NSR only competes with Stealth on IP peering. Stealth NPF has been out there longer and NSR's 'failure to launch'iPeer last year gave away market share. I am not sure that there is that much money in the service. It is just a community database between LECs. NSR likes to get a dip charge everytime someone looks up a number. I believe Stealth charges just a participation fee, not usgage based. Not positive.
The ATT-BS merger shouldn't have too much effect on NSR. They don't currently compete so they don't current steal each other's customers therefor no number porting. A common efficiency LECs usually do after mergers is consolidate their ECN NPA/NPXX. This simplifies their network and causes a ton of transactions for NSR NPAC. Net effect, more transactions short term, less long term. VoIP and wireless number porting is driving NSR transactions.
Yes - this helps... a follow-on question.
Looking at today's dated Morgan Stanley report by Xuying Chang (analyst) he states;
"Acquisitions are likely: We believe NeuStar continues
to look for acquisition opportunities to enhance its IP-based
capabilities and diversify its product portfolio. Importantly,
such acquisitions are not critical to the company�s current
2006-07 profile, but will be important to solidifying the
company�s longer-term clearinghouse role as the
communications industry evolves to be increasingly IPbased.
We would not rule out NeuStar doing an acquisition
that is modestly dilutive near-term, but we are confident that
management will insist that any target bring not only strategic
significance and proven technology, but a real and powerful
So - given he has insight into what the management team is thinking it appears Neustar will drive an acquisition strategy around complimentary IP networking solutions/service enhancements - makes sense, and that "some dilution" (of margin profile) will be acceptable seems to indicate they may break with their traditional business model - which I think they must do but still staying close to growth (revenue tied to subscribers, subscriber use of services or applications)... anyone have an idea what new solutions they might seek? MVNE makes sense, other service enhancement stuff like QoS control?, pan or X-network presence?
The easy answer is that NSR over a period of time, becomes the neutral, 3rd party provider of clearinghouse services not just to the US, but around the world. That is the growth story - not particularly well defined at the moment, but there are discussions going on in several countries to replicate the US's clearinghouse service. NSR is the only provider of this service currently. I'm not saying it's theirs to lose, as politics sometimes control decisions instead of the best person for the job, but they clearly have as good a shot based on historical performance as anyone.
For the time being, organic growth will be due to carrier consolidation and re-routing of traffic on networks and switches, will be due to new phone numbers needed for the increasingly growing forms of telecommunications, will be due to churn from one provider/telecom service to another, and will be due to the telecoms using less unionized (and pensioned) workers, outsourcing these transactions and services to companies like NSR - believe it of not, many of the functions that NSR performs for networks can be done faster and more cheaply using NSR than the telcos can do in-house on their own dime. Plenty of organic growth possibilities - not easy to quantify, but pretty visible.
Hope this helps.
Yes - I'm also starting to look closely at the opportunity...what can anyone see/say wrt growth strategies? they seem to be limited on upside organic growth due...long and hard work in the operator class software biz to grow new solutions to market...so M&A? but what do they buy, where do they diversify?
Are there qualitative differences between NSR's trade provisioning, billing, and interconnection services compared to its competitor Stealth? Would NSR win customers on pricing or is the market so new that they could grow just from new contracts?
Thanks Bunka, that's helpful. I agree that this company, as any company, needs to be run well internally to make its stock a good BUY; does anyone have any particular insight into the quality of the management. So they were smart enough to do a leveraged buyout with Warburg Pincus, but are they Top Gun managers that can take NSR to a multi billion dollar revenue company?
Thanks DR, that is helpful information, although wading through the acronyms was tough for me not being in the business.
Do you agree that the ATT - Bell South merger will be a plus (big-medium-small) for NSR? And do you agree with previous posts that NSR has successfully hidden outsized margins from the telcoms so they won't complain about price increases.
You've heard of Vonage and Time Warner Cable and others offering VoIP telephone services, right? Well, more and more players are getting into that business. New regulations regarding E911 and CALEA require these and other companies that sell these services to businesses to implement additional features and functionality the the Slyantro and Broadsoft platforms do not have as an inherent component of those hosting services. As such, they need to develop additional capabilities. Nuestar offers the management of these services and can be contracted to fullfill the compliance portion of these legistations that are coming down the pipe in the next 6 to 18 months. At this point, hiring Neustar is going to bring SIGNIFICANT revenue into Neustar. I have no connections to Newstar so I don't know in ternals but I DO know that as long as the company is run well internallly, they should be a VERY profitable company.