Another US service provider has designs on the Canadian marketplace. Primus Telecommunications Canada has been granted creditor protection north of the border, saying it needs the cover as it restructures and sells its assets to Birch Communications.
Primus serves some 204K residential and 23K commercial accounts in Canada, and some 27k more residential in the US and Puerto Rico. The company is expected to have generated about CAN$116M in revenue and CAN$10M in EBITDA for 2015, a sum that has been declining precipitously over the last few years (CAN$229M and CAN$41M in 2012). Its fixed costs have been, well, fixed, and the company hasn’t been able to maintain debt-to-EBITDA ratios required by its lenders, and thus the need for creditor protection.
That’s pretty bleak, but I didn’t even know Primus had held on this long after disassembling its global assets a few years ago. But tucking in assets that the rest of the industry doesn’t quite know what to do with seems to be a core competency for Birch Communications. Birch’s US reach has expanded dramatically in recent years via inorganic means, and the purchase of Primus’s assets will give it a significant foothold in Canada.
While the Canadian telecom marketplace has been more open to US providers for a while now following the easing of restrictions almost four years ago, not many operators have crossed the border in meaningful new ways. But lately we’ve started to see movement. Zayo did it recently with the purchase of Allstream, and now Birch is looking to do so via Primus.
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