By Khali Henderson

Posted: 08/2000

Master Agency Acquired by CLEC in Landmark Deal
By Khali Henderson

Master agency US Telebrokers Inc. (www.ustelebrokers.com) has been acquired by Compass Telecommunications Inc.
(www.compasstel.com)–both are based in Scottsdale, Ariz. US Telebrokers will continue to operate as a master agency and subsidiary of Compass Telecommunications. Financial terms of the stock-based transaction were not disclosed.

The acquisition of an agency by a carrier is among the first publicized transactions of its kind, and further lends credibility to the commercial value of the distribution channel, say industry observers.

Prior to this, the most notable pairing of a master agency with a carrier was between Online Telecommunications and OneStar Long Distance
(www.onestarld.com). In March 1999, OneStar acquired the assets of the $10 million agency, including its employees, offices and names of its subagents. Terms of the deal were not disclosed, but Online’s founder Rick Ribas says he was paid an undisclosed sum and hired by the carrier under an incentive-based plan to create OneStar’s agent program. OneStar did not acquire Online’s carrier contracts or the business under those contracts, and Ribas maintains Online, its subagents and accounts as a separate company.

In contrast, Compass has acquired US
Telebrokers, including its carrier contracts. US Telebrokers will continue to function as a separate subsidiary, trading on the marquee names of carriers, such as Cable & Wireless plc
(www.cwplc.com), Qwest Communications International Inc.
(www.qwest.com) and TMC Communications (www.tmccom.com).

Ted Schuman will continue as CEO of US Telebrokers and will become senior vice president of sales and marketing for Compass. Jeff Leshin, Compass vice president of sales-alternate channels, will manage agent services for both companies.

Schuman says that the deal made
sense for both companies. US Telebrokers was looking for a provider that could
offer its agents integrated services and startup; Compass was seeking a ready-made distribution channel.

“We have evaluated many providers over the last several months searching for one company that could offer voice, data, IP, local, enhanced services, and Compass delivers on all levels with aggressive pricing and innovative products to the consumer and terrific support and compensation to agents,” says Schuman.

“Compass is committed to providing fully bundled ICP services and has embraced the agent community as the most effective way to achieve aggressive marketing and sales goals,” says Ray Powers, Compass CEO. “We selected US Telebrokers Inc. as an acquisition candidate based on their reputation in customer care, delivery and agent advocacy. This kind of channel capability is key to our ICP strategy and provides the agent community with tremendous upside potential via a broad range of end-to-end products along with nationwide ubiquity.”