There wasn’t any one thing that led to the financial instability that slowly stalled Platinum Communications Corporation’s growth. “They ran into typical issues encountered when growing a company from scratch, and they ended up spending a lot of cash on a lot of different projects that didn’t pan out,” says CEO Bernard Parkinson. After unmanaged growth scattered the company’s resources, the prior management team, under direction from the board, realized it was time to trim. But after a considerable amount of cutting had been accomplished, the company still wasn’t out of the woods. “They hadn’t really positioned themselves for growth, and they didn’t know where to take the company,” Parkinson says.
Growth of Platinum’s network was opportunistic in the early days. “They just kept extending out farther and farther, like an Oklahoma land grab,” Parkinson says.
The situation soon pulled resources away from the head office, which began to present significant operational, capital, and logistical problems. “You had to hire more support people, you had to buy more trucks, put up more towers and radios, and you had more service and support calls,” Parkinson explains. “You do that long enough and you’re spread out all over the map, trying to coordinate a geographically diverse wireless network.”
After years in this pattern, Parkinson says the difficulties finally came home to roost. “[Platinum’s] management team didn’t have the broad-based skills to bring it all together and make it all work in unison,” he explains. The easy solution was to trim head count, put the company on a tight budget, and focus on hoarding cash. But Parkinson says that quick fix didn’t put the organization in a good position for the future. “It’s tough to grow your company when all you’re thinking about is controlling your costs,” he says.
Platinum subsequently lost money, and the share price plummeted. That’s when they decided it was time to find experienced management. Parkinson, who had orchestrated start-ups and turnarounds at several other companies, was brought onboard to stabilize the organization and work toward boosting the stock’s value. “And that’s what I’ve been doing for two and a half years,” he says.
Platinum started out in the residential Internet market, but Parkinson sees excellent opportunities for growth in both the commercial telecommunications markets and, more importantly, through acquisitions. “I’ve redirected a lot of the resources within the company to the commercial division, as that customer base is more stable and the ARPU [average revenue per user] is much higher, contributing to more-stable earnings, which enhances the overall valuation of the company,” he says.
By acquiring its rural-market competitors, Platinum as found another avenue to revitalize itself. “We figured if we bought our competitors in or near our network, we would be able to integrate their subscriber base into ours and, through rationalization of costs, pretty quickly have a significant lift in our earnings,” Parkinson says.
The company has already initiated two purchases this year—AlbertaHighSpeed and MyCanopy—and Parkinson says his team is looking for more. “We can expect a lot of operational efficiencies by acquiring these smaller ISPs,” he says.
Through its solid economic base, which is centred on the oil-and-gas industry, Alberta has a lot to offer businesses. “If you look at any economy in North America, I’ve got to say that Alberta has one of the fundamentally strongest,” Parkinson says.
It’s something Parkinson believes works in Platinum’s favour, and he’s aggressively looking for new opportunities, especially further north. “It’s taken quite a while to redirect much of our energies into servicing the significant commercial activity out there in rural Alberta, especially in the oil-and-gas industry,” he says.
Parkinson explains that small companies are often too opportunistic, which translates into lack of focus, and that long-term profitability takes a backseat to the quest for near-term revenue. Platinum’s experience with that unsustainable model led it to a difficult spot—with very little cash in reserve to take advantage of capital investment opportunities and a company preoccupied with simply staying afloat. But Parkinson says he and his senior team worked hard to steer the company back onto the solid footing it enjoys today, and it’s a position that invigorates the entire organization.
“Once you go through difficult times and you get out the other side, you have a sense of optimism within the company,” he says. “A lot of the internal operational functions work together more effectively, and exciting business opportunities that you can participate in start to come your way. It’s a good feeling when you can then execute properly and gain the respect of the marketplace.”