followed in other countries and the rekindling of speculation, stock market shares of Intracom and Vodafone have exploded in the last two years. We have never had any explosions in Vodafone’s share. I do not know where this reputation originates and what games it serves. Other subscribers and myself have noticed that mobile telephony networks face functional problems. Is there a problem of capacity again? Signals are hard to pick up in some areas. What is the reason for this? Have you stopped investing? There is a problem of information and efficient handling of issues in Greek society. Town-planning departments that have come under the authority of local government organizations now express the policy of their supervisory bodies. And so we have mayors and municipal councils making decisions on whether some transmitter can continue operating or close down; quite a few transmitters have been shut down or cannot be installed for purely subjective reasons. Are you saying signal cover is inadequate at the moment? If transmitter locations continue being lost at this rate, it may become so. If, for instance, we lose a station in Syntagma Square, all the traffic will go to the proximate stations. Vodafone’s network is good at this; if one station is lost, cover is not completely lost. Many stations in Athens have been shut down, not just ours but also of the other operators. And so it is natural that that there will be glitches, independent of operators’ efforts. How secure are subscribers’ conversations on mobile phones in Greece? We now see ads claiming that mobiles can be easily tapped. What is your view of this problem? As far as our network and systems are concerned, we have not found anyone that can tap conversations. Not even state agencies? For state agencies to be able to do that, they would have to make considerable investment, which has been made in other countries but not in Greece. Are you certain of that? For authorities to do something of the sort, they would have to coordinate with us. Is there no way of by-passing you? No, there is not. What are your forecasts for the Greek market? Do you see any buyouts or mergers? Not just in the mobile telephony but in the broader telecoms sector. I believe roles in the Greek telecoms market are not evenly distributed at the moment. Beyond the mobile operators, there are alternative providers, but they have not carried out investments like ours to make them comparable and I am not optimistic about their future. As profit margins shrink and expenses rise along with their customer base, I think they will face difficulties. What market share do you believe you could contest in fixed-line telephony? Technically, the entire market. We could provide a network with a capacity of ten million subscribers, but we do not have such a strategy. There is such a strategy for the very small corporate market segment and I do not see it changing in the next year or two. Do you see any bankruptcies ahead? Bankruptcies are usually preceded by creaking sounds which you hear first. I feel there is a pressure on liquidity which does not only affect the telecoms market, and I believe signs of fatigue will emerge. There is, of course, a buoyancy related to EU-subsidized projects and those for the Olympic Games, but we have yet to see them changing the reality of the Greek economy. The cost of mobile conversations has fallen considerably in recent years. Nevertheless, you are coming under strong pressure from EETT for further reductions. What is your reaction? I must stress that the Greek market is one of the cheapest, if not the cheapest, in mobile telephony in Europe. It is also the only one in which rate reductions take place at regular intervals. Competition works impeccably; there are calls from mobile to mobile that cost six cents a minute! Of course, there are calls from fixed-line phones to mobiles that affect the total costs of telecom services unfavorably. It is necessary to find a balance in prices. Today we employ 2,400 people, have paid about two billion euros in taxes and 400 million euros for licenses. The aim of government policy must be to further support the activities of companies in the sector. The State stands to gain most from this support. What will happen during the Olympic Games if a world record is broken and all spectators and reporters wish to use their mobiles simultaneously? If either the Transport Ministry or Athens 2004 (the organizers) do not assume the initiative and responsibility for the provision of comprehensive information by all mobile operating firms, we shall have a capacity problem. The responsible authorities must be facilitated in every possible way to invest appropriately. This has still not happened, one year before the Games. Monopolistic views in favor of the sponsors have prevailed, resulting in the danger of a telecommunications blackout.

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