Bloomberg News

Solorz-Zak Will Cut Polsat Stake, Build High-Speed Network

June 17, 2011

(Updates with Solorz-Zak comments starting in fourth paragraph.)

June 17 (Bloomberg) -- Billionaire Zygmunt Solorz-Zak is selling a stake in Cyfrowy Polsat SA to fund construction of a high-speed wireless network as he seeks to buy Polkomtel SA, Poland’s second-largest mobile-phone operator.

Solorz-Zak, who owns 66 percent of Cyfrowy Polsat, Poland’s second-biggest television company, through two companies he controls, will retain a majority stake, the Warsaw-based company said late yesterday. Cyfrowy Polsat fell as much as 5.8 percent and traded 3 percent lower at 15.61 zloty at 1:46 p.m. in Warsaw, valuing the company at 5.4 billion zloty ($1.9 billion).

Solorz-Zak, the second-wealthiest Pole according to Forbes magazine, is leading the auction for Polkomtel after getting financing for a bid that values the phone company at about 18 billion zloty, people with knowledge of the matter said this week. Polkomtel could help Solorz-Zak tap rising demand for bundled phone, Internet data and TV services.

The sale of the Cyfrowy Polsat stake will take place in the “coming days” for a price close to the market price, Solorz- Zak told the PAP newswire today. The proceeds from the sale will help him expand the long-term evolution network, and won’t be spent on Polkomtel, financing for which has been already secured, he told PAP.

Wireless Frequencies

To build the high-speed mobile Internet network, the billionaire is using another of its companies, NFI Midas SA, whose units are waiting for a decision by the telecommunications regulator to grant them the frequencies. Solorz could use Polkomtel towers to build the LTE network if he buys the mobile- phone operator, he told Puls Biznesu in March.

Polkomtel’s owners, which include Vodafone Group Plc, PGE SA, PKN Orlen SA and Weglokoks SA, plan to complete the sale by the end of this month. They received three bids, Herbert Wirth, chief executive officer of shareholder KGHM Polska Miedz SA, said June 15.

The other candidates, Apax Partners LLP, which has sought financing for its bid, and Telenor ASA, the Norwegian mobile operator allied with Bain Capital LLC, are considered less likely to win the auction, people familiar with the matter said this week. A winner may be decided this week or next, they said.

If Solorz wins Polkomtel, the phone company would need to cut its network costs to match competitors before holding an initial public offering, he told PAP.

The 2008 sale by Denmark’s TDC A/S of a 20 percent holding in Polkomtel provides a 3.7 billion-euro ($5.2 billion) minimum valuation, KGMH said in November.

Hieronim Ruta, another Cyfrowy Polsat shareholder, will also sell a stake, according to the company’s statement. Deutsche Bank AG, Credit Agricole SA and Trigon will advise in the Cyfrowy Polsat sale.

--Editors: Kenneth Wong, Alan Purkiss

To contact the reporters on this story: Marta Waldoch at mwaldoch@bloomberg.net; Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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