Neustar to split its operations into two companies

Published August 30, 2016 by Joan Tupponce

If all goes as planned, Sterling-based Neustar will divide itself into two companies next year.

“We did some analyses and determined that segregating the services into two separate groups and spinning one off would unlock shareholder value,” says Lisa Hook the company’s president and CEO.

One company, which has not yet been named, will include the majority of Neustar’s information services business, which provides marketing, security and data services. Revenue from these businesses totaled $470 million last year, with a compounded annual growth rate of 25 percent during the past four years.

The other company, which will keep the Neustar name, will provide order management and numbering services to wireline, wireless and cable communications providers as well as to social media and messaging platforms. Revenues from these services were $580 million in 2015, with a four-year growth rate of 8 percent. 

Revenues, however, could be affected by the loss of a U.S. number portability contract that Neustar has held since 1997.

The New York Times reported in July that the FCC has decided in a closed-door session to award the contract to Telcordia, a subsidiary of Sweden-based Ericsson. Neustar has been fighting to keep the contract since an advisory group recommended the switch to Telcordia in 2014.

The contract involves the Number Portability Administration Center (NPAC), which allows U.S. consumers to keep their phone numbers if they switch providers.

Neustar will continue to provide number portability services for the Canadian telecommunications industry. The company announced in early August that it has signed a deal with the Canadian LNP Consortium Inc. that lasts until the end of 2018.

Hook says one reason for splitting Neustar is that the two business groups tend to develop and grow differently. “The service industry is a different industry with different skill types. The separation will enable management of each company to have a better focus and move more quickly than today.”

Hook will become president and CEO of the information services company. Paul Lalljie, Neustar’s current senior vice president and CFO, will be president and CEO of the numbering services company.

In late July, Neustar reported  second-quarter revenues of $297.6 million, up 16 percent from the same quarter last year. Adjusted net income rose 12 percent to $69.4 million.