Primus Telecom
Encyclopedia
Primus Telecommunications Group, Incorporated is an integrated facilities-based telecommunications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and Western Europe. Primus provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence
(POPs) throughout the world, ownership interests in undersea fiber optic cable systems
, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide.
In 1996 Primus began its global expansion by acquiring Australia's fourth largest telecommunications service provider, Axicorp. In the same year Primus obtained a long-distance carrier license in the newly deregulated United Kingdom and also released their Initial Public Offering. They completed their public listing the following year with the completion of the sale of more than US$225 million in senior notes and warrants.
1998 saw Primus expand their operations further in Australia with the acquisition of Eclipse Telecommunications Pty. Ltd. and Hotkey Internet Services Pty Limited. These acquisitions along with Primus' new Australian Carriers License meant they were able to offer Internet and data services to Australians. This however was not Primus' most significant activity in 1998. In February that year they announced the acquisition of TresCom International Inc. for a sum of US$125 million which was later completed for US$150 million. The completion of this acquisition increased Primus' customer base to approximately 200,000 corporate, small and medium sized business, residential and wholesale customers in the North America, Europe and the Asia-Pacific regions. That same year Primus received international carrier status from Canada's Radio and Telephone Commission and signed a significant deal with Qwest
for fibre and increased bandwidth capacity for their U.S points of presence.
In March 1999, Primus' Canadian subsidiary purchased Toronto-based London Telecom Group Inc.. Earlier in the year Primus also purchased GlobalServe Communications, a privately owned Canadian Internet Service Provider.These acquisitions were closely followed by the purchase of many of the retail operations of Telegroup Inc, including their Australian subsidiary. A long-distance telephone company based in Fairfield, Iowa
with 350,000 customers around the world, Telegroup was in Chapter 11 bankruptcy
before Primus purchased their assets for $72 million. Primus' growth did not end there. In March the same year they were granted a Type 1 Telecommunications Carrier License in Japan, which made them one of the first foreign-based carriers to be awarded the license. They were also approved for a Public Telecommunications Operations license to offer voice telephony services in France and to capitalise on their agreement to interconnect with Deutsche Telekom
they purchased German Internet Service Provider
, TCP/IP GmbH. These developments and Primus' investment in pan-European fibre optic systems such as their Atlantic Crossing 1, Aphrodite Aphrodite, Arianne, CANTAT, Gemini and TAT12/13 meant Primus at the time offered services to 25 major cities located in 11 countries, including Austria, Denmark, England, France, Germany, Italy, The Netherlands, Norway, Spain, Sweden and Switzerland . Primus continued to pursue growth through the purchase of assets in 1999. They purchased a 51% controlling stake in Brazil's fifth largest Internet Service Provider, Matrix Internet S.A to gain access to the Brazilian market; they also acquired DSL provider DigitalSelect LLC to improve their residential broadband capabilities and firm 1492 Technologies to add e-commerce and web services capabilities to the organisation.
, they signed an agreement to purchase capacity for their nationwide fiber optic cable ring and connecting routes. This agreement came on the back of announcements that Primus had begun strategic alliances with Akamai Technologies
and Hewlett Packard. Their relationship with Akamai involved an agreement to jointly deploy Akamai servers in select Primus points of presence to further Akamai's global content delivery capabilities. Primus' venture with Hewlett Packard involved both parties joining forces to provide business services through HP-powered data centres across Primus' global network, the relationship involved a US$50 million investment by Hewlett Packard. While Primus continued expanding their ATM and IP networks in the U.S and internationally they also continued their acquisition growth strategy by purchasing LCR Telecom Group, a London based voice and data reseller ; Infinity Online Systems Inc., a Canadian Internet Service Provider; a 38% stake in Bekkoame Internet Inc., a Japanese Internet Service Provider; Shore.Net, a New-England based Internet Service Provider with data centre facilities and InterNeXt S.A., a French Internet Service Provider with national operations. These acquisitions also coincided with Primus entering the Puerto Rico market by partnering with Virtual Inc. and receiving a Competitive Local Exchange Carrier (CLEC) license.
At its peak in March 2000 Primus' stock price was valued at US$51.69 per share and the business was generating US$1.2 billion in revenue annually.
"bursting" in 2000 and the subsequent U.S financial downturn and stock market crash in 2001 after September 11 Primus reportedly began scaling back growth plans and reducing their debt in response to their stock value dropping to US$0.54 in June 2002.
This pre-emptive measure allowed Primus to avoid bankruptcy at the time and continue to remain profitable and record a full year earnings before interest, taxes, depreciation and amortization (EBITDA) of $101 million in 2002. Primus did make some acquisitions in this period purchasing the U.S. retail voice customer base of Cable & Wireless
in 2002, Canadian Internet provider Magma Communications Ltd and in Australia the internet service and interactive media businesses of AOL/7 as well as small Australian dot-com
firms UseOz, Blue Mountains Internet and Standard.net.
This period was still a period of growth and relative success for Primus. In 2003 Primus was added to the Russell 3000 index, a U.S. equity indexes that captures the 3,000 largest U.S. stocks based on market capitalsation. They were included in the 2004 'Fortune 1000', Forbes magazines ranking of the largest public companies, based on revenue, in the United States and a 2002 TeleGeography study found Primus was on aggregate the worlds fifth largest carrier of international public switched telephone network (PSTN) voice traffic. Primus also used this period of growth to move their stock from the NASDAQ
SmallCap Market to the NASDAQ
National Market to gain more transparency.
To remedy this trend Primus announced they would be shifting their focus from their:
In 2004 Primus made their first product release in-line with their new vision by releasing, a high-speed VoIP Internet phone service dubbed 'Lingo'. Designed to leverage Primus international data network to provide a cost effective retail voice service, Lingo offered U.S. customers unlimited calling in the U.S., Canada and Western Europe for only $19.95 per month.
Despite 6% revenue growth in Primus' new services—broadband and VOIP -- on March 14, 2006, Primus Telecommunications stock was transferred from the NASDAQ
National Market to the NASDAQ
Capital Market due to the value of the stock dropping below $1.00. This setback, however, did not stop the business from continuing to roll out their own DSLAM network internationally especially in Australia .
In 2007, Primus Telecom admitted paying more than $22 million to settle a lawsuit alleging illegal or fraudulent transfers of funds. Primus Telecom has also been named as a defendant in additional federal litigation.
As of 2008, the company's stock had dropped more than 99% from its peak in early 2000, amid declining revenue and accelerating losses. According to the company's SEC filings:
Months later however Primus successfully emerged from Chapter 11 on July 1, 2009. The value recovered by shareholders of old common stock (ticker NASDAQ:PRTL) will depend on the company's financial performance over the four years following their emergence from Chapter 11. As a result of the reorganisation Primus' creditors have also become significant share holders in the organisation.
The newly emerged public company
was not listed on any stock exchange until June 23, 2011 when it began trading under the ticker PTGI on the NYSE.
On 11 November 2010, Primus announced the acquisition of Arbinet Corporation. A leading provider of international voice and IP solutions to carriers and service providers globally, Arbinet provides sophisticated platform intelligence, call routing and industry leading credit management and settlement capabilities. The deal was reportedly worth approximately $28 million in a stock-for-stock transaction, reportedly Arbinet shareholders will own approximately 23% of the combined company and Primus shareholders are expected to own approximately 77% of the combined company.
With more than 1,100 carriers across the world utilizing the Arbinet network Primus expects the deal to add $300 million a year in revenue to its global wholesale group and deliver costs savings of $3 million to $7 million for each of the first two years.
Point of presence
A point of presence is an artificial demarcation point or interface point between communications entities. It may include a meet-me-room.In the US, this term became important during the court-ordered breakup of the Bell Telephone system...
(POPs) throughout the world, ownership interests in undersea fiber optic cable systems
Submarine communications cable
A submarine communications cable is a cable laid on the sea bed between land-based stations to carry telecommunication signals across stretches of ocean....
, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide.
Beginnings (1994-1996)
Primus commenced operations in 1994 intent on being a global, facilities based service provider. They entered the U.S market in 1995 by assembling their core management team and beginning operations.In 1996 Primus began its global expansion by acquiring Australia's fourth largest telecommunications service provider, Axicorp. In the same year Primus obtained a long-distance carrier license in the newly deregulated United Kingdom and also released their Initial Public Offering. They completed their public listing the following year with the completion of the sale of more than US$225 million in senior notes and warrants.
Global expansion (1997-1999)
Primus' global expansion continued in 1997 with key acquisitions and international network expansion. They completed the build and activation of their Australian switched network, international gateway switches in New York and Los Angeles and trans-Pacific links. 1997 was also the beginning of Primus' growth through acquisitions. In April Primus purchased Cam-Net Communications Network Inc. to allow them to enter the Canadian long distance market. Later that year Primus acquired Telepassport LLC and the assets of USFI Inc; this expanded Primus' long distance services operations into Germany, Japan, Austria, Switzerland and South Africa.1998 saw Primus expand their operations further in Australia with the acquisition of Eclipse Telecommunications Pty. Ltd. and Hotkey Internet Services Pty Limited. These acquisitions along with Primus' new Australian Carriers License meant they were able to offer Internet and data services to Australians. This however was not Primus' most significant activity in 1998. In February that year they announced the acquisition of TresCom International Inc. for a sum of US$125 million which was later completed for US$150 million. The completion of this acquisition increased Primus' customer base to approximately 200,000 corporate, small and medium sized business, residential and wholesale customers in the North America, Europe and the Asia-Pacific regions. That same year Primus received international carrier status from Canada's Radio and Telephone Commission and signed a significant deal with Qwest
Qwest
Qwest Communications International, Inc. was a large United States telecommunications carrier. Qwest provided local service in 14 western U.S. states: Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming.On April...
for fibre and increased bandwidth capacity for their U.S points of presence.
In March 1999, Primus' Canadian subsidiary purchased Toronto-based London Telecom Group Inc.. Earlier in the year Primus also purchased GlobalServe Communications, a privately owned Canadian Internet Service Provider.These acquisitions were closely followed by the purchase of many of the retail operations of Telegroup Inc, including their Australian subsidiary. A long-distance telephone company based in Fairfield, Iowa
Fairfield, Iowa
Fairfield is a city and the county seat of Jefferson County, Iowa, United States. The population was 9,464 in the 2010 census, a decline from 9,509 in the 2000 census. - History :...
with 350,000 customers around the world, Telegroup was in Chapter 11 bankruptcy
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
before Primus purchased their assets for $72 million. Primus' growth did not end there. In March the same year they were granted a Type 1 Telecommunications Carrier License in Japan, which made them one of the first foreign-based carriers to be awarded the license. They were also approved for a Public Telecommunications Operations license to offer voice telephony services in France and to capitalise on their agreement to interconnect with Deutsche Telekom
Deutsche Telekom
Deutsche Telekom AG is a telecommunications company headquartered in Bonn, Germany. It is the largest telecommunications company in Europe....
they purchased German Internet Service Provider
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
, TCP/IP GmbH. These developments and Primus' investment in pan-European fibre optic systems such as their Atlantic Crossing 1, Aphrodite Aphrodite, Arianne, CANTAT, Gemini and TAT12/13 meant Primus at the time offered services to 25 major cities located in 11 countries, including Austria, Denmark, England, France, Germany, Italy, The Netherlands, Norway, Spain, Sweden and Switzerland . Primus continued to pursue growth through the purchase of assets in 1999. They purchased a 51% controlling stake in Brazil's fifth largest Internet Service Provider, Matrix Internet S.A to gain access to the Brazilian market; they also acquired DSL provider DigitalSelect LLC to improve their residential broadband capabilities and firm 1492 Technologies to add e-commerce and web services capabilities to the organisation.
Peak (2000-2001)
The new millennium brought about success for Primus with the global company being recognised by the technology industry. In January Primus won the Washington Technology Fast 50 award. Later that year they were recognised by Deloitte & Touche as the fastest growing technology company according to their Fast 500 ranking, an award subsequently won by Ebay in 2001 and Google in 2004. Primus continued their network expansion by furthering their relationship with QwestQwest
Qwest Communications International, Inc. was a large United States telecommunications carrier. Qwest provided local service in 14 western U.S. states: Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming.On April...
, they signed an agreement to purchase capacity for their nationwide fiber optic cable ring and connecting routes. This agreement came on the back of announcements that Primus had begun strategic alliances with Akamai Technologies
Akamai Technologies
Akamai Technologies, Inc. is an Internet content delivery network headquartered in Cambridge, Massachusetts, US.The company was founded in 1998 by then-MIT graduate student Daniel M. Lewin, and MIT Applied Mathematics professor Tom Leighton...
and Hewlett Packard. Their relationship with Akamai involved an agreement to jointly deploy Akamai servers in select Primus points of presence to further Akamai's global content delivery capabilities. Primus' venture with Hewlett Packard involved both parties joining forces to provide business services through HP-powered data centres across Primus' global network, the relationship involved a US$50 million investment by Hewlett Packard. While Primus continued expanding their ATM and IP networks in the U.S and internationally they also continued their acquisition growth strategy by purchasing LCR Telecom Group, a London based voice and data reseller ; Infinity Online Systems Inc., a Canadian Internet Service Provider; a 38% stake in Bekkoame Internet Inc., a Japanese Internet Service Provider; Shore.Net, a New-England based Internet Service Provider with data centre facilities and InterNeXt S.A., a French Internet Service Provider with national operations. These acquisitions also coincided with Primus entering the Puerto Rico market by partnering with Virtual Inc. and receiving a Competitive Local Exchange Carrier (CLEC) license.
At its peak in March 2000 Primus' stock price was valued at US$51.69 per share and the business was generating US$1.2 billion in revenue annually.
U.S. financial downturn (2001-2004)
Following the dot-com bubbleDot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
"bursting" in 2000 and the subsequent U.S financial downturn and stock market crash in 2001 after September 11 Primus reportedly began scaling back growth plans and reducing their debt in response to their stock value dropping to US$0.54 in June 2002.
This pre-emptive measure allowed Primus to avoid bankruptcy at the time and continue to remain profitable and record a full year earnings before interest, taxes, depreciation and amortization (EBITDA) of $101 million in 2002. Primus did make some acquisitions in this period purchasing the U.S. retail voice customer base of Cable & Wireless
Cable & Wireless
Cable & Wireless Worldwide PLC is a global telecommunications company headquartered in Bracknell, United Kingdom. Cable & Wireless specialises in providing communication networks and services to large corporates, governments, carrier customers and resellers...
in 2002, Canadian Internet provider Magma Communications Ltd and in Australia the internet service and interactive media businesses of AOL/7 as well as small Australian dot-com
Dot-com company
A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...
firms UseOz, Blue Mountains Internet and Standard.net.
This period was still a period of growth and relative success for Primus. In 2003 Primus was added to the Russell 3000 index, a U.S. equity indexes that captures the 3,000 largest U.S. stocks based on market capitalsation. They were included in the 2004 'Fortune 1000', Forbes magazines ranking of the largest public companies, based on revenue, in the United States and a 2002 TeleGeography study found Primus was on aggregate the worlds fifth largest carrier of international public switched telephone network (PSTN) voice traffic. Primus also used this period of growth to move their stock from the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
SmallCap Market to the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
National Market to gain more transparency.
Financial issues (2005-2009)
Towards the end of 2004 Primus' stock fell 69% and continued to fall in 2005 as their core revenue streams of long-distance telephone service, dial-up Internet connections and prepaid calling began shrinking.To remedy this trend Primus announced they would be shifting their focus from their:
...long distance voice heritage to become a fully integrated service provider--capable of delivering and bundling high growth telecommunication services, including local, wireless and broadband...with the capability of offering arrays of bundled wireline/wireless/broadband/VOIP products in its major markets...
In 2004 Primus made their first product release in-line with their new vision by releasing, a high-speed VoIP Internet phone service dubbed 'Lingo'. Designed to leverage Primus international data network to provide a cost effective retail voice service, Lingo offered U.S. customers unlimited calling in the U.S., Canada and Western Europe for only $19.95 per month.
Despite 6% revenue growth in Primus' new services—broadband and VOIP -- on March 14, 2006, Primus Telecommunications stock was transferred from the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
National Market to the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
Capital Market due to the value of the stock dropping below $1.00. This setback, however, did not stop the business from continuing to roll out their own DSLAM network internationally especially in Australia .
In 2007, Primus Telecom admitted paying more than $22 million to settle a lawsuit alleging illegal or fraudulent transfers of funds. Primus Telecom has also been named as a defendant in additional federal litigation.
As of 2008, the company's stock had dropped more than 99% from its peak in early 2000, amid declining revenue and accelerating losses. According to the company's SEC filings:
...Primus did not maintain effective internal control over financial reporting as of December 31, 2006, due to the material weakness in the Company’s internal control over accounting for income taxes...
Bankruptcy and recovery (2009)
Primus struggles finally culminated in the company filing for Chapter 11 bankruptcy protection on March 16, 2009.Months later however Primus successfully emerged from Chapter 11 on July 1, 2009. The value recovered by shareholders of old common stock (ticker NASDAQ:PRTL) will depend on the company's financial performance over the four years following their emergence from Chapter 11. As a result of the reorganisation Primus' creditors have also become significant share holders in the organisation.
...Under the terms of the plan of reorganization Primus has reduced its debt by $316 million, or 55%, and will emerge from bankruptcy with approximately $255 million of debt. Additionally, Primus reduced interest payments by approximately
50% and extended certain debt maturities...
...None of Primus' operating companies in the United States, Australia, Canada, India, Europe or Brazil were included in the restructuring. The operating units have and will continue to manage and to operate their businesses normally...
The newly emerged public company
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
was not listed on any stock exchange until June 23, 2011 when it began trading under the ticker PTGI on the NYSE.
Acquisition of Arbinet (2010-present)
As of March 4, 2010 Primus appeared on the recovery track as they reported 2009 net revenue of US$814 million and free cash flow of $27.9 million; revenue increases they claim are partly the result of:...sales of IP-PBX, data hosting and other managed services to small and medium enterprises...
On 11 November 2010, Primus announced the acquisition of Arbinet Corporation. A leading provider of international voice and IP solutions to carriers and service providers globally, Arbinet provides sophisticated platform intelligence, call routing and industry leading credit management and settlement capabilities. The deal was reportedly worth approximately $28 million in a stock-for-stock transaction, reportedly Arbinet shareholders will own approximately 23% of the combined company and Primus shareholders are expected to own approximately 77% of the combined company.
With more than 1,100 carriers across the world utilizing the Arbinet network Primus expects the deal to add $300 million a year in revenue to its global wholesale group and deliver costs savings of $3 million to $7 million for each of the first two years.
See also
- Primus CanadaPrimus CanadaPrimus Canada is a Canadian telecommunications company. Primus operates as a CLEC — buying services at wholesale rates and reselling them to consumers...
- Primus Telecom AustraliaPrimus Telecom AustraliaPrimus Telecommunications Pty Ltd is an Australian telecommunications provider.As a full service carrier, Primus operates its own fibre network in the five major capital cities, delivering a range of business direct-connect services including ISDN, frame relay, ATM, telephone line, broadband x-DSL...
- Broadband Internet Access (Australia)
- Group of Four (Australia)