Saturday 17 March 2018

Ex-communist candle seller makes good with €2bn fortune

He became Poland's biggest borrower but multi-millionaire mogul Zygmunt Solorz-Zak now wants to spend within his means, he tells Marta Waldoch

Zygmunt Solorz-Zak: 'My goal is not another million, but achieving what I had planned'
Zygmunt Solorz-Zak: 'My goal is not another million, but achieving what I had planned'


IN Radom, a blue-collar Polish city better known for producing guns than entrepreneurs, Feliksa Pietruszka remembers the young boy from the neighbouring apartment who sold candles at the local cemetery.

"These were good kids," said Pietruszka, 85, who still lives in the same building with outside toilets and coal-fired stoves for heating, as she sat in a kitchen barely big enough for chairs and a table. "This was just a normal family."

More than four decades and three changes of name later, that boy, Zygmunt Solorz-Zak, has turned his first zloty into a fortune exceeding €2.25bn and a business spanning TV, mobile phones, a bank and a power utility.

Along the way, it also made him Poland's biggest borrower as he expanded to compete with rivals funded by foreign investors and create the fastest mobile internet service in the country.

Solorz-Zak now says his goal is to lose that title and go back to his roots of only spending what he has. After selling a pension fund and an insurer last year, he's cutting jobs at mobile phone company Polkomtel to free up cash and add to the €.2bn it repaid creditors last year as the Polish economy grows at its slowest pace in a decade.

"Without any debt, that's for sure," Solorz-Zak, 56, said by email this month when asked how he sees his group of companies in a decade's time. "I invest most of my money. It's the only way I know."

Born in Radom, 100 kilometres south of Warsaw, Solorz-Zak earned his first money by selling "various stuff", he said when asked about the cemetery candles. His wealth stands at €.8bn, according to the Bloomberg Billionaires Index. He is Poland's second-richest person behind Jan Kulczyk, who owns stakes in energy firms.

Solorz-Zak took on a record amount of debt for a Polish businessman two years ago when he bought Polkomtel, the country's second-largest mobile phone operator, from Vodafone Group Plc (VOD) and a group of Polish state-owned companies. At €4.2bn, it remains the biggest leveraged buyout in Poland's history.

The deal satisfied an old ambition for Solorz-Zak, who had been trying to meld his media holdings with mobile telephony since 2002, when he began a push to acquire Polska Telefonia Cyfrowa, then Poland's largest carrier.

That bid collapsed amid more than 50 lawsuits and arbitrations around the world between co-owners Vivendi, Solorz-Zak's Elektrim and Deutsche Telekom, which won control of PTC by paying Vivendi €.4bn.

Polkomtel's loans and bonds stand at the equivalent of €2.8bn. The company's euro-denominated bonds due in 2020 returned 6.5 per cent this year, while its dollar bond maturing in the same year gained 3.3 per cent.

Solorz-Zak "has always been against taking on debt; he earned money to invest it further," Jozef Birka, a lawyer who has been working with the billionaire since the Eighties, said by phone in May. "But for Polkomtel his own money wasn't enough, and after long consideration, he decided on credit."

Before Polkomtel, Solorz-Zak created the country's first and biggest private television network, Telewizja Polsat. He also owns lender Invest Bank and power utility ZE PAK.

The billionaire backed the Slask Wroclaw soccer team in the city where he started his Polish business. It won its second championship last year, though Solorz-Zak is now in dispute with the municipality over the financing of the club.

"Solorz-Zak had it all: an opportunity, plus the courage and skill to pull it off," Adam Lukojc, who helps manage €2.6bn at Warsaw-based Skarbiec TFI says. "Now, in a tough market, he seems to be focusing on what he's got. But I wouldn't be surprised if he starts trying to make his other ideas materialise."

Solorz-Zak set up his first business, a transport company, in Germany, where he ended up via Yugoslavia and Austria when he was about 20 years old. At that time, communist Poland had shut its borders with the West as people sought to flee for a life in capitalist countries.

It was also in Poland's western neighbour where he started changing his name. He was born as Zygmunt Krok, though at a refugee office in Germany he identified himself as Piotr Podgorski, using his friend's name to prevent any trouble for his family back home, he said.

Then, in the Eighties, he became Zygmunt Solorz, taking his first wife's last name. That marriage ended in 1991. He added Zak, his second wife's name, after remarrying a year later.

"It must have been the contrarian in me," Solorz-Zak says. "There's nothing extraordinary behind it."

He has three children, one from his first marriage and two from his second. He is currently in divorce proceedings with his second wife.

He came back to Poland in the late Eighties and started selling imported cars, electronics and clothes. The media business began with a purchase of the Kurier Polski newspaper and then fully took shape in 1992 when he founded Telewizja Polsat, the first Polish private network.

"I got into the television business by sheer accident," said Solorz-Zak. He lent money to an acquaintance and took a television transmitter that was supposed to cover Warsaw and Lodz, Poland's third-largest city, as collateral.

"The man deceived me and instead of 60km, the transmitter coverage radius was 6km," he said. "That taught me to take interest in every detail and I learned that in order to develop a business I need to understand it."

In 1996, Solorz-Zak challenged France's Canal Plus by starting his pay TV platform, later known as Cyfrowy Polsat. With 3.57 million clients, it's now the biggest operator in Poland. Cyfrowy's shares have gained 29 per cent on the Warsaw Stock Exchange this year, while TVN advanced 8 per cent and benchmark WIG20 Index lost 11 per cent.

Now with close-cropped grey hair and matching moustache over a toothy smile in photographs, Solorz-Zak plans to supply fourth-generation mobile Internet to customers in smaller cities where high-speed fibre-optic networks won't reach.

"My goal is cooperation between media companies and telecommunications. That's where I see the future," he said in his email. "We're focusing on building a fast internet network to enable access to it by as many Poles as possible, as fast as possible.

"My goal is not to have another million in the bank account, but proving to myself that I achieved what I had planned."

© Bloomberg

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