Customer Login
Media & News - News
› Sunday Business Post - Prime Carrier makes the move to the bigger stage
17 June 2005
When Geoff Butcher became chief executive of Prime Carrier last year, the Dublin software firm faced issues common to many young companies.
Founded in 2000 by telecoms industry veteran Vincent Browne, the company had raised about €8.5 million from venture capitalists.
It had developed and sold its software to telcos worldwide including KPN and Colt, and was “a well-positioned business'‘, according to Butcher.
However, it needed a “different set of skills'‘ to move to the next stage of development and become a medium-sized software firm. Butcher, who had just sold his British telecoms software firm Protek for about $20 million (€16.4 million), took over as chief executive from Browne last July.
Browne, a former head of procurement at Esat Telecom, has remained close to the firm in “a fairly classic founder role'‘, advising on product vision and strategy.
“Last year was about taking a breath and making some changes in the way we position the business,’' Butcher said.
Prime Carrier's software is used by telcos to automate the buying and selling of voice minutes to other operators - a process that was historically manually based.
The firm's large contracts could take over a year to implement, but it now sells its software in modules that can be installed quickly.
In February, Prime Carrier raised €3 million from investors including ACT Venture Capital, bringing its total backing to almost €12 million.
ACT's involvement has also helped the firm in its attempts to build its technology and customer base.
Those attempts culminated in the acquisition last weekend of Am-Beo, a Galway billing software firm that was also backed by ACT. Am-Beo had raised about €25 million in funding, but had burned through much of the cash and “needed a deal'‘, according to Butcher.
Having ACT as a common shareholder meant that Prime Carrier could move quickly to acquire Am-Beo in an all-share deal. “We knew Am-Beo and had been looking at it for some time,’' Butcher said.
“It had the right business and proposition, but it was years too early.
“If you look at the difference between 2000 and today, back then 3G, content demand and billing were just around the corner. Then the bubble burst and demand got pushed out. But there is strong evidence that the vision [of Am-Beo's founders] is going to be vindicated.”
Butcher said that Prime Carrier would retain Am-Beo's products, but also saw opportunities to integrate the software of the two firms into one product.
There should be chances to sell Prime Carrier's software to Am-Beo customers, which include Western Wireless and Sonera Zed.
Prime Carrier has about 45 staff after the deal, including about 12 people at a research and development centre in Galway. Butcher would not comment on revenue figures at the company, but said it hoped to win “several million euro in revenue'‘ next year.
The company's last accounts, for the year to the end of December 2003, show it made a loss of almost €2.4million that year. “These losses have continued since the year end with the result that the cash resources of the company have been significantly depleted,” the accounts state.
“We want to be pretty certain to get into profit within a limited number of months of 2006,” Butcher said. “This market is moving very quickly and our ambition is to get to tens of millions of euro in revenue.” Staff numbers are also expected to increase over the coming year.
Other acquisitions are likely as Butcher sees the Am-Beo deal as “the start of an acquisition play'‘ to build a significant-sized software company.
Building software companies of scale is a key part of the new strategy from Enterprise Ireland, which has backed Prime Carrier.
“People are a hell of a lot more comfortable buying from a company with €50million in revenue than a company with €5 million,” Butcher said.
“The challenge is to grow both organically and through sensible M&A [merger and acquisition] activity.”
Butcher said that future acquisitions could be funded by issuing shares, raising further venture capital or even from a stock market listing. However, he said a listing on the Alternative Investment Market in London “is a thought, and no more than that'‘ at this stage.
Prime Carrier has strong venture capital backers, including Irish funders ACT, Delta Partners, Ion Equity and Hot Origin. ACT is the largest shareholder, while Advent Partners - an international funder that had backed Am-Beo - is the second-largest after last week's deal.
“There is a huge amount of venture capital available for the right acquisitions but it is about finding the right deal,” Butcher said. “It is easy to rush out and buy things, but it is much more difficult to get a deal that is a good cultural fit and will lead to a rapid up-tick in business.”
While there has been consolidation in the telecoms software sector - including the Am-Beo deal and the acquisition of Sepro by Openet Telecom - Butcher said Prime Carrier would remain independent in the short to medium-term.
“At this stage, someone is unlikely to make an offer,” he said. “Our shareholders believe that there is significant unrealised value in Prime Carrier. We have an exciting opportunity and that is why we did the Am-Beo deal. At some point, we will look for an exit, whether it is through a trade sale or a float, but that is a long way in the future.”
By Gavin Daly
