Primus makes good on Magma acquisition

In its ongoing quest to re-invent itself out of the ashes of long-distance reselling, Primus Telecommunications Canada has leveraged its 2004 acquisition of Magma Communications to deepen its business relationship with the Canadian Real Estate Association (CREA). The question is: will infrastructure/hosting deals like the one with CREA, as well as the WiMAX partnership with Motorola, be enough to keep Primus's American parent happy?"The Canadian operation is a well-managed, tight ship," says Iain Grant, managing director of the SeaBoard Group, a telecommunications consultancy.Although the company is profitable, revenue has been declining in recent years. However, on the Canadian side relationships like those with CREA suggest that Primus is keeping up with customer requirements: CREA recently extended its contract with Primus for hosting and managed services for mls.ca. With more than four million unique visitors every month to the popular website, and plans for enhanced capabilities, the CREA deal seems to represent a vote of confidence in Primus.Marc Lafrance, marketing director of CREA, says that Primus has to continue to earn its keep."Our relationship goes back to Magma, as we were with them when Primus bought them out. However, we do go out to market every few years - we test the market for payment and service levels, and with Primus we are quite pleased. They're responsive, and the site stays up and running."CREA has some big plans for the website. It will soon be rebranded as Realtor.ca, currently running in beta, which will have additional mapping capabilities while maintaining the approximately 100 feeds from realtor boards across Canada. For mapping, CREA went with Microsoft Corp. after looking at several other companies, including Google."When looking at what we're doing with Microsoft, we have to make sure that Primus can ensure close to 100% availability, which isn't a worry," he says, adding that during the blackout a few years ago the CREA site stayed up.A.J. Byers, senior vice president of Primus Business Services, says the CREA site is seeing between 15% and 25% growth annually. He points out that one of Primus's advantages is that it can handle customer growth within flexible service level agreements (SLAs)."We host across multiple data centres, and do some of the server and technical infrastructure. We manage operations and all of the network security, but share server administration with CREA. We are unique in that we can blend services and share management," Byers tells Network Letter.But will deals like the one with CREA, successful as it is, be enough for Primus? After the announcement last September that Motorola will work jointly with Primus Canada and Mipps Inc. on trials of WiMAX in Toronto, the companies have been fairly quiet. This suggests that WiMAX, despite all its promise, is still proving to be a finicky technology."Primus had a couple hundred million in revenue for long distance, and now that's down to $20 million or so," says Grant, referring to the early days when Primus was allied with AT&T Canada. "They branched out, started reselling DSL, but they were still competing against the big players. With the Magma acquisition they got into the SMB market; they also have the advantage that they don't have many enemies. And with WiMAX they can release themselves altogether by going wireless."Grant, however, is cautious on the WiMAX strategy. It seems to be a race against time. "It could be the next golden age," he says. "But in Motorola they‘ve chosen a supplier that's desperate to succeed and clutching at straws."But while Primus is waiting for WiMAX to gel, they aren't wasting any time in the SMB space."Small and medium businesses are struggling to figure out how much to do themselves and how much to outsource," says Byers. "These customers need a mix-and-match strategy. Wwe can throw the right resources to the right place -- it could be monitoring, security updates, or patch or application management."CREA is a prime example of such flexibility - the organization has actually moved back and forth in the relationship with Primus, adding and dropping services over time as needed.

Primus makes good on Magma acquisition

News | July 28, 2008

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