M2 acquisition to open up government market for Primus

Telecommunications company Primus will be free to pursue more Australian government business following its acquisition by M2 Telecommunications, according to Primus chief executive, Tom Mazerski.

Speaking at the 2012 CommsDay Summit in Sydney, Mazerski said that while Primus had been able to tender for government business previously, it had been hampered by government reticence to sign the company due to it being US-owned.

“[Primus is] now part of an Australian company which is very important to the market and very important to customers, because when it came to the Federal Government and some of the big hospitals and some of the markets we just could not penetrate, we always got 'yeah, buts',” Mazerski said.

“We’d get to the end of the deal and they’d say, 'This is awesome, we like you, you’re really the best fit for us, yeah but, you’re owned by the US', or 'yeah but, four or five years ago you were bankrupt in the US', that all now goes away and I just see bright lights and a lot of upside in this particular company.”

According to Mazerski, under the $192.4 million deal, the company will be structured with iPrimus as the consumer brand, Commander will be aimed at small to medium business, Primus at corporate telecoms and M2 fibre wholesale.

Commenting on the background thinking to the acquisition by M2, Mazerski said the company had considered making an acquisition itself, merging with another company or being acquired.

“It’s like a puzzle coming together of two companies after a long process that we went through, looking at all kinds of alternatives," he said. "Would we buy something, would somebody buys us, would we merge with somebody, how would we do it?

“My view is that it’s a match made in heaven, whenever you can take two companies who do different things but do them well and come together for business, it’s a really good thing.”

Providing his assessment of the acquisition, telecommunications analyst, Paul Budde, said the transaction was arguably five years overdue.

“The company was one of the first competitors in the market and did a wonderful job in the 1990s, but from that moment on it floundered,” Budde said.

In Budde's view, Primus was unable to build on its earlier strengths in the market and had been overshadowed when broadband arrived in Australia via iiNet, Internode, and TPG among others.

“With the decline in margins on the telephone side of the business the company saw its position in the market shrink and while it did held on to a sizable chunk of the market, they were unable to transform itself in order to better adapt to the new environment which includes the NBN,” he said.

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