Neustar to split into two firms. Here’s why

Firm will separate NPAC contract from the rest of its business.

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

The move comes as the firm’s stock (NYSE:NSR) has fluctuated wildly in recent years as the firm 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 firm’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 firm 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.

The part of the firm with the NPAC contract will retain the Neustar name and the other part will be rebranded under the leadership of Paul Lalljie Lisa Hook. Paul Lalljie, right now Senior Vice President and Chief Financial Officer of Neustar, will run Neustar.

The split will probably take a year to complete.