Canadian Manufacturing

Ottawa telecom firm targets U.S. SMBs for growth

Mitel says the embattled U.S. small business sector is its "sweet spot" and primed for a reboot

MONTREAL—Despite economic uncertainty in the U.S., telecom company Mitel Networks Corp. expects growth from small and medium-sized American businesses with its communications and Internet Protocol telephony services.

“It still has tremendous potential for us,” president and CEO Richard McBee said of the U.S. market.

The “sweet spot” for Mitel’s telecom services is U.S. businesses with 25 employees and small enterprises with about 1,000 employees, he said.

Mitel has customers in more than 100 countries, but McBee still sees plenty of growth in North America overall.

“The reality for Mitel is there’s a lot of room for us to run in the U.S. and Canada, so we’ll be focusing there first.”

The almost 40-year-old Ottawa company recently listed on the Toronto Stock Exchange to broaden its shareholder base after being traded on the NASDAQ since 2010.

McBee, who became chief executive 18 months ago, noted the amount of software in phones and networks is “very big.”

“Whether it’s any type of mobile device, whether it’s a mobile phone or whether it’s an iPad, or whether it’s a desk phone, we have software that link all of these things together that allow a seamless experience for them to basically connect business,” he said.

M Partners analyst Ron Shuttleworth, whose firm was the first to initiate Canadian coverage of Mitel, said the company is known for its software service that helps companies use fewer servers for their applications.

“When you’re not running a gigantic bank of servers, you don’t have to hire too many guys to watch the servers,” he said. “This is what’s giving them the winning edge in this space.”

“In North America Mitel Networks ranks third behind Cisco and Avaya,” he said in a recent research note. “In the UK, due to a favourable channel relationship with British Telecom, Mitel ranks second behind only Cisco.”

Mitel was founded in 1973 and was one of Canada’s early technology success stories with sales of office phone systems to companies and public sector agencies around the world.

A predecessor of the company was also publicly traded on Canada’s largest stock exchange before Mitel was purchased in the 1980s and taken private. It has since gone through numerous transformations, including its split from Zarlink Semiconductors several years ago.

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