1 HIGHLIGHTS Goal: Provide VoIP services in a cost-effective way, and establish the company as a technology innovator Solution: Tekelec 6000 VoIP Application Server Results: A projected cumulative, five-year net benefit of $11,908,690, driven by increased revenue. The project has an ROI of 832%, and a payback period of one month. It allowed PRIMUS to gain a foothold in residential/broadband/voice in a cost-effective way, and has established the company as a technology innovator. CUSTOMER PROFILE PRIMUS Canada Launches Innovative VoIP Services and Gains Nearly $12 Million in Benefits with Tekelec 6000 VoIP Application Server In 2003, PRIMUS Canada, now Canada s largest alternative communications carrier, was looking for ways to find new revenue streams in an increasingly competitive market. It wanted to leverage its expertise and market presence as an Internet Service Provider (ISP) and long-distance company to find new sources of income. At that time, phone services based on Voice over Internet Protocol (VoIP) were in their infancy. But the company believed that VoIP was the wave of the future, and could give it a means to provide local phone service and inexpensive long-distance services to its residential customers. To offer VoIP services, it chose the Tekelec 6000 VoIP Application Server, and used that as the basis of a new VoIP service for residential customers. The projected result will be a cumulative, five-year net benefit of $11,908,690, driven by increased revenue. The project has an ROI of 832%, and a payback period of one month. It allowed PRIMUS to gain a foothold in residential/ broadband/voice in a cost-effective way, and has established the company as a technology innovator. PRIMUS Canada PRIMUS Telecommunications Canada Inc. is the largest alternative communications carrier in Canada with over 1,000,000 retail customers. Headquarters: Toronto, Ontario Industry: Telecommunications Employees: >900 Revenue: PRIMUS Canada is a wholly owned subsidiary of PRIMUS Telecommunications Group, Incorporate (OCBB:PRTL), a global facilities-based Total Service Provider, and as such does not publish separate financial information. Benefits OBJECTIVE Develop new services and revenues Offer flexibility Save on maintenance and support Provide advanced VoIP features BENEFITS ACHIEVED The Tekelec 6000 enabled PRIMUS Canada to launch a residential VoIP service, leading to a projected, cumulative five-year revenue increase of $11,908,690. The Tekelec 6000 s support of multiple protocols, including SIP, MGCP, and SCCP, allows customers to be connected in multiple ways, expanding the potential user base for its voice service, and saving on costs. The Tekelec 6000 can be managed and maintained with a single staff member, saving on maintenance and support costs. The Tekelec 6000 has allowed PRIMUS Canada to offer a wide variety of innovative services, including voice mail, unlimited long-distance calling throughout the U.S. and Canada, self-service portals, and find me and follow me services, among others.
2 The Challenge: Launch New VoIP Services to Increase Revenue in a Competitive Market In 2003, PRIMUS Telecommunications Canada Inc., now the largest alternative communications carrier in Canada, was looking for ways to find new revenue streams in an increasingly competitive market. It wanted to leverage its expertise and market presence as an Internet Service Provider (ISP) and long-distance company to find new sources of income. At that time, phone services based on Voice over Internet Protocol (VoIP) were just emerging. But the company believed that VoIP was the wave of the future, and could give it a means to provide local phone service and inexpensive longdistance services to its residential customers. PRIMUS Canada did not have the technology for providing VoIP. It was looking for a solution that would do the following: Offer advanced features. PRIMUS Canada did not want to merely offer a me-too type of residential voice service, because that would not effectively attract new customers. It was looking for a platform that would allow it to easily offer advanced features, including voice mail, portal-based selfmanagement, follow me phone features, and more. Provide future-proofing. PRIMUS Canada knew that over time, new advances and services would be able to be built on top of VoIP. The company was looking for a solution that offered the widest possible support for protocols and features, to ensure that it would be able to offer any new VoIP-related services. PRIMUS Canada chose the Tekelec 6000 because of its flexibility, comprehensive feature set, easy integration, performance, reliability, and clearly defined technology roadmap that includes a wide variety of protocol support. Provide easy integration. PRIMUS Canada already had a significant investment in a telecommunications infrastructure that provided telephone service and Internet access. The new solution had to easily integrate with its existing infrastructure, and cause no service disruptions. Be reliable. The VoIP solution PRIMUS Canada chose would have to be extremely reliable, in order to provide an always-on residential voice service, with few or no disruptions. Be easily maintained and supported. PRIMUS Canada did not want to spend significant amounts of time and money supporting a new infrastructure, and was looking for a platform that could be easily maintained with little expense or staff time. PRIMUS Canada Chooses the Tekelec 6000 PRIMUS Canada conducted a thorough search of existing platforms, and began with a list of potential solutions from six companies. It narrowed that to a short list of three, and did in-depth evaluations of all three platforms. Based on its comprehensive testing and research, it chose the Tekelec 6000 VoIP Application Server. It chose the solution based on the Tekelec 6000 s flexibility, comprehensive feature set, easy integration, performance, reliability, and clearly defined technology roadmap that includes a wide variety of protocol support. 2
3 Case Study Forum R O I C A S E S T U D I E S The Tekelec 6000 provides migration to consumer broadband, mobility, IP Centrex and hosted PBX service delivery for service providers and their IP telephony customers. The Tekelec 6000 VoIP Application Server is an integrated, scalable, standards-based solution that delivers revenue-generating applications out of the box, works with a wide range of network equipment and protocols, and offers ease of administration while reliably supporting an almost unlimited number of customers with their own secure configurations. Wi-fi User Access Point IP Access SIP SoftPhone User Tekelec 8200 Gateway or Softswitch Tekelec 6000 VoIP Application Server The Bottom Line for PRIMUS Canada PRIMUS s bottom line for the project: A projected cumulative, five-year net benefit of $11,908,690, driven by increased revenue. The project has an ROI of 832%, and a payback period of one month. It allowed PRIMUS to gain a foothold in residential/broadband/ voice in a cost-effective way, and has established the company as a technology innovator. A detailed analysis of the Tekelec 6000 implementation projects that PRIMUS Canada will gain a cumulative, five-year net benefit of $11,908,690 from the project, driven by increased revenue. This net benefit results in an ROI of 832%, and a payback period of one month. It allowed PRIMUS to gain a foothold in residential/broadband/voice in a cost-effective way, and has established the company as a technology innovator. The solution allowed PRIMUS Canada to launch a new residential VoIP service with its own branded identity, attract new customers, and increase its revenue. The increased revenue projected in this case study is based on an assumption that PRIMUS Canada has 50,000 customers for its service in Canada. The Tekelec 6000 allowed us to quickly create a residential VoIP service that became our marquee product and brought new customers in the door, says Matt Stein, Vice President of New Technology and Services for PRIMUS Canada. It became a platform on top of which we could launch new services. 3
4 He adds, The launch far exceeded our expectations, and within the first three weeks, we had exceeded our entire first quarter plans. The launch far exceeded our expectations, and within the first three weeks, we had exceeded our entire first quarter projections. Matt Stein Vice President, New Technology and Services PRIMUS Canada One of the primary benefits of the Tekelec 6000 was its ability to easily integrate into PRIMUS Canada s existing infrastructure, allowing the company to quickly launch the new service. The company saved time and money on integration, allowing it to quickly bring the service to market at the lowest cost possible. Of particular benefit is the Tekelec 6000 s support of SIP (Session Initiation Protocol), MGCP (Message Gateway Control Protocol), and SCCP (Skinny Client Control Protocol). Support for these protocols allows PRIMUS Canada to connect customers to the VoIP service in multiple ways, expanding the potential user base for its voice service and saving on costs. Because of the Tekelec 6000 s support for MGCP, PRIMUS Canada has since connected its Tekelec 6000 system to Broadband Loop Carrier systems, allowing PRIMUS Canada to provide broadband data and traditional voice services to its customers while integrating the elaborate feature set typically reserved for VoIP offerings. The Tekelec 6000 s abilities also enabled PRIMUS Canada to easily obtain emergency 911 compliance, something that other VoIP providers still have a difficult time doing. $11,908 $8,413 $5,501 $3,171 $1,378 Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative 5 Year Net Benefit ($000) PRIMUS Canada s rapid growth has also led it to add a Tekelec 9000 Distributed Switching Solution to lower its long distance and local network connectivity costs. With the Tekelec 9000, PRIMUS Canada connects its Tekelec 6000 subscribers to networks throughout Canada and elsewhere using the Tekelec 9000 s distributed media gateways and highly efficient IP and TDM network connectivity. The Tekelec 6000 platform has allowed PRIMUS Canada to offer feature-rich, innovative services to customers, including voice mail, unlimited long-distance calling throughout the U.S. and Canada, self-service portals, find me and follow me services, and others. In addition, because of its support for multiple 4
5 The Tekelec 6000 allowed us to create a residential VoIP service that became our marquee product and brought new customers in the door. It became a platform on top of which we could launch new services. Matt Stein Vice President, New Technology and Services PRIMUS Canada protocols, it will allow PRIMUS Canada to offer new innovative services as technology advances. The platform also allows PRIMUS Canada to inexpensively support the new platform. A single technician is able to support and maintain the Tekelec 6000 system. Based on the success of the launch of the residential service, PRIMUS Canada launched a business VoIP service, and is considering other VoIP-related launches as well. The following chart provides a detailed, five-year analysis, built on assumptions of PRIMUS Canada s market penetration based on market size and positioning. 5 YEAR ANALYSIS Project Summary ROI 832% Payback Period (in months) 1 Cumulative Net Value $11,908,690 Project Costs Year 1 Year 2 Year 3 Year 4 Year 5 TOTAL Contract Cost $165,680 $215,385 $280,000 $350,000 $420,000 $,431,065 TOTAL PROJECT COSTS $165,680 $215,385 $280,000 $350,000 $420,000 $1,431,065 Benefits Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Gain $1,544,400 $2,007,720 $2,610,036 $3,262,545 $3,915,054 $13,339,755 TOTAL BENEFITS $1,544,400 $2,007,720 $2,610,036 $3,262,545 $3,915,054 $13,339,755 Financial Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Net Value $1,378,720 $1,792,335 $2,330,036 $2,912,545 $3,495,054 Cumulative Net Value $1,378,720 $3,171,055 $5,501,091 $8,413,636 $11,908,690 Net Present Value $8,907,534 Payback Period (in months) 1 ROI 832% ROI (return on investment) is the percentage return expected over a specified period of time. ROI is the total benefit minus the total investment and costs, divided by the total investment and costs. This ROI metric is good for assessing the net value benefit of the project relative to the total investment and costs. Net Present Value (NPV) represents the cumulative present value of the expected return of a project over a specified period of time minus the initial costs of the project. This dollar figure provides visibility on the actual value of a project, taking into consideration the time value of money the ongoing benefit of a project in today s dollars. NPV tells you the magnitude of the project and if the project generates a profit. Payback Period (or breakeven) is the timeframe it takes for the project to yield a positive cumulative cash flow. Payback period is a key measurement of risk but does not take into account cash flows after the payback period. ROI, NPV and Payback should be used in conjunction to understand the rate, size and timing of the return. Net Value (or Net Benefit) is the benefit delivered to the organization for the investment made in the project. Net Value is calculated by taking the total benefit minus the project costs. Internal Rate of Return (IRR) is the implied rate of return of an investment assuming complete reinvestment of cash flows. It is the percentage rate by which you have to discount the benefits until the point that they equal all the costs. IRR is calculated as the discount rate necessary to drive the NPV to zero. 5
6 About PRIMUS Telecommunications Canada PRIMUS Telecommunications Canada Inc. is the largest alternative communications carrier in Canada with over 1,000,000 customers. The Company offers facilities-based voice, data, e-commerce, Web hosting, VoIP and Internet services utilizing ADSL2+ technology. As a leading Internet service provider in Canada, PRIMUS Canada has over 80,000 Internet subscribers served by a national network of Internet points-of-presence (POPs) for dedicated and dial-up access. PRIMUS Canada also offers local services to businesses, bundling them with its long distance and Internet services. The Company has a fully redundant and diverse SONET network across Canada, extending from Quebec City to Victoria. PRIMUS Canada s national network consists of nationwide switches with international connectivity through its parent company s global network, ATM and IP nodes, and colocation facilities at major cities across the country. These network elements provide an integrated and converged backbone for all of PRIMUS Canada s voice, data, VoIP, Internet private line and bundled services. The local colocation network covers over three million households and businesses in Canada utilizing next generation ADSL2+ technology, delivering download speeds of up to 22 Mbps. PRIMUS Canada is a wholly-owned subsidiary of McLean, Virginia-based PRIMUS Telecommunications Group, Incorporated (OTCBB: PRTL). PRIMUS Canada news and information are available at the Company s Web site at About Tekelec Tekelec is a high-performance network applications company that is accelerating the transition to IP Multimedia Subsystem (IMS) networks for service providers around the globe. With its experience at the intersection of network applications and session control, Tekelec creates highly efficient platforms for managing media and delivering network solutions. Corporate headquarters are located near Research Triangle Park in Morrisville, N.C., with research and development facilities and sales offices throughout the world. About the Tekelec 6000 VoIP Application Server The Tekelec 6000 VoIP Application server is a suite of voice applications and services delivering a rich set of line-side and enhanced telephony features for IP networks. It is part of Tekelec s switching portfolio and a future-proof solution providing IMS-ready applications for now and next-generation networks. Direct sales or wholesale service providers and system integrators use the Tekelec 6000 to provide business customers with Hosted PBX, IP Centrex and/or Business Trunking and mobile VoIP services to provide Broadband Residential VoIP services to both wireline and mobile users. About Case Study Forum Case Study Forum is the leader in the writing and production of ROI-focused Case Studies. In addition to a customer success story, each ROI Case Study provides insight into the business impact the revenue, productivity and cost savings the customer achieved as a result of the investment made in the solution or service. For more information, please contact Case Study Forum at , or visit The information contained herein is subject to change without notice. The only warranties for products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. Case Study Forum and Tekelec shall not be liable for technical or editorial errors or omissions contained herein. 6