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Rogers Buys BLACKIRON from Primus

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Rogers Communication Inc. (RCI - Free Report) , one of the leading telecom carriers of Canada, has acquired BLACKIRON Data from Primus Telecommunications Group for a cash consideration of $200 million. The acquisition will allow Rogers to expand its reach within the enterprise segment spread across Canada.

BLACKIRON Data is an innovator in data centre and cloud computing services and has approximately 4,000 customers. BLACKIRON offers a wide range of IT infrastructure solutions including Customer Relationship Management (CRM) and works closely with clients to deliver value to their business.

Acquisition of BLACKIRON will allow Rogers Business Solutions (RBS) to strengthen its capacity and coverage across Canada as almost 80% of all Canadian businesses are located within 200 km of a BLACKIRON Data centre.

Notably, BLACKIRON owns and operates 8 data centres across five important cities of Canada and has recently opened a contemporary data centre in Markham, Ontario. The data centre has expanded its current operations by 45%. This strengthens RBS’s position in Ontario, where it already owns two data centres and has partnerships with multiple cloud vendors.

Combining Rogers’ fibre-based network with BLACKIRON’s advanced range of data centres will allow the Canadian telecom company to become a turnkey IT infrastructure solution provider for enterprise clients. BLACKIRON, which has 132 skilled professionals, reported an EBITDA margin of 38.6% on annual revenue of $33.7 million at the end of 2012.

Companies providing cloud computing service continue to flourish as virtualization has become essential for business enterprises to reduce costs and for exploring the markets worldwide. Instead of installing their own virtualization and data centre set up, the corporate bodies are now sharing the cloud computing platform of dedicated providers like Citrix Systems Inc. (CTXS - Free Report) , Equinix Inc. (EQIX - Free Report) and VMware Inc. (VMW - Free Report) that allows them to fulfil their data storage needs.

According to research firm Gartner, the cloud computing service market is expected to reach $131 billion by 2013 representing an 18.5% annualized growth. Acquiring BLACKIRON will allow Rogers to capture a share of this growth momentum in cloud service business.

We believe that integrating BLACKIRON with RBS’s network will facilitate the latter to serve a wider customer base and strengthen its position in the Canadian B2B (business to business) market.

Rogers currently carries a Zacks Rank #2 (Buy).

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