Poland leads Central Europe's Web migration

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April 11, 2000
Web posted at: 4:49 p.m. EDT (2049 GMT)

by Peggy Simpson

(IDG) -- WARSAW -- More than a decade ago, Poland became the first of the Soviet satellites to break free from the iron fist of foreign rule. Many years of independence helps explain why Poland is now a leading Central European Internet pioneer. Nowhere is this more apparent than on the Warsaw Stock Exchange, where interest in information technology companies -- many with Net plays -- recently sent the market to record highs. In late March, the WSE eased the way for other tech startups by creating a new IT sector within the market called SITech and reducing the costs and red tape to list on the exchange.

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Pure dot-coms have yet to appear on the market, but Marcin Sadlej, an IT analyst for Pekao Securities in Warsaw, says, "We've got IT companies and that's an essential first step -- there aren't really [any] in the Czech Republic or Hungary -- and these companies are going into the Internet."

The stock market surge began last November. Media group Agora, now the fourth-largest company on the WSE, saw its stock price triple after announcing its Net plans to develop a portal, among other offerings. Helena Luczywo, a founding editor of an Agora-owned major national newspaper, will help develop the portal.

Others followed the same pattern. Computer assembler Optimus' shares soared 750 percent after foreign investors discovered that the company's portal, Onet, had captured 45 percent of the market. Prokom, the country's largest systems integrator with a market cap of $860 million, saw its stock rise 223 percent after it took a 25 percent stake in the second most-popular Internet portal, Wirtualna Polska. And the Kracow-based ComArch, which designs software and Net business solutions for telecom companies, had a 300 percent jump in share price after releasing plans for an Internet joint venture with Radio RMF and announcing its goal to sign up 600,000 subscribers by the end of the year.

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Beyond the stock market giants, "at least a dozen entrepreneurial companies are planning to open b-to-b portals," says Stephen Arkfeld, a venture capitalist in Warsaw. "I think the growth will be very great this year. The capital market is pulling them in. And there is a general perception in society that this is the time to change."

Poland's burgeoning Net companies are building on a decade of developments, starting with an early departure from Soviet rule and economic dependence. In 1989 when solidarity reformers took over, Poland was bereft of almost all contemporary infrastructure. Stores, hotels, airlines, banks and giant state industries used abacuses for their millions of transactions. Only 7 percent of the country had access to telephones.

Yet, completely by accident, the communists helped equip a generation of engineers with computers and entrepreneurial opportunities. The communists thwarted Western prohibition on technology sales to the Soviets by condoning the gray-market trade in imported computer parts and software from Asia and Western Europe. It also gave the Poles a chance to partake in the exploding computer market and to become adept in assembling computers from an assortment of imported parts. Today, some of those one-time traders -- notably Optimus' founder and CEO Roman Kluska -- are computer-magnate capitalists, helping make Net business a reality here.

Unlike other former Soviet bloc countries, Poland has had more than a decade to develop a diversified market economy, and its growth is among the highest in Europe. "These IT firms are local companies grown to a big size," says Warsaw's Krzysztof Bledowski, chief strategist in Central Europe for brokerage firm Wood & Co. "Poland may not be an India or Israel but this is becoming a key area of growth."

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