Birch Communications has spent the last decade rolling up network and CLEC assets from around the USA, but its 28th consecutive deal takes the company across the border and into Canada for the first time and in a big way. Reports from January had them sniffing around Primus Telecommunications, which was seeking protection from creditors, and they have indeed followed through with an agreement to buy the company’s assets.
The deal will bring some 250K business and consumer customers to Birch, including some 20K in the US and Puerto Rico, with a generally parallel product portfolio of internet & data, cloud-hosted PBX, and voice products. But the biggest change for Birch will clearly be a presence in all of Canada’s major markets, making it the second alternative network operator from the US in six months to go national north of the border.
Until regulations were loosened few years ago, the Canadian market was basically closed to foreign ownership. The strength of the US dollar, currently worth CAD$1.32, has clearly created a window of opportunity that the two most prolific consolidators in the sector have jumped through.
Zayo of course did it last month with the purchase of Allstream, a purchase that brought it both the substantial fiber assets it always seeks out and some more CLEC-derived revenues that may not really fit it. It strikes me that Birch might be interested in those revenues as a means to greater scale in Canada, and the two companies could easily engage in some followup consolidation activity.
Financial details were not disclosed but the deal is expected to close during the second quarter of 2016. This is the last piece of Primus to find a home. The company sold off its Australian assets to M2 a few years back, and then separated out its data center assets and sold them to Rogers a year later. They have some 650 employees, most of whom hopefully will land safely at Birch.
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Categories: CLEC · Mergers and Acquisitions
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Primus itself had never been Canadian-owned, by the way. This isn’t about a loosening of foreign ownership rules at all.