Solorz-Zak borrowed to build a media empire | “My goal is not to have another million in the bank account”
Marta Waldoch and Maciej Martewicz
Born in Radom, 62 miles south of Warsaw, Zygmunt Krok earned his first money by selling “various stuff,” he says. A neighbor, Feliksa Pietruszka, recalls him peddling candles at the cemetery across from their apartment building. More than four decades and three name changes later, the man now known as Zygmunt Solorz-Zak, 56, has turned his first zlotys into an empire spanning television, mobile phones, a bank, and a power utility.
Solorz-Zak is the second-richest man in Poland, with a fortune of $3.5 billion, according to the Bloomberg Billionaires Index. Assembling it also made him the country’s biggest borrower as he competed with rivals funded by foreign investors.
He now says his goal is to lose that title and to spend only what he has. After selling an asset management firm and an insurer last year, he’s cutting jobs at mobile phone company Polkomtel to free up cash for debt repayment.
In 2012, Polkomtel repaid creditors 1 billion zlotys ($309 million). When asked how he sees his companies in a decade’s time, Solorz-Zak wrote in an e-mail, “Without any debt, that’s for sure.” He added: “I invest most of my money. It’s the only way I know.”
The Polish businessman took on a large amount of debt two years ago when he bought Polkomtel, the country’s second-largest mobile phone carrier, from Vodafone Group and several Polish state-owned companies. The deal, valued at 18.1 billion zlotys, remains the biggest leveraged buyout in Poland’s history. Polkomtel’s loans and bonds stand at the equivalent of $3.81 billion. Solorz-Zak “has always been against taking on debt,” says Józef Birka, a lawyer who has served as the billionaire’s adviser since the 1980s. “But for Polkomtel his own money wasn’t enough, and after long consideration, he decided on credit.”
Solorz-Zak set up his first business, a trucking company, while in Germany, where he settled at about age 20 after detours in Yugoslavia and Austria. At the time, communist Poland had largely shut its borders to the West as people sought to flee the regime for a life in capitalist countries. He changed his name in Germany, identifying himself at a refugee office as Piotr Podgorski, using a friend’s name to prevent any trouble for his family back home, he says.
In the 1980s, he became Zygmunt Solorz, taking his first wife’s last name. He later added Zak, his second wife’s name, after remarrying. (He’s getting divorced again.) He returned to Poland in the late 1980s and started selling imported cars, electronics, and clothes. His media business began with the purchase of the Kurier Polski newspaper and fully took shape in 1993 when he founded Telewizja Polsat, the first private broadcast network in Poland. “I got into the television business by sheer accident,” says Solorz-Zak, who would answer questions only by e-mail. He lent money to an acquaintance and took a TV transmitter that was supposed to cover Warsaw and the smaller city of Lódz as collateral. He got ownership when the man defaulted. “The man deceived me, and instead of 60 kilometers, the transmitter coverage radius was 6 km,” he says. “That taught me to take interest in every detail, and I learned that in order to develop a business I need to understand it.”
Knowing little about the media industry, he asked Wieslaw Walendziak, then a reporter for Polish public television, to help him organize the newsroom and the sales and technical areas. “We were young guys, none of us really knew what this Polish viewer was like,” Walendziak says. 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’s main channel and 12.7 percent for Polish public television’s TVP1, according to Nielsen’s audience measurement research for WirtualneMedia.pl.
Solorz-Zak bought Polkomtel because he wanted a mobile phone operator to tap rising demand for bundled phone, Internet data, and TV services. “My goal is cooperation between media companies and telecommunications. That’s where I see the future and good business,” Solorz-Zak says. “We’re focusing on building a fast Internet network to enable access to it by as many Poles as possible, as fast as possible.”
Along with repaying 1 billion zlotys of debt last year, Polkomtel refinanced 7.95 billion zlotys of loans in June, cutting interest payments by more than 100 million zlotys a year, according to an e-mailed statement. “My goal is not to have another million in the bank account,” Solorz-Zak says. “The goal is proving to myself that I achieved what I had planned.”
The bottom line Poland’s second-richest man is trying to cut his company’s debt of almost $4 billion.