Telecom giant to shut down Portal.pl
By : Roseanne Gerin
Portal.pl (http://www.portal.pl), owned by Telekomunikacja Polska (TPSA) (http://www.tpsa.pl), will be shut down in autumn after the telecom giant buys a 50% stake in Wirtualna Polska (WP) (http://www.wp.pl), the country's No. 2 portal, a TPSA official said last week.
Artur Zak of TPSA's investor relations department said his firm would complete negotiations to buy a majority stake of 50% plus one share of WP in six weeks. The transaction was set to be completed by June 30, but summer vacations and continued talks over the price pushed up the deadline, he said.
"Portal.pl is really weak," Zak said. "We have less than 1% of the (Internet) market, so there is no sense to have two portals. We want one huge portal and a leading-position portal. We have money, and WP has know-how."
Portal.pl was launched in May 2000 and is part of a league of 10 other general information portals in Poland. TPSA invested zl. 20 million ($4.7 million) in its development. Unlike other portals whose page views per month usually increase gradually, Portal.pl has stagnated at 2 million monthly page views. Neither Katarzyna Halicka, WP's spokeswoman, nor Marek Borzestowski, WP's president, could be reached to obtain the portal's current statistics. By contrast, Wirtualna Polska was used by 28% of Polish portal users, according to a survey published last month by market research firm Taylor Nelson Sofres/OBOP. It ranked second behind Onet.pl, the country's most popular portal, which was used by 47.1% of Polish portal users. Portal.pl employs 30 workers in content management and technical positions, but Zak couldn't say what would happen to them until September when TPSA will present its Internet business plans. He also said that Portal.pl is a small part of TP Internet (TPI) (http://www.tpi.pl), TPSA's online unit, which this year will focus on developing new online services, such as electronic certification services via public key infrastructure (PKI) a digital encryption standard used to authenticate the identities of those who complete online transactions.
Renata Palen, TPI's spokeswoman, said she couldn't comment on the negotiations, but added that TPSA's president Pawel Rzepka said last month that TPI would have a stake in the assets from the WP deal. She also declined to reveal Portal.pl's monthly cash-burn rate or the amount of revenue it generated from online ad sales. Portal.pl, like other portals, is almost entirely dependent on revenue from the sale of banners and buttons. Last February, TPI's former president, Slawomir Kulagowski, said he expected Portal.pl to generate zl. 15 million-zl. 20 million ($3.5 million-$4.7 million) in 2001, almost all of it from advertising.
"Portal.pl has a very low number of users and low market (share) of revenue and e-commerce," said Maria Skowron-Szafranska, an IT analyst at CDM Pekao Securities. "And it's very expensive to reach the popularity that Wirtualna Polska has. It's easier and better to invest money in WP, which has plenty of users and people who know the brand."
Owned by the Internet division of Gdansk-based Prokom Software, WP announced in April it was seeking a strategic investor to provide financial backing for its e-commerce projects. In May, TPSA announced its intention to acquire a majority stake in WP by buying new and existing shares. According to previous news reports, TPSA said it was prepared to spend zl. 2 billion ($465 million) this year on Internet-related investments. Zak, however, declined to comment on the amount TPSA was willing to pay since negotiations are still going on. WP needs a huge cash infusion to put it in the black since the portal incurred a zl. 45 million ($10.4 million) loss in 2000, according to a previous news report.
TPSA, Poland's dominant Internet service provider, said last month it was considering floating TPI on the Warsaw Stock Exchange (WSE) within three years. Once the deal with WP is sealed, TPI said it planned to focus on developing e-commerce services based on WP's portal.
