“…I had a good nose and I invested in Elektrim, but you can’t foresee everything.”
— Solorz-Zak, quoted by Financial Times
Not much is known about the early days of Polish media tycoon Zygmunt Solorz-Zak. As legend has it, his first brush with business was selling candles near a cemetery in Radom, Poland, his place of birth. He ran away from communist Poland, only to return to the country in 1994, after the Soviet empire collapsed. Enigmatic as he may want to remain, Solorz-Zak’s recent successful bid to acquire Poland’s second-biggest mobile phone operator Polkomtel has pushed him into the limelight and has set tongues wagging.
The $6.6-billion Polkomtel deal also happens to be the crowning glory in Solorz-Zak’s long history of calculated gambles, which over the course of the last two decades or so has marked his meteoric rise to the perch as Poland’s second-richest man. Polkomtel, which has some 14 million subscribers, was jointly owned by Britain’s Vodafone and a host of Polish state-owned companies such as copper miner KGHM, utility PGE, oil refiner PKN Orlen SA, and coal company Weglokoks. Solorz-Zak clinched the deal outsmarting the likes of private equity firm Apax and Norwegian telecom services company Telenor. The Polish government also stands to gain from the pact as additional revenues from stake sales could help trim the country’s ballooning budget deficit. And Solorz-Zak hopes the latest acquisition will help him gain a toehold in the highly competitive Polish telecom market, which is dominated by the likes of France Telecom’s Polish unit TPSA and Deutsche Telekom’s wholly-owned subsidiary PTC. The acquisition offers the Polish billionaire, who also owns the country’s second-largest television group Cyfrowy Polsat, an opportunity to cash in on the increasing demand for bundled services in Poland such as Internet, phone, and TV services.
Back in Poland after the fall of communism, Solorz-Zak started off by selling electric heaters and importing cars from Germany. However, his big moment came in 1994 when he unexpectedly won a private television broadcast license. And with this, Polsat was born.
Solorz-Zak spent the next ten years building his television empire in Poland, rightfully earning his moniker as media mogul. Polsat made waves after it was granted a license in 1994 by the Polish government, who had hoped that they could use the channel for political propaganda. However, they were proved wrong as Solorz-Zak focused on the business side of television as is the practice in the West. Since then, there has been no looking back, as the cliché goes, for the hard-nosed Pole.
I do not think there would be any problems (with the competition authority),
— Solorz-Zak on the Polkomtel deal, quoted by Reuters
Encouraged by his success, in 2004 Solorz-Zak acquired Elektrim, a debt-laden conglomerate that had a stake in Polish mobile services provider PTC. Though the deal became embroiled in controversy, the Polish entrepreneur ended up owning a coal-fired power plant and a piece of prime real estate in Warsaw after the beleaguered company exited bankruptcy. Last year, Solorz-Zak made a move to consolidate two of his major media holdings. Publicly-traded Cyfrowy Polsat, a pay-television operator, moved to acquire privately-held Polsat TV for $1.3 billion, in a deal that would create the country’s largest media company by revenue. The merger of Poland’s biggest digital-satellite provider Cyfrowy Polsat with Polsat TV, the largest television station in terms of viewers, has transformed Cyfrowy into a fully integrated media company. Truth be told, the Cyfrowy Polsat’s acquisition of Polsat TV did raise investor concerns over valuations as Solorz-Zak also happened to be the majority shareholder in both the companies. Following the transaction, the media magnate had said that his top priority would be to build a high-speed internet network in Poland. Recent reports indicate that he is already in the process of setting up a high-speed mobile broadband network that is supposed to help enable fast Internet surfing on laptops and smartphones. Solorz-Zak, with assets worth $2.6 billion, also holds stakes in insulin maker Bioton, telecom company Sferia, and power utility PAK.
Though Solorz-Zak may still want to play his cards close to his chest, the expansion of his business empire has forced him to shed the shroud of secrecy. The shrewd businessman has also become more open to taking loans, something which was unthinkable for him a few years back. The latest Polkomtel deal, for instance, is to be funded by a $5.1 billion loan, evidently the region’s largest leveraged loan after KKR’s acquisition of Alliance Boots. The loan is fully underwritten by the Deutsche Bank, Credit Agricole CIB, Royal Bank of Scotland, PKO Bank Polski, and Societe Generale, according to a Reuters report.
As much as his business deals, the elusive businessman’s personal life also makes for interesting reading. Known to have changed his name a number of times, curiously, his surnames – Solorz and Zak – come from two of his wives, according to a report in the FT. Solorz-Zak, 54, lives in Warsaw and has three children.
Quite naturally, Solorz-Zak’s rapid strides in the Polish business world have raised a few jealous eyebrows. One would be tempted to see a bit of a Russian oligarchy in some of Solorz-Zak’s business deals, but the comparison ends there. Thanks to his business acumen and work ethic, there is no doubt that this shrewd dealmaker has worked his way up to the top the hard way. And perhaps tellingly, Solorz-Zak’s success story is also a powerful commentary on the improving business climate in this fast-growing East European economy.
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© Thomas White International, Ltd. 2019