Excel to Create Long-Distance Firm of Its Own

Excel Communications Inc. on Friday said that it agreed to buy Telco Communications Group Inc. for $1.2 billion to strengthen its position as the fifth-largest long-distance company in the United States.

The deal will create a communications company with 6.3 million customers, a 100,000-mile fiber-optic network and revenues of about $2 billion. It will also generate substantial cost savings for Excel, company executives said.

Excel stock jumped $2.375 to close at $21.125 on the New York Stock Exchange, and Telco stock jumped $3.875 to close at $25.875 on the Nasdaq market.

Industry analysts said the acquisition will provide Dallas-based Excel with the network it needs to continue growing and also should boost profit margins.

Formed just 10 years ago, Excel has carved a niche by buying wholesale long-distance service from companies with networks and reselling it to customers through independent sales agents.

That strategy brought sensational growth rates, with revenues rising from $31.2 million in 1993 to $1.32 billion in 1996, but the company decided it was time to set up its own long-distance network.

Telco, which is based in Chantilly, Va., offers discounted long-distance telephone services.

Under the agreement, Telco shareholders will receive 0.7595 share of common stock of the combined company and $15 in cash for each share of Telco common stock.