Warsaw Business Journal Online - business in poland,warsaw,polish companies,companies databaseTuesday, November 2nd, 2004 1st November 2004 In Brief From Warsaw Business Journal American General Electric (GE) is considering making large investments in Poland. Investments American General Electric (GE) is considering making large investments in Poland. Company president Jeffrey Immelt met with Prime Minister Marek Belka to discuss the concern's plans to produce parts for plane engines and the servicing and production of train engines. GE is also considering building a factory for wind power plants. Unofficial sources suggest the value of GE investments could reach as much as $3 billion in 2005 and $8 billion by the end of 2006. Since 1992 GE has invested $400 million in Poland. However, the GE general director for Central and Eastern Europe, Lesław Kuzaj (pictured), would not confirm the rumors. "GE constantly analyzes and evaluates all investment possibilities in the scale of the region and eventually chooses the best one," he stated. Nevertheless, government sources indicated that GE is indeed planning "very large" investments in Poland. The Polish Information and Foreign Investments Agency (PAIiIZ) has confirmed that it is in talks with GE on concrete investment projects. (Poland A.M.) Business Polish Airports (PPPL) has given notice to the Tishman Hotel Corporation Warsaw Airport (THC), which last year signed a 20-year agreement to manage the Courtyard by Marriot hotel located at Warsaw's Okęcie airport. PPPL's subsidiary, Port Hotel, claims that THC's actions constitute, among others, a breach of accounting laws. "[The charges made by Port Hotel] are so generic that one does not know what is going on," said Denis Mahoney, deputy head of THC Warsaw Airport. As the Polish saying goes, when you don't know what the problem is, the problem is usually money-in this case an estimated $1 million a year to run the hotel. By giving notice to THC, Port Hotel loses the right to use the Marriott name and access to Marriott's reservation system. Port Hotel's agreement with THC stipulates that no other hotel would be built at Okęcie, but with construction of the second terminal underway and passenger traffic rising rapidly, PPPL is tempted to build another hotel. "Everything seems to indicate that PPPL decided to get rid of Marriott's operator to build another hotel and reap profits from both," said Mahoney. (Poland A.M.) The Treasury Ministry wants to increase control over its enterprises by turning them into capital companies. According to a report published by the Ministers' Council yesterday, of the 8,000 businesses that the Treasury has shares in, 1,162 belong to the state. Even though this number has gradually been decreasing, Treasury Minister Jacek Socha estimates the changes are insufficient. "We want to accelerate the transformation of these companies into capital ones. In this way we will increase their clarity. Also our relations with the firms' management would improve," said Socha. The Treasury is also preparing a report about the assets owned by the state in other EU countries. "Our aim is to show what the tendencies are and thus conclude how many firms should remain state companies in Poland," explained Socha. (Poland A.M.) Stocks The Warsaw Stock Exchange (WSE) was buzzing with rumors that Poland's richest man, Jan Kulczyk, who is heavily implicated in the Orlengate controversy, partly through an alleged meeting with a Russian spy, is selling his shares in the oil company. Mid-week Orlen fell on the stock exchange with a turnover exceeding zł.120 million. In June 2002 Kulczyk Holding revealed that it had a 5.6% share in Orlen, but there have been no recent updates on the matter. The Securities and Exchange Commission is said to be investigating whether Kulczyk had been honest about the amount of Orlen shares he owns because secret service notes on his meeting with Russian spy Vladimir Alganov indicate that he could control more than he admitted publicly. Zbigniew Wasserman, the deputy head of the Special Parliamentary Commission investigating the Orlengate scandal, said that the Commission asked the General Prosecutor to look into possible grounds on which to secure Jan Kulczyk's assets. (Poland A.M.) PKO BP's first round of subscriptions for shares from individual investors is expected to be massively oversubscribed. In some cases it is thought that bids for shares are likely to be reduced by well over 90%. DM BZ WBK analysts expect a 97% reduction, while those from DB Securities claim the figure could even reach 99%. Analysts at DM BOŚ brokerage point to the sizeable reductions in subscriptions for the much less touted IPO of textbook publisher WSiP, which were 91% in the first tranche and 95% in the second. "I expect large oversubscription in the individual investors tranche [of PKO BP shares], but also in the institutional tranche. There are positive signals from abroad, where the book-building process is underway," said Grzegorz Zawada, an analyst with Erste Securities. Knowing that bids will be reduced very significantly, investors are taking out huge loans to sign up for more shares than they can afford. "Banks also appear to be confident that these loans will be returned in a few days [when the allocated shares are reduced] as they are granting them boldly," points out Andrzej Powierża from DI BRE Bank. (Poland A.M.) Fiscal Policy The effect of the "post-accession" slump in the economy is deeper than could have been expected, claims BRE Bank's chief economist Janusz Jankowiak (pictured). The bank has revised its GDP forecasts for the third and fourth quarter of this year downwards by 0.5 points. BRE Bank's growth forecasts for these two quarters now stand at 5.1%. Economists from the Institute for Market Economy research (IBnGR) also see a weakening in economic growth, expecting GDP to grow by 5% year-on-year in the third quarter and 4.9% in the fourth. This would put 2004 GDP growth at 5.6%, while next year IBnGR expects the economy to grow by 5.2% in real terms. However, the Institute's Bogdan Wyżnikiewicz warns that forecasts are surrounded by considerable uncertainty due to the unexpected increase in inventories and unclear data on investment. Central Statistical Office (GUS) figures show that while some companies are investing, the growth rate of investment in the economy as a whole indicates it is still far too low to maintain high growth rates. (Poland A.M.) Industry Economy Ministry representatives will lobby the European Commission again in November, arguing for billions of złoty of public money to be pumped into the Polish coalmining sector. The key argument the government will present is that Polish coal is a strategic resource for the EU. Poland's reserves amount to at least 5 billion tonnes, the largest figure of all the EU countries. However, while the Commission is not firmly against the Polish proposal, it would like the Polish coalmining sector to be more competitive, in comparison for example to the much cheaper coal that the EU can import from South Africa. The Economy Ministry claims that if Poland is allowed to grant the sector zł.6.2 billion in public aid, it will be able to compete on EU markets. Kompania Węglowa (KW), the largest coal mining conglomerate, has already received a capital injection of zł.900 million, but it has now prepared analysis indicating that another shot of cash of a similar amount is required. Meanwhile, in view of high coal prices on world markets, KW has withdrawn from earlier plans to shut down three coalmines. (Poland A.M.) TMT Swedish-Finnish Telia and Dutch KPN, in cooperation with Netia, are among those interested in investments in GSM and UMTS (3G) in Poland. According to Witold Graboś, the president of the Office for Telecommunications and Post Regulation (URTiP), the Dutch together with Netia have already met with the representatives of the Office and confirmed their interest. "KPN and Netia expect not only internal roaming but also asymmetry of interconnection fees, which would grant preference to the fourth operator [on the market]," said Graboś. According to the regulator, Swedish-Finnish telecom operator Telia Sonera has also investigated the possibility of investing in this sector in Poland. "I suppose these are not all potential investors. Some operators may follow a different strategy and not reveal themselves until the last minute," added Graboś. All of the potential investors who want to become the fourth mobile operator expect to be given the option of internal roaming. However, according to URTiP this may be realized at the earliest in Q4 2005. (Poland A.M.) Wirtualna Polska (WP) has just introduced a new Internet telephone service, "Nawijka," allowing connections to both fixed-line telephones and cell phones that are up to 88% cheaper than rates offered by Telekomunikacja Polska (TP). Both clients with modems and those who have broadband access are able to use the new service. WP's president Andrzej Kiesz said computer users only need headphones and a microphone to get hooked up. The service will be offered in a pre-paid system with online billing to allow users to control their spending. Kraków-based portal Interia.pl's new president Jacek Pasławski recently announced plans to implement a similar service. WP appears to have beaten both Interia.pl and even portal O2.pl (from last week's cover story) to the punch. (Poland A.M.) TP SA has started work on widening its offer of IP telecom services. The company has begun market research to find out if entrepreneurs are interested in such services and what would prove to be most attractive for business clients. It is thought that TP SA will definitely launch IP telecom services in the near future. However, the company's spokeswoman, Barbara Górska, said: "We are considering the possibility of introducing IP telecom services. We condition their implementation on the results of market research and economic analysis. At the moment we are at the stage of conducting those analyses." Meanwhile, the operator's Q3 net profit amounted to zł.596 million, which is significantly more than analysts had expected. The company's revenues in Q3 rose by 2.5% as compared to the same period last year and totaled zł.4.68 billion. (Poland A.M.) 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