Boy Selling Candles Becomes Polish Billionaire Repaying Debt
In Radom, a blue-collar Polish city better known for producing guns than entrepreneurs, Feliksa Pietruszka remembers the young boy from the neighboring apartment who sold candles at the cemetery opposite.
“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 two 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 $3 billion and a business spanning television, 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 1 billion zloty ($313 million) 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 e-mail 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 kilometers (62 miles) 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 $3.5 billion, according to the Bloomberg Billionaires Index. He is Poland’s second-richest person behind Jan Kulczyk, who owns stakes in energy companies.
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 18.1 billion zloty, 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 SA, Solorz-Zak’s Elektrim SA, and Deutsche Telekom AG, which won control of PTC by paying Vivendi $1.7 billion.
Polkomtel’s loans and bonds stand at the equivalent of $3.81 billion, according to data compiled by Bloomberg. The company’s euro-denominated bonds due in 2020 returned 6.5 percent this year, while its dollar bond maturing in the same year gained 3.3 percent.
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 1980s, 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 SA. He also owns lender Invest Bank SA and power utility ZE PAK SA.
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 11 billion zloty at Warsaw-based Skarbiec TFI SA, said on July 22. “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 materialize.”
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 mainly shut its borders with the West as people sought to flee the regime for a life in capitalist countries.
It was also in Poland’s western neighbor 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 1980s, 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, who wasn’t available to meet in person after postponing interviews, said in an e-mailed response to questions on July 2. “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, according to Joanna Adamowicz, a spokeswoman for the Praga district court in Warsaw.
He came back to Poland in the late 1980s 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 60 kilometers, the transmitter coverage radius was 6 kilometers,” 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.”
Still knowing little about the business, he asked Wieslaw Walendziak, then a reporter at Polish public television, to help him organize the newsroom and the sales and technical areas.
He was interested in every detail and deliberated on every zloty before approving the expense, Walendziak said in a telephone interview. When the crew was going out to film short material, he couldn’t understand why the camera operator couldn’t also be the van driver. So he changed it, he said.
“We were young guys, none of us really knew what this Polish viewer was like,” Walendziak said. Solorz-Zak “kept asking questions and learned quickly. He has the memory of an elephant and he’s very careful in planning.”
Telewizja Polsat’s main channel had 11.5 percent of the Polish audience in June, compared with 12.2 percent for rival private broadcaster TVN SA’s main channel and a 12.7 percent share for Polish public television’s TVP1, according to Nielsen Audience Measurement’s research for Wirtualnemedia.pl.
In 1996, Solorz-Zak challenged France’s Canal Plus by starting his pay TV platform, later known as Cyfrowy Polsat SA. With 3.57 million clients, it’s now the biggest operator in Poland. Cyfrowy’s shares have gained 29 percent on the Warsaw Stock Exchange this year, while TVN advanced 8 percent and benchmark WIG20 Index lost 11 percent.
Now with close-cropped gray hair and matching moustache over a toothy smile in photographs, the boy from Radom knew the potential of people with lower income, Walendziak said.
Polkomtel followed that model. Solorz-Zak plans to supply fourth-generation mobile Internet to customers in smaller cities where high-speed fiber-optic networks won’t reach.
“My goal is cooperation between media companies and telecommunications: That’s where I see the future and good business,” he said in his e-mail. “We’re focusing on building a fast Internet network to enable access to it by as many Poles as possible, as fast as possible.”
While Polkomtel’s sales declined 4.5 percent in the first quarter, the number of its Internet users rose by 200,000 to 2.8 million, the company said on June 5.
Pressure on Polkomtel will come as other carriers bid for Polish frequencies, said Konrad Ksiezopolski, an analyst at Espirito Santo Investment Bank in Warsaw. Economic growth in Poland is forecast at 1.1 percent this year by the International Monetary Fund after being revised lower this month.
“This project is turning out to be less profitable than expected at the beginning, but the economy wasn’t really helpful,” Ksiezopolski said. “The most important for Solorz now is to deal with debt.”
The billionaire bought Polkomtel as his media mix lacked a mobile phone operator that would help him tap rising demand for bundled phone, Internet data and TV services.
At the last stage of the transaction, Solorz-Zak competed with offers from private-equity firm Apax Partners LLP and Telenor ASA, the Nordic region’s largest phone company, two people with knowledge of the matter said at that time.
As well as repaying 1 billion zloty of debt last year, Polkomtel’s borrowing costs were cut in June by more than 100 million zloty a year after the company refinanced 7.95 billion zloty of loans, according to a filing.
“My goal is not to have another million in the bank account,” Solorz-Zak said. “The goal is proving to myself that I achieved what I had planned.”
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