TeraGo Networks adding voice services for SMBs

Another business broadband supplier is joining the increasing number of service providers offering phone service to small and mid-size companies.

However, customers looking to switch providers will have to wait a few months.

Toronto-based TeraGo Networks Inc., which offers service in six provinces, said Wednesday that business is so good it’s expanding into wireline local and long distance services using its own network.

CEO Brian Boyd told financial analysts that new phone service will first be offered to SMBs primarily in suburban office parks, where most of the company’s customers are located. It will also be pitched to new customers in the same buildings.

“These companies have told us they’re looking for more choice in their voice provider,” Boyd said, “and we intend to fulfill their need.”

Boyd didn’t detail a start time or pricing. But in an interview Michael Testa, the company’s vice-president of marketing, said TeraGo has to apply to the Canadian Radio-television and Telecommunications Commission to become a competitive local exchange carrier (CLEC), so service will start “more likely in the back half of this year.”

TeraGo is known for its fixed broadband wireless Internet offerings, which run over licenced spectrum in 43 markets across the country including the Montreal area, southern Ontario and southern B.C.

The move is another example of the increasing number of Internet service providers hungry to add to their offerings and slice away phone business from incumbent telephone companies. Some are merely reselling telephony from telcos and cablecos,

Another southern Ontario business broadband provider, Atria Networks LPsaid last year it is also expanding into telephony. John Piercy, Atria’s CEO, said Wednesday that his company has already applied for CLEC status. It plans to trial phone service in Q3 and hopes to launch commercial service in Q4.

Roberta Fox of Fox Group, a Mount Albert, Ont.-based telecom consultant to organizations, said TeraGo is making a good move to expand beyond broadband access.

“I think there’s a lot of dissatisfaction with the legacy carriers because they [her clients] say they’ve gone offshore, they’ve outsourced [call centres], they don’t care about us any more because they’ve had to cut so much,” she said. “So they are looking for choices.”

TeraGo’s move comes off a satisfying 2009. Revenue for the year was $34.8 million, up 12 per cent from the year before, and it came during a recession. Revenue in the fourth quarter was up 6 per cent over the same period in 2008.

Some of that revenue came from a deal with new wireless entrant Public Mobile to provide backhaul for its network in southern Ontario and Quebec. A second deal with the startup was inked this quarter. Public Mobile is still waiting for its carrier licence from the CRTC.

The number of customer locations increased to 4,743, a gain of 221 from 2008.

TeraGo still ended 2009 with a net loss of $6.2 million. However, that was half of what it lost in 2008. More importantly, its earnings before interest, taxes and deductions was close to $5 million.

All of which enabled Boyd to tell financial analysts he was “very pleased” with the company’s performance in 2009 during a “difficult economy.”

For 2010, “we see momentum growing, and we have confidence to make investments to accelerate this growth” and make TeraGo “the network service alternative for business customers in Canada.”

One of its main goals this year is to leverage the company’s national fibre optic network to add new voice and data services. It will also try to get more backhaul business from wireless carriers and increase sales in its existing 43 markets.