Author: Zuzana Kubátová, Martin Jašminský
How has your life changed during the past week?
It has changed, and certainly not for the better. I lost a friend and got into a whirlwind of events that none of us could have imagined. Of course, it’s very demanding in terms of work; emotionally as well. On top of that, you have to focus to the maximum and spend a lot of time on everything that has to be addressed right now.
What is the most pressing issue?
Making sure that nobody drops the ball. This means making sure that everybody continues working at full speed on projects in progress. I must say the response of people here at PPF and of our business partners has been that everyone is prepared to work with maximum dedication. Petr primarily took care of strategies and innovative thinking. We miss him a lot. It’s a huge loss.
Did Petr Kellner leave a will?
That’s not a question for me.
Outside of Petr Kellner, you and J. P. Duvieusart were the two minority shareholders with equal stakes of 0.535%. Was you being charged with leading the group part of a previously prepared plan for such a situation?
We did not address this situation explicitly, but there was a clear agreement to the effect that it would be me if necessary.
Because you are one of the longest-serving people in the company and were close to Petr Kellner?
Both, I guess.
Up to now, you were in charge of the telecoms segment and the Sotio biotech company. What do you have to do in addition to that now?
Everything else to a different level of detail. That means financial services and real estate, as well as Škoda Transportation matters. However, J. P. Duvieusart still manages financial services and real estate, and Ladislav Chvátal is in charge of Škoda. I don’t manage those parts of PPF on a daily basis; it’s more about transactions and strategy for me.
What is the position of Petr Kellner’s family at this point since he owned almost 99% of PPF?
This is not a question for me, and I don’t want to expand on it. We assume the group of heirs is known and defined, and other matters involving the probate procedure and the related processes are exclusively up to the family.
Judging by the experience with other major companies, the probate procedure may take quite a long time, it can even take years in some cases as seen elsewhere in the world. Is the length of time this takes important to PPF?
Of course it is, but I would only be speculating if I were to give any estimate right now.
A clear ownership structure of PPF is important for creditors and business partners. It’s important for them to know who the final owner of PPF is. Also, many contracts include provisions about a change in ownership or the final beneficiaries.
All provisions in contracts are written so that this does not place our relationships in danger. I think the other parties are calm. Of course, this was one of the first things that we looked into to see if a change of control could trigger early maturity or things like that, and this is not the case.
We are asking because certain transactions in progress will require the approval of regulatory authorities. For example, the forthcoming increase in PPF’s equity stake in Moneta Money Bank will require the submission of the beneficial owners to the regulatory authority.
In this specific case, the central bank indeed approves the beneficiaries, but we believe there will be no complications. Also, it’s important to say that we have an agreement with the family to the effect that nothing will change in the projects that are in progress. Generally speaking, as far as the operation of PPF is concerned, the family’s will is to fulfil Petr’s legacy.
When it comes to the potential merger with Moneta Money Bank, when do you expect PPF and the Moneta shareholders will say “Let’s go for it” or “Let’s quit”?
It’s a matter of weeks.
There has been speculation that Daniel Křetínský, another experienced businessman and the partner of Petr Kellner’s daughter, could become the family’s representative within PPF. Is anything like that being discussed?
This is pure speculation, and I don’t want to comment on it at all. We are not living in a Spanish soap opera.
Who of the surviving family members do you communicate with about PPF affairs?
With Renáta Kellnerová because there is a personal relationship, and she is the head of the family now due to the state of affairs.
In what sense is Petr Kellner missed the most at PPF at this stage of development?
We miss him as a human being – my phone rings much less often now. That said, we miss him most when discussing and devising new projects and forming strategies for individual businesses. Time will tell. At this point, it’s up to us, the team, to find a way to fill the sudden void. Petr was certainly an extraordinary personality, a visionary; we will miss him. We are naturally thinking about how to find a substitute, but that’s not a matter for the next few months. It’s important to say that our businesses themselves generate interesting ideas and opportunities, which is good. And then, it’s all about a team of people who have learned a lot.
You took over at the helm of PPF Group in perhaps the most difficult period imaginable. Some of its parts have been hard-hit by the covid pandemic.
I think you are exaggerating a bit. In situations such as this, there are types of businesses that perform better, and those that are worse off.
Home Credit, your key financial group, posted a loss of more than €580 million last year. How will this affect the rest of PPF?
We are a fairly diversified group. Yes, the financial services industry has been impacted by the COVID pandemic and people’s immobility. But the other businesses offset that to a considerable extent. Telecoms are an immensely stabilising element and Mall Group, which is online retail, is also working well at this point, which is a kind of a silver lining to this dark cloud. Škoda, which we took over in quite a difficult situation, currently has more orders on its books than ever before, which is essential for this type of business.
How will you address the decline in financial services, that is, in Home Credit, your biggest group?
China is quite problematic in this respect. We’re working on it. I don’t think that it’s going to be so dramatic, however. Simply put, consumer financing took a hard blow. We responded by dramatically cutting our operating costs in China, significantly reducing the amount of new business, and focusing on clients with much better risk profiles in order to keep risk under control. We have quite diversified financing. Those are the elements that we need to reasonably weather the situation, which is complicated in general, not just for us but for other financial service providers as well. We’ve certainly taken a loss that is based on the effects of higher risks.
What does dramatically cutting operating costs mean? Closing branches and layoffs?
We are transforming quite dramatically into a fintech business rather than a classic brick-and-mortar consumer credit provider. We have radically reduced our headcount to 60,000; so by about half.
Do you expect to return to the previous business volumes once the crisis subsides?
It’s too early to say now. It’s not for me to say that we will not return, but we need some time for the situation to stabilise there, and then we’ll decide. However, it is a lesson learned.
What have you taken from this lesson? Will you suspend or reconsider your Asian expansion, which is going on not just in China but also in Vietnam, India, and the Philippines?
We are not reconsidering because each of those countries is specific. There was a confluence of several factors in China. First, there is the impact of the covid pandemic. Then there is the impact of regulation, which has changed quite considerably in China and complicated our business model. It has been a lesson more in the sense that expansion can’t last forever and that you have to expect various countries developing in ways you didn’t expect. Frankly speaking, this happens quite often. The only difference is that China was a very big part of Home Credit’s business. Plus, it has always been a very complicated market, while on the other hand it’s an amazing opportunity.
You wanted to publicly offer Home Credit on the Hong Kong stock exchange in late 2019, but that didn’t materialise. Will you try again?
There is no specific project in progress at this point, which is not to say that we will not focus on it systematically. There is no point speculating about it now.
Speaking of the stock exchange, PPF has recently confirmed it’s considering an IPO for Cetin on the stock exchange. Do you have an idea when to make the offer and how large a stake of Cetin to sell?
This is still in progress, but it’s a sensitive process. When we reach the conclusion that it’s the right time to disclose more information, we will do so.
Are you considering a strategic partner buying into Cetin in addition to selling shares?
I think I have already answered that. To be clear: We see a large business opportunity in telecommunication infrastructure. It’s a growing market, the industry is very stable, and from in this light all the steps we are taking aim to expand in this area.
Is the opportunity to have a market valuation for your telecoms business one of the reasons you want to raise capital this way?
That’s an example, but we also want to be prepared for an attractive opportunity to acquire other infrastructure companies. We see certain opportunities in the region.
What region are we talking about?
Let’s say we are talking about Europe.
The financial services segment was markedly bigger than your other activities until last year. Since you want to expand in telecoms, could this segment become dominant within PPF?
We don’t think in terms of competition between the individual parts of our business. It’s more about opportunities for growth and creating value. We also have a natural diversification of risk, whether it’s geographic, interest risk, or in changes to the economy.
Your telecoms division includes telecommunication infrastructure, services, and media since last year’s acquisition of CME Group, including Czech broadcaster TV Nova. Do you want to expand at the same rate in all three areas?
Those areas are complementary.
So, you are considering the acquisition of more media?
If there is an attractive opportunity. I have to say that CME works very well. It’s a good platform for us to potentially add things. Because there you always need a foundation, knowledge, and people. When you have that, everything is easier, and you have a better chance of success. So, yes, we are.
Are you interested exclusively in media associated with the telecom business, such as TV, audio-visual platforms, and the Internet, or is print media interesting as well?
Print? What’s that? Or rather, what will it be? Something akin to vinyl records, maybe? Something for connoisseurs. I don’t know. Generally speaking, print has no future business-wise, but it may make sense as a complement to other media. We’re not exactly looking at newspapers, though.
How do you think about synergies in telecommunications, media, and financial services?
I’m pragmatic in this respect. You can be poetic about synergies, but then you have to make them happen. There is certainly some room in sharing technologies, say, in telecoms and financial services. Telco is up to date technologically, and that helps. We work with artificial intelligence and we invest a lot into it. After all, it’s one of the credit scoring tools at Home Credit, which couldn’t work without it. But building a new Revolut or something like that – I’m not sure if that’s the right thing to do.
And in relation to television?
That’s absolutely obvious with telecoms and television. We want to offer our clients the broadest possible range of services associated with telecommunications. Television is part of that. First of all, CME is capable of producing content that we are able to use. Second, we already have purchasing power strong enough to buy more content on the market, and we can provide it to our clients. Television is radically changing from linear viewing to individuals choosing what to watch when they want it. And this is paid in various ways. This is where telecoms can greatly help television make the leap into the digital world, which is crucial and it’s happening. We certainly have seen the figures of how Netflix and other providers are growing. We want to be part of that too.
Do you want to offer more paid services?
Our Voyo service (TV Nova’s paid video-on-demand service; ed.) is growing quite nicely and we certainly want to expand further.
Does it really make sense to have Voyo alongside O2 TV?
It makes sense. At this point, we are discussing how to arrange the platforms so they complement each other, and it all works together.
Published on 9. 4. 2021
Link to the article: https://www.seznamzpravy.cz/clanek/sef-ppf-bartonicek-exkluzivne-chceme-nakupovat-telekomunikace-i-media-149971