Primus Canada enters Ottawa through Magma buyout

Primus Telecommunications Canada Inc. Thursday said it has bought Ottawa ISP Magma Communications Ltd. for an undisclosed sum.

The deal will give Primus Canada,

a subsidiary of Virginia-based Primus Telecommunications Group Inc., a foothold in the Ottawa market and add about 30,000 customers to the firm’s current Canadian base of approximately 70,000.

Magma will operate as a subsidiary of Primus Canada and maintain current staff levels. “”It’s business as usual,”” said chief operating office A.J. Byers. “”The company name will remain as Magma. The entire senior management team is staying.””

“”This was nice because we don’t have an office in Ottawa,”” said Primus Canada president Ted Chislett. “”It’s one of the largest markets in Canada. And it provides us a presence there to use as a springboard for other Primus products as well.””

Magma has customers in Toronto and Montreal, but more than 90 per cent of its base is in Ottawa, according to Byers. The company provides basic Internet access as well as corporate products like Web hosting, server co-location and managed security services.

Magma has about 5,000 enterprise customers, said Byers, and operates data centres in Ottawa and Toronto. Primus Canada is better known for its small and medium business offerings, as well as residential Internet service.

“”Their customers tend to be larger than ours,”” said Chislett. “”They’ve got a great operation and we’ve been very impressed with how professionally it was run and we thought it would be a great way for us to launch into that larger customer segment. . . . (Magma’s) capabilities would let us service a number of enterprises.””

Future service offerings in from Primus Canada will include more network security products, dial acceleration (improved dial-up Internet service) and possibly disaster recovery services.

Gartner Canada analyst Elroy Jopling, based in Toronto, said he’s impressed that Primus Canada has been able to increase its product offerings in recent years.

“”They are establishing themselves more with their move into voice over IP and prior to that, into broadband. They are beginning to make a name for themselves,”” he said.

Chislett said Primus Canada may be able to compete with established players like Q9 Networks, but a move into the enterprise marketplace may be a tough proposition.

“”It’s very much changing their business model and whenever you’re changing your business model, you’re increasing the risk,”” said Jopling. “”Without question, it’s a movement they should be very careful of.””

Comment: info@itbusiness.ca

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