Era chief steps down; company claims losses not a factor
Almost three years to the day that Polska Telefonia Cyfrowa (Era GSM) launched its mobile-phone service here, the company has replaced its founding chief executive officer, Tadeusz Kubiak.
Kubiak resigned abruptly last week. Era said the decision was totally his. "This was Mr. Kubiak's own decision to leave," said Robert Niczewski, PTC's spokesman.
However, the boardroom reshuffle followed on the heels of a first-half loss at Era of zl. 130 million ($32.5 million) and the emergence of a new controlling investor in the form of conglomerate Elektrim.
Analysts said it was doubtful that these factors were unrelated to Kubiak's resignation.
"Ms. Lundberg is a tough lady," said Rafal Gebicki, head of research at Raiffeissen Capital and Investment Polska, referring to Barbara Lundberg, Elektrim's CEO. "When PTC loses zl. 130 million, and it's competitor Polkomtel (Plus GSM) posts a profit, its clear that bad decisions were made in the company."
Niczewski said the first-half loss did not result in Kubiak's ouster. "There is no connection between his resignation and the financial results of the company," he said.
Kubiak could not be reached for comment last week.
Analysts pointed out, however, that because Elektrim now controls 51% of PTC, the subsidiary's results will have to be fully consolidated in its own accounts. This means the loss will hit Elektrim's bottom line as well, something which was unlikely to please Lundberg.
Kubiak's mortal sin, analysts said, was to get caught out by the zloty's faster-than-expected devaluation this year, Gebicki said, leaving PTC's foreign-currency debt exposed.
The zloty lost 15% of its value this year against the dollar. Polkomtel, which operates the mobile telephone network Plus GSM, converted its forex debt into zloty and sidestepped that problem. But it hit PTC hard, costing the company zl. 80 million ($20 million).
Niczewski denied the significance of these losses for the company. He added that they had nothing to do with Kubiak's departure. "It has always been Era's strategy to spend more in the first half and make our profits in the second half," Niczewski said.
Kubiak submitted his resignation to PTC's supervisory board on Sept. 21, and it was unanimously accepted. The board immediately voted to replace Kubiak with Boguslaw Kulakowski, PTC's chief strategist, Niczewski said.
The move caught analysts off guard, but they did not expect any significant change in the company's outlook or strategy.
"It's a total surprise," said Andrzej Kasperek, an analyst at COK Banku Handlowego. "The reason they gave for his replacement was that there was a disagreement over the company's development. But we didn't see anything wrong with the company's strategy.
"We cannot exclude the possibility that this has something to do with Elektrim's taking control of the company," he added.
Elektrim now has a 51% stake in PTC. "But no one knows what is going on inside the company."
Polkomtel, for it's part, refused to comment on the change in management of its main competitor.
"The board talked it over, and decided that the best policy is not to make any comment," said Leszek Kaminski, Polkomtel's spokesman.
Polkomtel started operating on the market within weeks of Era's creation. The two cellular competitors had been awarded GSM licenses, the first in the country, after a lengthy and expensive tender process. At that time, the only cellular operator was Centertel, which was controlled by Telekomunikacja Polska (TPSA) and only offered analog service.
Despite PTC's change of leadership, analysts said that they expected a steady hand would stay at the helm.
The new CEO, Kulakowski, has been with PTC from the beginning in 1996. Analysts predicted that thanks to this, there would not be a significant change in the company's strategy.
"We see this change as neutral," Kasperek said. "In the medium term, it should not have an impact on the company."
Elektrim spokeswoman Ewa Bojar denied speculation that Kubiak's resignation resulted from conflict between Elektrim and Kubiak over PTC's strategy.
But analysts said that until the exact reasons for Kubiak's departure are known, the move raises troubling questions about the firm.
"The problem is that we don't know the reason," said Piotr Dudzinski, senior stockbroker at Citibrokerage. "So it's difficult to say whether this is good or bad."
But he added that it is a good sign that Kubiak's replacement is from within PTC. "The change is a good decision," Gebicki said. "Next year looks to be much better for the company, but they have to make better financing decisions."
