Bigger and Better

Posted: 3/2004

Bigger and Better
BCN Telecom Emerges from NUI Telecom Buyout
By Khali Henderson

Dick Boudria

NUI Telecom was purchased for $10.8
million in a management buyout from parent energy company NUI Corp. in
mid-December. Under new ownership, the company will change its name to BCN
Telecom Inc.

NUI Telecom President and CEO Dick Boudria lead the buyout,
which included other unnamed investors, and will retain his position with the
new company.

The transaction also included the expedited buyout of Norcom
Agency Sales for $3.1 million. NUI Telecom was scheduled to purchase NAS in
February 2004 for stock, but Boudria renegotiated the deal as part of the NUI
Telecom buyout (see story below).

Boudria says the reason for the acquisition was to privatize
the ownership to gain full control and to make our sole focus telecommunications
you know to not be a subsidiary of a gas company or some other type of
company. In addition, he sought to make the companys financial statements
reflect its performance. They were being distorted by corporate allocations
that were in excess of $4 million, he says.

While newly unencumbered, NUI Telecom once touted the backing of
its large energy parent as a sign of stability in an uncertain marketplace. One
of the attractions in the merger [with NUI Corp.], which goes back over four
years, was access to capital, Boudria admits, but says that the parent had difficulties and
quite simply the money dried up.

They werent able to support further acquisitions or to provide
other funding or requisite resources to support our initiatives and our plan, he
says, adding, Were 10 or 12 times the size [we were in 1999 when we merged
with NUI Corp.] but now we have new funding from investors who, again, believe
in the telecom sector and have experience and theyre not distracted by anything

NUI Telecoms new name stands for Better Communications Now, and
the company is planning an unveiling of the new brand in conjunction with the
Channel Partners Conference & Expo in Las Vegas this month. Boudria says the
agent channel is a critical component of the companys growth
strategy; 85 percent of its sales are from partners. The company maintains
agreements with two master agencies, Solutions Express and Cornerstone, which
includes some principals from NAS.

The company also plans to continue its acquisition strategy,
started while still part of NUI Corp. In 2002, the company acquired Norcom Inc.,
Worldnet and Telecorp Ltd. In the case of Norcom, NUI bought the company for
stock valued at approximately $4.17 million, at the time. The two-part deal also
included the purchase of a second base that Norcom would develop as Norcom
Agency Sales for NUI Telecom over the ensuing 18 months.

BCN Telecoms financial objective is to exceed $100 million in
revenue within 18 months to two years, and then to exceed somewhere between $300
million to $500 million in revenue within four years.

Beginning this month, the company plans to push its new UNE-P
local and long-distance bundle as well as integrated T1s on the wireline side.
On the wireless side, BCN Telecom is adding Verizon to its NextTel, Sprint
portfolio and rolling out a competitive match program and a 13-month free with a
one year agreement In addition to new product, Boudria says that the company is
deploying a new provisioning system that is fully automated and Web-based with
expectations for cutover April 1. We can layer a lot more volume in here
without having to add people exponentially and the agents have a lot more
automated capability in interfacing with us and viewing activity on their
particular accounts, he says of the impact of the new back-office

There also will be additional personnel in the provisioning and
financial departments. A major accounts direct sales group has been formed and
is lead by Nicole Barch. The company planned to hire staff in product
management, support and development as well as a new vice president of sales and
marketing with oversight of the agent channel, master agencies and the internal
sales organization plus product development, support and rollout.

We are really fully building a sales channel with the requisite
marketing support so we can be more responsive to the marketplace and our agents
and customers, Boudria says.

Norcom Agents Cash In
By Tara Seals

Norcom Inc. agents benefited twice from the sale of the
companys base to NUI Telecom, by cashing in on an equity program.

Norcom had set up an opportunity that gave one stake in the
company to any agent committed to bringing $100,000 in billing per month, and
two stakes for bringing $200,000 or more per month. A payout was triggered in
late 2001 when the company sold to NUI, giving agents a two-time multiple on the
sale for each stake. But it didnt end there: Norcom also went on to sell the
growth of the base from 2001-2003 to NUI.

We knew we would sell the base again in late 2003, so we signed
up agents to the program all over again and they had 18 months to bill as much
as they could, explains Eric Mostrom, president at Norcom.

I rest easy knowing Im one of the few paying agent bonuses,
and making good on my word twice in a downturn is something, he

In all, the company has paid out more than $5 million in agent
bonuses. While Norcom has no immediate plans for another sale, you never know,
says Mostrom.


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