Private Lives.

It's no wonder Pawel Rzepka, chief executive and president of Polish Telecom (a.k.a. Telekomun-ikacja Polska or TP) has been neglecting his yacht, a 30-footer anchored in Poland's lush Mazurian Lake District. After all, what telecom chief hasn't had his hands full in the 1990s, what with so many things to keep him busy: global deregulation, consolidation, and the popularization of new technologies like mobile telephony and the Internet. But these are just a few small waves in TP's sea of issues.

While navigating industry change, Rzepka has had to keep the company on course through Poland's turbulent evolution from a Soviet command economy to a free market. Not even the lure of sailing that blue-and-green landscape is enough to pull the 42-yearold Rzepka away from the Herculean task of turning a clunky state-owned utility into a consumer-oriented public company.

Since going public in 1998 with a float of 15 percent of its shares in Warsaw and London--the proceeds of which went not to the company, but to the selling shareholder, the government--TPSA has become a good example of why Poland is economically way ahead of its former Soviet sisters. Part of a uniquely Soviet organization that yolked it to Poland's postal service until its privatization in 1991, it now contributes 40 percent of the Warsaw Stock Exchange's total market cap, and leads the country's public companies in profitability despite being No. 3 in revenue.

Now the Polish state is selling another 25 percent to 30 percent stake in TPS, and management wants the buyer to be a strategic partner or consortium. The company already has an alliance with France Telecom, which owns a 34 percent share of TP's cellular subsidiary. Its next alliance should be one that can help it compete with the world's top telecoms when Poland joins the EU. Deutsche Telekom and British Telecommunications have been mentioned as potential bidders.

Not that there isn't already competition. The Polish government has opened the local phone market to dozens of upstarts, and TP's monopoly on international long distance expires in 2003. "We expect to eventually have 70 percent of the Polish market [down from 96 percent], but we expect the market to double," Rzepka explains.

To leverage TP's current dominance, Rzepka, who's been CEO for two years now, plans to build out a basic access network and customer base while also aggressively developing mobile and Internet services. Then the company can package these products in various ways for different price points, with or without value-added components like e-mail, or 800 numbers for businesses.

Rzepka, who began his career as an engineer, became one of many men his age who returned to school in the early 1990s to study business and financial management. He had been involved in mid-level management for several years before TP's changes began, and shortly after getting his degree he joined the board.

Going forward, Rzepka has to continue keeping European and American institutional shareholders happy, and in the meantime float foreign-denominated Eurobonds ($1 billion worth in 1998) to finance TP's efforts to build out and modernize the local telecom infrastructure. The company plugs in about one million new customers a year, but at a cost of about $1 billion annually. While expensive, such expansion is crucial to position the company for increased demand. Telephone usage jumped from 11.5 percent of the country's households in 1993 to about 22 percent today, and the market can easily double again before it's saturated.

With revenues growing at 25 percent a year, TP can only pay part of these capital costs with cash flow and covers the remainder with debt. On the bright side, as the company continues to privatize it has been distinguishing itself from the state in the eyes of rating agencies. As a result, last year's post-IPO bond sale cut the cost of servicing TP's debt by several percentage points. At the same time, paying foreign loans in Poland's inflationary economy is tough. TP's earnings de-clined 70 percent from the last quarter of 1998 to the first quarter of 1999, after devaluation of the Polish zloty boosted the cost of the loans.

Rzepka manages to pitch and roll with all the waves that come his way by keeping his eye on the big picture. "We're building a new corporate culture, the sort of culture that synergizes customer satisfaction," he explains, "which determines the company's competitive position--investor satisfaction and employee satisfaction too."

It's a journey that is far from over. And it's unlikely that Rzepka will be less busy anytime soon. His yacht, and the Mazurian shoreline, will just have to be patient.

PAWEL RZEPKA

President and Chief Executive Polish Telecom

"We're building a new corporate culture...investor satisfaction and employee satisfaction too."

Age: 42

Birthplace: Poznan, Poland.

Family: Married, three children.

Education: Faculty of Electrical Engineering of Poznan Technical University; Acedemy of Economics, organization & managment.

Pastimes: Sailing, archery.

Vacation Spot: Mazurian Lake