AT&T Canada resurfaces as Allstream

AT&T Canada relaunched itself Wednesday almost three months ahead of schedule in an effort to reposition itself as a national provider of connectivity, infrastructure management and IT services.

The company said it would spend around $20 million to promote its new brand name, Allstream, which is intended to represent the smooth collaboration it enjoys with customers. The name change follows AT&T Canada’s successful debt restructuring plan last April, which executives said left the firm without any restructuring debt, positive cash-flow, net income and strong first-quarter earnings. AT&T Corp., which once held a 31 per cent stake in AT&T Canada, said late last year it would not take any equity in the restructured firm. The brand is also extended to AT&T Canada’s IT arm, Montage-DMC, which will now be called Allstream IT Services. The original launch timeframe was Sept. 9.

John MacDonald, Allstream’s president, said the firm has already seen momentum since its restructuring and has won accounts with Public Works and Government Services Canada, Citi Financial and Disney.

“”This isn’t just an aspirational exercise; we’re already demonstrating these strengths,”” he said.

MacDonald said Allstream’s future lies in the movement of traffic from traditional public switched telephone network onto a fabric based on Internet protocol (IP). While some customers fret over that transition, he said the value would come in areas like disaster recovery and continuity of service.

“”A lot of what people talk about in terms of the advantages of having a converged architecture on an IP fabric are wrong-minded,”” he said. “”The real opportunity is in the applications.””

Brownlee Thomas, an analyst with the Giga Information Group based in Montreal, linked the name change to that of UUNet, which eventually became WorldCom Canada after a series of ownership and operational changes.

“”I think it was forced on them by AT&T Corp. because they didn’t like the way AT&T Canada was basically trying to continue the free ride,”” she said.

In an interview a few days before Allstream’s announcement, AT&T Corp. officials said they wanted to clear up misconceptions that AT&T is pulling out of the country. Worldwide, AT&T has committed US$500 million to expand its worldwide infrastructure, including AT&T Global Network Services Canada (AT&T GNS), which provides data-based services like virtual private networking (VPNs) and frame relay. AT&T GNS was sold to AT&T from IBM’s Global Network Division four years ago.

David Stroud, president of AT&T GNS, said the company has tripled its sales force in the last six months, and will probably grow another five to 10 per cent before the end of the year. He said he welcomed AT&T Canada’s new brand.

“”We’ve had that brand confusion, there’s no question about it,”” he said. “”There’s going to be an immediate clarification that there is two different companies.””

Richard Blacklock, AT&T GNS’s director of business strategy and development, said the company would continue to invest in VPN services and remote access technologies, though he said remote access had declined somewhat since last year.

“”Where we really do position ourselves as different is the ability to provide services in 50 countries around the world,”” he said.

Allstream vice-chairman John McLennan said Allstream would continue to conduct business with AT&T, but it would no longer be an exclusive relationship. Thomas said both firms were wise to maintain ties.

“”This is really just another time the Americans who have a direct investment in Canada — because remember it’s not regulated so foreign ownership rules do not apply — they’re not going to walk away from that because the investment basically pays for itself,”” she said.

Contrary to rumours, McLennan said Allstream was not in talks with Telus as a possible takeover target, though he said he is obliged to consider all offers.

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