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Primus Telecommunications and Arbinet to Merge

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November 11, 2010

Primus Telecommunications and Arbinet to Merge

By Anil Sharma, TMCnet Contributor

Arbinet (News - Alert) Corporation, a provider of telecommunications services to fixed and mobile operators, signed a definitive agreement to be acquired by Primus Telecommunications Group.

Officials with Primus Telecommunications (News - Alert) said that upon closing, the company intends to integrate Arbinet's operations into its Global Wholesale Group.  

On a pro forma basis, Primus' Wholesale business unit is expected to generate over $500 million in annual revenue and bring Primus' total consolidated annual run rate revenue to over $1 billion.

The combined company is expected to be ranked among the top 12 leading international telecommunications carrier service providers in the world based on annual revenues.

Company officials said that with its enhanced scale and market position, the combined company is expected to enable wholesale customers to access additional networks and termination routes at competitive rates.  

According to company officials, the combined company is expected to have a diversified product portfolio of international voice and data services across all wholesale customer segments.  The anticipated increased global reach is expected to provide additional market opportunities for retail and carrier wholesale interconnectivity.  

The combined company, company officials said, would become the only major global provider to offer wholesale customers options to either acquire direct international connections through traditional interconnect arrangements or manage their access needs through Arbinet's Exchange.  

"While we have continued to make significant progress in leveraging our unique suite of services to increase customer traffic, pricing pressures and increased competition have continued to affect our bottom line.  As a result, our Board examined a range of strategic alternatives and after careful review, our Board unanimously concluded that our merger with Primus is the best available option for our shareholders,” said Shawn O'Donnell, president and chief executive officer of Arbinet, in a statement.  

O'Donnell said that the company believes this transaction will allow Arbinet to respond more effectively to marketplace challenges through enhanced scale, expanded reach, and improved products and services.  

“In addition, we believe the transaction will allow us to lower our operational costs and benefit from significant synergies. As an all-stock transaction, this combination provides our stockholders the opportunity to participate in the upside potential of the combined company,” said O'Donnell.  

“In sum, we have found a strong partner in Primus with a complementary business, outstanding reputation and shared values, and we believe Arbinet will thrive as part of the Primus team," he said.

Peter D. Aquino, chairman, president and chief executive officer of Primus said that with the combined carrier services platforms and additional global reach through Arbinet's Exchange, Primus gains access to additional traffic streams, better routes for termination of voice traffic and the ability to manage multiple segments of carrier customers.  

Aquino said that Primus and Arbinet share great cultures of innovation and customer service, and the company is pleased to welcome Arbinet's customers and employees to Primus.

Anil Sharma is a contributing editor for TMCnet. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

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