The U.S. Federal Communications Commission voted unanimously on Thursday to drop Neustar Inc in favor of Ericsson subsidiary Telcordia Technologies as a contractor that helps telephone carriers route calls and text messages.
The exclusive government contract, which expires on June 30, accounts for about half of Neustar's revenue, and the company's shares have taken a hit in recent weeks from the expected loss of the contract.
The stock was up 2.2 percent at $22.40 in midday trading after Neustar announced a $150 million share repurchase program and affirmed its financial outlook for the first half of 2015.
The contract is to manage the world's largest registry that allows consumers and businesses to keep their telephone numbers when switching providers. It serves more than 2,000 telecom carriers in the United States and Canada.
FCC commissioners, among other reasons, cited the savings expected to result from switching to Telcordia, which the agency's staff and advisers had recommended.
FCC Commissioner Ajit Pai said Neustar's contract cost about $460 million last year, while Telcordia's bid amounted to costs of less than $143 million per year.
Neustar, which has managed the contract since 1997, fought against the change by raising various concerns and on Thursday said the vendor selection was defective and fraught with risks.
"We are considering all options to address the significant flaws in the selection process," Chief Executive Officer Lisa Hook said in a statement.
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