Innovate Corp.

Innovate Corp.
Company type	Public
Industry	Financial services
Predecessor	HC2 Holdings, Inc.; Primus Telecommunications Group, Inc.
Founded	1994

Innovate Corp. (previously known as HC2 Holdings, Inc. and Primus Telecommunications Group, Inc.) is a publicly traded American company operating within the financial services sector, established in 1994.

Foundation and Early Years (1994–1997)

Primus launched its business in 1994 with the objective of becoming a global service provider owning its infrastructure. The company entered the United States market in 1995 by building its core leadership team and initiating operations.

In 1996, Primus expanded internationally by acquiring Axicorp, which was Australia's fourth-largest telecom operator at the time. The company also obtained a long-distance carrier license in the newly deregulated UK market and completed its initial public offering. By 1997, Primus had successfully raised over US$225 million through senior notes and warrants issuance.

International Growth Phase (1997–1999)

During this period, Primus accelerated its expansion through acquisitions and network development. In 1997, it finalized the build-out of its switched network in Australia along with international gateways in New York and Los Angeles, including trans-Pacific connections. The acquisition of Cam-Net Communications facilitated entry into the Canadian long-distance market. Later that year, Primus extended its footprint into Germany, Japan, Austria, Switzerland, and South Africa by acquiring assets from Telepassport LLC and USFI Inc.

In 1998, Primus strengthened its Australian operations by purchasing Eclipse Telecommunications Pty. Ltd. and Hotkey Internet Services Pty Limited. It also secured a new Australian Carriers License to provide Internet and data services. A major acquisition was TresCom International Inc., acquired for US$150 million, which increased the customer base to about 200,000 users across North America, Europe, and Asia-Pacific regions. Primus also gained international carrier status in Canada and entered into a substantial bandwidth agreement with Qwest for multiple U.S. points of presence.

By 1999, Primus' Canadian arm acquired London Telecom Group Inc., establishing itself as the third-largest alternative long-distance provider in Canada. It also bought GlobalServe Communications, a Canadian ISP. Additionally, Primus acquired retail operations from Telegroup Inc., a Fairfield, Iowa-based long-distance company that had filed for bankruptcy and served approximately 350,000 customers worldwide, for $72 million.

Primus secured one of the first foreign Type 1 Telecommunications Carrier Licenses in Japan and obtained a Public Telecommunications Operations license in France through an interconnection agreement with Deutsche Telekom. The purchase of German ISP TCP/IP GmbH further consolidated its European presence across 11 countries and 25 major cities via investments in fiber optic networks such as Atlantic Crossing 1 and TAT12/13.

Other acquisitions included gaining majority ownership (51%) of Matrix Internet S.A., Brazil’s fifth-largest ISP; entering broadband markets through DSL provider DigitalSelect LLC; and enhancing e-commerce capabilities by acquiring 1492 Technologies—all supporting Primus’ global diversification strategy.

Peak Performance Period (2000–2001)

In January 2000, Primus was honored with the Washington Technology Fast 50 award and subsequently named by Deloitte & Touche as the fastest growing technology firm in their Fast 500 list—a distinction also achieved by eBay in 2001 and Google in 2004. The company expanded its network capacity significantly via an agreement with Qwest to acquire bandwidth for a nationwide fiber optic ring. Strategic collaborations included partnering with Akamai Technologies to deploy content delivery servers and receiving a US$50 million investment from Hewlett-Packard to deliver business services through HP-powered data centers integrated into Primus' global network.

Primus continued expanding its ATM and IP networks both domestically and internationally while pursuing targeted acquisitions in key markets. These included LCR Telecom Group (a London-based voice and data reseller), Infinity Online Systems Inc. (a Canadian ISP), a 38% stake in Bekkoame Internet Inc. (a Japanese ISP), Shore.Net (a New England ISP with data center facilities), and InterNeXt S.A. (a French ISP). The company also entered the Puerto Rican market via partnership with Virtual Inc., obtaining a Competitive Local Exchange Carrier (CLEC) license.

At its zenith in March 2000, Primus’ stock price peaked at US$51.69 per share with annual revenues nearing US$1.2 billion—demonstrating robust financial results and significant market influence during this timeframe.

U.S. Economic Downturn (2001–2004)

In the aftermath of the dot-com crash and the economic impact following September 11, Primus curtailed its expansion ambitions and focused on debt reduction as its share price fell to US$0.54 by June 2002. This prudent approach helped the company avoid insolvency, enabling it to sustain profitability with a full-year EBITDA of $101 million in 2002. During this challenging period, Primus pursued growth through acquisitions, including obtaining the U.S. retail voice customer segment from Cable & Wireless (2002), acquiring Canadian ISP Magma Communications Ltd, and taking over AOL/7’s internet service and interactive media operations in Australia, alongside smaller Australian dot-com entities such as UseOz, Blue Mountains Internet, and Standard.net.

Despite adverse market conditions, Primus managed to grow and gain recognition: it was added to the Russell 3000 index in 2003 and appeared in Forbes' 2004 Fortune 1000 list based on revenue figures. A 2002 study by TeleGeography ranked Primus as the fifth largest global carrier for international PSTN voice traffic. Additionally, the company upgraded its stock listing from NASDAQ SmallCap to NASDAQ National Market to improve transparency and enhance its market profile.

Financial Challenges (2005–2009)

By late 2004, Primus’ stock value had dropped by 69%, with further declines in 2005 driven by shrinking revenues from traditional long-distance telephone, dial-up Internet, and prepaid calling services. To address these pressures, Primus pivoted its business model away from long-distance voice offerings toward becoming a comprehensive telecommunications provider, emphasizing bundled local, wireless, broadband, and VOIP services in strategic markets.

In 2004, Primus introduced Lingo, a high-speed VoIP product utilizing its international data infrastructure to provide unlimited calls within the U.S., Canada, and Western Europe for $19.95 monthly. Although broadband and VOIP revenues grew by 6%, by March 2006 the company’s shares were downgraded from NASDAQ National Market to the Capital Market after prices fell below $1.00 per share. Nonetheless, Primus continued expanding its DSLAM network internationally, particularly within Australia.

In 2007, Primus resolved a lawsuit involving claims of fraudulent fund transfers with a settlement exceeding $22 million and confronted additional federal legal challenges. By 2008, its stock had declined over 99% from its peak in early 2000 amid falling revenues and escalating losses. SEC disclosures revealed significant deficiencies in internal financial controls related especially to income tax accounting as of December 31, 2006.

Bankruptcy and Recovery (2009–2010)

On March 16, 2009, Primus filed for Chapter 11 bankruptcy protection due to financial distress. The company successfully emerged from bankruptcy on July 1, 2009, following a debt restructuring process. Holders of the former common stock (NASDAQ:PRTL) faced uncertain recovery prospects contingent on financial performance over the subsequent four years. Creditors assumed substantial ownership stakes as part of the reorganization.

The restructuring reduced total debt by $316 million (approximately 55%), leaving around $255 million outstanding; interest expenses were cut nearly in half, and debt maturities were extended. Notably, Primus’ operational divisions across the United States, Australia, Canada, India, Europe, and Brazil were excluded from the bankruptcy proceedings and continued regular business activities.

Following its emergence from bankruptcy, Primus remained off public exchanges until June 23, 2011, when it resumed trading on the NYSE under the symbol PTGI—signifying an important milestone in its financial turnaround and market re-entry.

Acquisition of Arbinet (2010-2013)

In March 2010, Primus disclosed its 2009 financial results, reporting net revenues of $814 million and free cash flow amounting to $27.9 million. This performance was partially fueled by sales in IP-PBX systems, data hosting, and managed services targeting small and medium-sized enterprises.

On November 11, 2010, Primus revealed its acquisition of Arbinet Corporation, an international provider specializing in voice and IP solutions for carriers and service providers worldwide. The transaction, structured as a stock-for-stock exchange valued near $28 million, resulted in Arbinet shareholders owning approximately 23% of the merged entity, with Primus shareholders holding the remaining 77%.

Arbinet’s extensive network, utilized by over 1,100 carriers globally, was anticipated to contribute around $300 million annually to Primus’s wholesale revenue and yield cost savings between $3 million and $7 million within the initial two years post-acquisition.

Primus delists from NYSE and name changes (2013-present)

On November 8, 2013, Primus’s board resolved to remove the company’s listing from the New York Stock Exchange and deregister its common stock. This decision aimed to realize cost efficiencies benefiting both shareholders and the company by eliminating expenses related to annual audits, legal fees, and compliance with SEC regulations including Sarbanes-Oxley requirements while maintaining sufficient financial oversight.

Subsequently, on January 7, 2014, HRG Group Inc. acquired a 40.5% ownership interest in Primus. Following this development, on April 14, 2014, the company underwent a rebranding to become HC2 Holdings, Inc.

Later, on July 9, 2021, the organization announced another name change to INNOVATE Corp., signaling a strategic emphasis on innovative growth sectors. Despite this corporate rebranding at the parent level, its broadcasting division continues operations under the HC2 Broadcasting brand.

United Kingdom operations

In 2010, Primus’s United Kingdom subsidiary experienced a management buyout that separated it from Primus Telecom. This led to the establishment of New Call Telecom as an independent entity.

Broadcast expansion

HC2 initiated its entry into broadcast television ownership in July 2017 by acquiring a 50% interest in DTV America, which operated 50 low-power television (LPTV) stations across 42 U.S. markets; by October 2017, HC2 had completed full ownership. Further acquisitions included purchasing 38 LPTV stations from Mako Communications and an additional 14 from Three Angels Broadcasting Network. By November of that year, HC2 expanded its portfolio further through acquisitions of seven stations from OTA Broadcasting, two from Abrahantes Communications, nineteen from Northstar Media—including two full-power stations—and the Azteca América network from TV Azteca. In December, seven affiliates of Azteca América were acquired for $411,318.

Throughout 2018, HC2 continued station acquisitions from multiple sellers such as HERO Broadcasting, Tyche Media LLC, Joseph W Shaffer, Prime Time Partners LLC, Tran Star LLC among others for a total of approximately $9.67 million. Significant transactions included the purchase of KCEB in Longview, Texas for $225,000; stations acquired by NRJ TV and One Ministries Inc.; deals with KM Communications valued at $1.85 million; Tri-State Christian Television for $4 million; Estrella Media for $3.3 million; and WPVN-CD in Chicago for $7 million. Additional purchases encompassed WVTT-CD, Milachi Media, CNZ Communications, and V1 Productions Inc., cumulatively involving several million dollars.

In September 2018, HC2 announced plans to acquire WJFB in Lebanon, Tennessee for $5.75 million along with WDEM-CD in Columbus, Ohio at a price of $850,000. A multi-station acquisition in Puerto Rico added WOST, WQQZ-CD, and WWKQ-LD for $2.85 million. The following month saw HC2 acquire K20JX-D from Amazing Facts Inc. for $800,000.

In May 2019, HC2 purchased full-power station WSCG in Baxley, Georgia (Savannah market) for $2.6 million. Two Florida low-power stations—WBEH-CD in Miami and WSPF-CD in St. Petersburg—were slated for acquisition at a combined price of $3.7 million; however, these sales were not completed by year-end and the stations were eventually sold to other broadcasters including Tri-State Christian Television and Daystar’s parent company.

On October 21, 2022, INNOVATE Corp., successor to HC2 Holdings, announced the discontinuation of Azteca América after operating for 22 years amid competition with major Spanish-language networks Univision and Telemundo. Prior to this closure announcement effective December 31st, INNOVATE had been divesting most full-power Azteca América stations and informed affiliates and advertisers about the network’s planned shutdown.

This strategic expansion into broadcasting considerably enhanced HC2’s footprint within low-power television markets across multiple U.S. regions and Puerto Rico while strengthening its service offerings amid a competitive industry environment.

External links

Official site of HC2 Broadcasting