PRIMUS Telecommunications
Company: PRIMUS Telecommunications Group, Incorporated
Company Description: PRIMUS Telecommunications Group, Incorporated (NASDAQ: PRTL) is a global facilities-based Total Service Provider offering bundled voice, data, Internet and hosting services. Founded in 1994 and based in McLean, VA, PRIMUS serves corporate, small- and medium-sized businesses, residential and carrier customers primarily located in the North America, Europe and Asia Pacific regions of the world.
Nomination Category: Company, Office & Product Awards Categories
Nomination Sub Category: Best Business Turnaround
Nomination Title: PRIMUS Telecommunications' Three-Pronged Strategy To Survive The Telecom Meltdown And Emerge As A Stronger Company
- Tell the story of what this nominated company has achieved in 2002 (up to 500 words). Focus on specific accomplishments, and relate these accomplishments to past performance and industry norms. Be sure to mention obstacles overcome, innovations or discoveries made, and outcomes:
The telecommunications industry experienced an unprecedented metamorphosis following the 1996 Telecommunications Act. From boom to bust in seven years, the carnage was devastating, including massive layoffs, erosion of billions of dollars of stakeholder value, and a record number of bankruptcies. Amid this maelstrom, upstart PRIMUS Telecommunications devised a "three-pronged strategy" in late 2000 to significantly improve financial and operating performance and ensure survival and emergence as a stronger player.
Like many carriers, PRIMUS relied on the capital markets for funding to expand its business to create critical scale to generate profits. PRIMUS commenced operations in 1995 and entering 2001 had over $1 billion in revenue, barely break- even EBITDA, $400 million in cash, and $1.3 billion in debt with annual interest of $143 million. Against a backdrop of failed carriers, PRIMUS sought advice from Wall Street whose consistent recommendation was to either declare bankruptcy or attempt to wait out the storm. The Company rejected the advice.
PRIMUS had built a unique franchise which it wanted to protect. With over $1 billion in revenue, it completed deployment of global voice/data networks to offer its services, and developed in-country operations in its major markets. The Company believed that declaring bankruptcy would irreparably damage its global franchise -- particularly where no precedents existed of a retail carrier successfully emerging from bankruptcy. The passive advice to wait out the storm could only give PRIMUS 18 months of continued operations with its existing cash.
When it became apparent that the capital markets would be indefinitely foreclosed, PRIMUS determined to become financially self-sustaining on its own resources and to attain this developed a three-pronged strategy:
Accelerate EBITDA; Strengthen its balance sheet by significantly reducing debt; and Raise additional financing. To grow EBITDA, PRIMUS focused on higher margin services/customers, advertantly scaled back low margin businesses, and implemented aggressive SG&A reductions. PRIMUS also was among the first to use precious cash to purchase debt on the open market as well as exchange equity for debt. This combination reduced PRIMUS' debt from $1.3 billion to approximately $550 million currently, which reduced annual interest to some $55 million from $143 million. PRIMUS confounded the experts by being able to purchase its debt in great volumes for slightly over 20 cents on the dollar without driving up bond prices. Once PRIMUS strengthened its balance sheet and increased EBITDA generation, it was able to execute on the third prong. On December 31, 2002, PRIMUS announced a $42 million investment led by American International Group.
Through execution of its three- prong strategy, PRIMUS reduced its debt by nearly 60%, grew EBITDA from $12 million in 2001 to $101 million in 2002, and increased cash in each of the past three quarters. Impressively, this was achieved with the resumption of revenue growth and ending 2002 with a record of over 3 million customers. PRIMUS has set a goal to become net income profitable by the end of 2003, and, almost alone in the global telecom sector, has projected up to 8% revenue growth in 2003 with EBITDA increasing 30%+ from 2002. With this amazing turnaround, PRIMUS is now poised to pursue aggressively its goal of profitable growth.
- List hyperlinks to any online news stories, press releases, or other documents that support the claims made in the section above. To include a URL you must begin and end the URL with a square-bracket and include http:// Example: [http://www.yourdomain.com]
http://www.corporate-ir.net/ireye/ir_site.zhtml? ticker=PRTL&script=410&layout=9&item_id=366807 http://www.corporate-ir.net/ireye/ir_site.zhtml? ticker=PRTL&script=410&layout=9&item_id=382542 http://www.corporate-ir.net/ireye/ir_site.zhtml? ticker=PRTL&script=410&layout=9&item_id=376740 http://www.corporate-ir.net/ireye/ir_site.zhtml? ticker=PRTL&script=410&layout=9&item_id=333680 http://www.corporate-ir.net/ireye/ir_site.zhtml? ticker=PRTL&script=410&layout=9&item_id=322217 http://www.corporate-ir.net/ireye/ir_site.zhtml? ticker=PRTL&script=410&layout=9&item_id=278394 http://www.corporate-ir.net/ireye/ir_site.zhtml? ticker=PRTL&script=410&layout=9&item_id=197469 http://www.primustel.com/docs/PrimusAmazingTurnaround.pdf http://www.primustel.com/docs/washpost06252002.html http://www.primustel.com/docs/washpost04062002.html http://www.americasnetwork.com/americasnetwork/content/contentDetail.jsp? id=15956
- Provide a brief (up to 100 words) biography about the leader of this nominated company:
PRIMUS' three-pronged strategy for which this nomination is based was led by its top three executives, Chairman, President, CEO and co-founder K. Paul Singh, co- founder and EVP John F. DePodesta, and EVP/CFO/COO Neil L. Hazard. These are seasoned industry executives with entrepreneurial backgrounds who have worked alongside one another for nearly the past 20 years.
Prior to co-founding PRIMUS, Mr. Singh demonstrated his leadership and vision as a telecommunications executive by founding and building up two companies, OTI and Cygnus Satellite, focused on international telecommunications which were later acquired by MCI and Panamsat, respectively. A native of India, Mr. Singh holds an MBA from Harvard Business School and an MSEE from State University of New York.
Mr. DePodesta participated in the development of recommendations advocating the divestiture of AT&T. He has been instrumental in the formation, capitalization and in obtaining regulatory authority for several telecommunications entities, including PRIMUS, Cygnus Satellite and OTI. He holds a J.D. from the University of Pennsylvania and a B.A. from Harvard College
Mr. Hazard’s background includes various management and finance positions at MCI, OTI and Hughes Network Systems. He holds an MBA degree from Harvard Business School, an MS degree in Computer Systems from the University of Maryland, and an undergraduate engineering degree from Johns Hopkins University.