RESELLER CHANNEL: NUI Telecom Snaps Up 3 More Resellers

By Khali Henderson

Posted: 11/2002

NUI Telecom Snaps Up 3 More
Resellers

By Khali Henderson

NUI Telecom, the telecom unit of
energy company NUI Corp., is snapping up the assets of three more resellers as
part of its rollup strategy. The most recent deals have been with Norcom Inc.,
Worldnet which is based in Queens, N.Y., and runs international minutes —
primarily prepaid and Telecorp Ltd.

"Our strategy is to do three to
five accretive acquisitions per year," says Dick Boudria, president and CEO
of NUI Telecom, noting there are more transactions in the hopper. "We go
out and source candidates that fit our model."

That model is a one-source solution
— "the old telco with new services at competitive prices."

The company is looking for asset
purchases of commercial bases it can sell its bundled services into. In
addition, it seeks to retain the services of the officers or key employees as
employees, agents or consultants.

In the case of Norcom, NUI closed on
the acquisition of certain assets of the Florida-based long-distance carrier
Aug. 30 for approximately 216,000 shares of common stock of NUI Corp., which was
$19.35 or approximately $4.17 million, at the time. The purchase includes 4,000
Norcom small and midsize business accounts located in geographic areas served by
NUI Telecom. The two-part deal also includes the purchase of a second base that
Norcom will develop as an independent agency for NUI Telecom over the next 18
months.

In the Telcorp all-cash deal, which
is pending, NUI Telecom will acquire the 13-year-old company’s primarily
commercial long-distance customer base for about $3.5 million plus an additional
payment based on results from June through November, according to an NUI Telecom
spokesperson. Steve Samuels, former Telcorp president, and two other Telcorp
executives have agreed to stay on with NUI Telecom in a consultative capacity.
Executing on the company’s plan to expand internationally, NUI Telecom also has
entered into an all-cash deal with Worldnet, which is based in Queens, N.Y., and
runs international minutes – primarily prepaid – on a retail and wholesale basis
to South America. The company will receive a one-time payout based on the value
of the base as of Sept. 30, according to the NUI Telecom spokesperson. He adds
that the two companies will engage in a five-year cooperative marketing
arrangement beginning Oct. 15 that calls for a margin split between the two
companies for traffic moved onto the NUI Telecom network.

Boudria says NUI Telecom already has
an international group and a wholesale group as well as switch partitioning in
New York, Miami and London. NUI Telecom interconnects to 40 carriers in London
and has 18 reciprocal agreements with carriers in South America, connecting in
Miami, Boudria says.

"[International connectivity]
enables us to move up market into multinational corporations with both our
direct sales force and agents," he says.

In addition to these recent deals,
in May 2001 NUI Corp. acquired TIC Enterprises. In July, NUI ceased operation of
TIC’s telecom equipment and shipping divisions and transferred management of
TIC’s profitable network services and wireless divisions to NUI Telecom. Boudria
says NUI Telecom gained 42 employees, a base of business, a distribution channel
and also contracts with wireless company Nextel.

Boudria says it’s critical to point
out that the company has only one sanctioned agent program, NUI Solutions
Express, which it operates under the NUI name and separately from other
marketing arrangements. "There is no channel conflict," he says,
explaining that there is parity in retail pricing and commissions.

He says NUI Telecom is working
toward fuller integration by developing commonalities and consistencies among
the distribution programs. "The focus many vary by group, but there will be
a common product, price, support, maintenance and billing," he says,
estimating this will be achieved by year’s end.