PRIMUS Accelerates Revenue Growth and Triples Customer Base
-- $1 Billion Revenue Run Rate Now Projected By Year End 1999 -- One Year Ahead Of Plan
MCLEAN, Va.--(BUSINESS WIRE)--June 1, 1999-- -- Retail Revenues And Customers From Telegroup and AT&T Canada
Transactions Propel Growth
-- Total Customers Approaches 1,500,000
-- Nearly 70% Of Total Revenues To Come From Retail Customers
PRIMUS Telecommunications Group, Inc. (Nasdaq:PRTL - news), a global facilities-based voice, data, and Internet telecommunications provider, has over the past week significantly progressed the execution of its business plan to become a world class provider of bundled voice, data and Internet services with critical mass in eight major markets around the world.
During the last seven days, PRIMUS has made several strategic announcements, including the formation of a subsidiary, iPRIMUS.com, to launch the Company's global Internet/data initiatives, enhanced and validated its high bandwidth worldwide fiber and satellite network through an alliance with Global Crossing (Nasdaq:GBLX - news), acquired a leading German Internet Service Provider (ISP) TCP/IP GmbH, and purchased the global retail business and assets of Telegroup with projected revenues of approximately $150 million per year.
Capping off the eventful week, PRIMUS today became the second largest alternative carrier in Canada with the acquisition of the residential business of AT&T Canada and ACC Corp., including over 450,000 long distance and Internet customers and consumer market assets.
PRIMUS purchased this retail business for a consideration of about $39 million, comprised of cash and a note. The acquisition is part of a comprehensive alliance formed by PRIMUS and AT&T Canada.
The alliance provides PRIMUS customers with low-cost access to AT&T Canada's high quality pan-Canadian network for domestic calls and connection to PRIMUS's world class global network for international traffic; continued customer services to be provided by AT&T Canada for up to 12 months to allow for seamless transition of this business from AT&T Canada to PRIMUS; and a customer billing licensing agreement.
In addition, AT&T Canada is working with PRIMUS to enhance existing relationships with several distinguished national affinity partners, which will support PRIMUS's marketing channels and brand recognition in Canada.
''We estimate that today's transaction will generate approximately $70 million in annual retail revenues and should be accretive to PRIMUS's gross margin and EBITDA,'' said Neil Hazard, Executive Vice President and Chief Financial Officer of PRIMUS. ''We project that this Canadian retail business should generate gross margin in the low 30% range. Also, this transaction, together with our recently announced acquisition of the retail business and customer base of Telegroup, should move our retail portion of projected total revenues close to 70%.''
''In just over two years, PRIMUS has become the second largest alternative carrier in Canada with a customer base of over 650,000,'' commented K. Paul Singh, Chairman and Chief Executive Officer of PRIMUS. ''Our growth in Canada has been propelled by our aggressive marketing campaigns beginning last fall after the Teleglobe monopoly was deregulated when we offered Canadian customers the benefits of lower cost international long distance rates and expanded services. The response to those programs were outstanding. Then, earlier this year, we acquired London Telecom, a Canadian service provider with a loyal customer base and highly motivated employees. To implement our strategy to be a full service provider of voice, data and Internet services, we also recently acquired GlobalServe, a leading Internet Service Provider (ISP) in Canada, and have begun implementing programs to offer bundled voice and Internet services. These Internet services will now be offered through our newly-formed subsidiary, iPRIMUS.com. Another significant benefit from the AT&T Canada transaction is that PRIMUS also acquired 25,000 new Internet customers in Canada which now makes iPRIMUS.com the 5th largest ISP in Canada.''
''The AT&T Canada transaction has capped what has been an historic week for PRIMUS,'' Singh observed. ''We began last week by announcing the 'running start' launch of iPRIMUS.com to pursue Internet/data initiatives. Then we announced the expansion of iPRIMUS.com's ISP activities beyond Australia and Canada into Continental Europe through our acquisition of a leading business-focused ISP in Germany. Last Friday, we announced the acquisition of the retail business and customer base of Telegroup which will add approximately 350,000 customers and $150 million annually in sustainable retail revenues. Now, with the AT&T Canada transaction, PRIMUS has within the span of one week placed itself on a trajectory to meet its $1 billion revenue run rate goal by year end 1999 --one year ahead of plan-- while tripling its customer base to almost 1,500,000 since the beginning of this year! PRIMUS has also vaulted into the number two position in Canada as an alternative service provider, is now the fifth largest ISP in Canada, remains the fourth largest carrier in Australia and will have a franchise in Europe with an expected revenue run rate of over $225 million by the end of this year.''
PRIMUS Telecommunications Group, Incorporated is a global facilities-based telecommunications company providing domestic and international long-distance voice, data, Internet, private network and value-added services.
The Company provides services through an extensive global network of owned and leased transmission facilities, including ownership interests in 23 undersea fiber optic cable systems, 12 international gateway switches, a satellite earth station and a variety of operating relationships that allow the Company to deliver traffic worldwide.
Founded in 1994 and based in McLean, Va., the Company, prior to this transaction, had an annual revenue run rate in excess of $500 million and served more than 650,000 corporate, small- and medium-sized business, residential and telecommunications carrier customers located in the North America, Europe and the Asia-Pacific regions of the world.
News and information are available at the Company's Website at www.primustel.com.
The statements in this release that are forward looking statements are based on current expectations and are not strictly historical statements, which may differ materially from actual results.
Not strictly historical statements include, without limitation, those regarding management's plans, objectives and strategy for future operations, product plans and performance, management's assessment of market factors, and future financial performance.
Among factors that could cause actual results to differ materially are changes in business conditions, changes in the telecommunications industry and the general economy; competition; changes in service offerings; risks associated with PRIMUS's limited operating history, entry into developing markets, and managing rapid growth; and risks associated with international operations (including foreign currency translation risks), dependence on effective information systems, and development of the network.
These factors are discussed more fully in PRIMUS's filings, including its 10K and 10Q filings and the prospectus dated May 6, 1999, with the Securities and Exchange Commission.
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