Neustar to split into two companies. Here’s why


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Neustar, which operates domain name registry services for .co, .biz and many others, is splitting into two publicly traded companies.

The move comes as the company’s stock (NYSE:NSR) has fluctuated wildly in recent years as the company tried to retain its Number Portability Administration Center (NPAC) contract.

The NPAC contract with the government is akin to Verisign’s contract to run .com; it provides stable revenue and makes up a good chunk of its business.

Neustar is losing the $500-million-a-year NPAC contract, but it’s not clear when the transition will take place. It’s also suing to try to retain the contract.

Since the NPAC contract represents half of the company’s revenues, any movement in the transition date can have a big effect on its stock price.

The other half of Neustar’s business is marketing services, domain name registries, internet security and some other telecom services. The company has built this business up as its prepares for losing the NPAC contract.

The proposed split will enable people to essentially bet on the future of the NPAC contract (and a few related revenue streams) and Neustar’s other businesses separately.



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