New CEO has Idea for cellular market

Polska Telefonia Komórkowa (PTK) Centertel plans to show its first balance sheet profit in 2002, take over the No. 2 slot from rival mobile phone operator Polkomtel and increase its share of corporate clients, Sławomir Skrodzki, the firm's new president and chief executive officer told the Business Journal last week. Skrodzki was appointed CEO by Centertel's board in December after the company's former president, Marek Józefiak, took the helm at Telekomunikacja Polska (TPSA) in October. TPSA owns 66% of Centertel, while France Telecom (FT) hold the remaining shares. Although Skrodzki said Centertel, now the country's third-largest mobile operator, would see profits by the end of 2002, he declined to forecast a specific number. He added that Centertel's revenue for 2001 would be about zł. 2.5 billion ($625 million) but would not confirm or deny a previous statement by a company official that its losses would not be greater than zł. 500 million ($125 million). "These are not losses, only investments planned in the development of the infrastructure of the market," Skrodzki said. Centertel got a late start behind Polska Telefonia Cyfrowa (PTC), the largest mobile operator, and Polkomtel in offering digital mobile service since it received its nationwide operating license in March 2000 and has had to invest heavily in building its network to catch up. In 2000, Centertel had zł. 1.58 billion ($395 million) in revenue and a net loss of zł. 530 million ($132.5 million). The firm will issue its official annual financial results for 2001 in March. Anna Bossong, the director of Eastern Europe telecom research at CA IB in London, was surprised at Centertel's ambitious profitability target, saying she didn't expect the firm to be in the black until 2005 since its interest payments and financing costs for expansion, as well as depreciation costs, were still great. Bossong forecast Centertel's revenue for 2001 at about zł. 2.35 billion ($588 million) with a loss of about of zł. 450 million ($112.5 million). Nonetheless she was impressed with the company's performance. "For the stage they're in, (the loss) is not bad because they are making an EBITDA profit," she said, referring to the firm's basic earnings before interest, depreciation, tax and amortization. She estimated the company's EBITDA at zł. 219 million ($54.75 million) in 2001. Centertel also expects to have 4 million subscribers by the end of 2002 and replace Polkomtel as Poland's second-largest operator, Skrodzki said. The firm, which operates under the brand name Idea, finished 2001 with 2.8 million subscribers and a 28% market share compared to PTC's 3.8 million clients and 37%, and Polkomtel's 3.5 million clients and 35%. But Centertel is unlikely to snag the No. 2 slot by the end of 2002, Bossong said, and forecast the firm having a 29% market share at year-end compared to PTC's 38% and Polkomtel's 33%. Skrodzki said Centertel, which has cornered the pre-paid market of budget-conscious subscribers who pay lower costs for service, would also focus on gaining more lucrative post-paid corporate clients in 2002. The firm said it would have 20-25% of the post-paid market by year-end. Centertel ended 2001 with 80,000 corporate clients, lagging greatly behind PTC and Polkomtel, both of which have corporate clients as their main subscribers. "Centertel definitely will have more corporate clients in 2002, but there will be much faster growth in the lower-value segment," Bossong said. She forecast Centertel getting 36% of all new mobile customers in 2002 compared to 35% for PTC and 29% for Polkomtel.