Excel Agents Sue Company

[VANTEK COMMUNICATIONS]

Discount Long Distance Digest, Friday May 10, 1996

EXCEL BEING SUED BY AGENTS - AS STOCK GOES PUBLIC TODAY

Tulsa, OK, May 10, 1996 (DLD DIGEST) -- Two big news stories involving
Excel Telecommunications today. Excel (NYSE: ECI) finally opened up
the company for public trading today in a $150 million Initial Public
Offering on the New York Stock Exchange. The stock's initial trade
value will be at $15 a share, with 10 million shares being offered to
the public.

Kenny Trout, president of the Dallas, TX based reseller, and a small
number of other Excel insiders will keep over 97 million shares of the
stock for themselves. Troutt's stock alone is valued at over $961
million.

Unfortunately, the company's stock may not do as well as had once been
expected, due largely to Thursday's announcement of a $400 million
lawsuit being brought against Excel, Troutt and vice president of
marketing Steve Smith.

"The company is featureless as far as any expectations for big upside
potential," stated David Menlow, president of IPO Financial Network.
He equated the company to "blue smoke and mirrors" and stated, "We
just keep hearing that this is a company that may not end up as good
as some think it is."

The lawsuit, filed by Independent Excel Representatives Linden Wood,
Brad Campbell, Candy Campbell and Jerry Szeszulski of Tulsa, OK, claim
that Smith and the company "interfered with their sales of
long-distance time and training materials", as well as threatening
them with termination for using training materials not sold to them by
the company. Excel makes profits from the sale of training materials,
and other products/services, to their independent agents. Wood is
currently Excel's #2 top paid independent representative, and earns an
average commission of $500,000 a month with the compamy.

In addition to the above complaints, the suit also accuses Excel of
being a "multilevel marketing scheme", and goes on to accuse the
company of defamation, unfair competition and interference with
contractual relations.

On a related note, an article in Friday's edition of {The Tulsa World}
blasted the company as being a "pyramid of expanding recruits
originating from a single representative".

Industry insider Judy Reed Smith of Atlantic-ACM, Inc. claimed in a
recent interview with the paper that "You have very low potential to
earn anything as an Excel IR, Independent Representative ... the vast
majority never make any money."

According to the paper, over half of Excel's customers drop out on
average each year, and that in 1995, 86% of their independent reps
opted not to pay the annual fee Excel charges to keep their positions.

[Ken Leonard]

VANTEK COMMUNICATIONS (van...@northcoast.com) wrote:

> Discount Long Distance Digest, Friday May 10, 1996

> EXCEL BEING SUED BY AGENTS - AS STOCK GOES PUBLIC TODAY

The representative in question is very obviously in non compliance
with corporate policy and hasn't a leg to stand on. The courts will
prove this out. Also, the expected damaging results against the IPO
did not occur per:

By John Kirkpatrick, {The Dallas Morning News}

Knight-Ridder/Tribune Business News

May 12--Dallas-based Excel Communications was a smash hit at its Wall
Street debut Friday, when its shares nearly doubled from $15 to
$29.375 in an initial public offering.

The New York Stock Exchange's opening bell was rung by Excel founder
and CEO Kenny Troutt. By the end of the day, Mr. Troutt had rung up
about $1.9 billion in the value of his Excel stock putting him
officially in the leagues of Texas' Big Rich.

Mr. Troutt, 48, holds almost 64.2 million shares, none of which were
part of the initial offering. The offering was for 10 million shares,
with Excel getting $15 per share, or $150 million.

Friday's performance made Excel the highest percentage-gainer on U.S.
exchanges. It also was the third most active stock.

Excel has become a somewhat controversial company in recent weeks, as
some analysts criticized its accounting methods and other matters. But
buyers evidently were unfazed. Shares went as high as $33.125 at one
point Friday.

"It's definitely a controversial company. Most people either love it
or hate it," said Ryan Jacob, director of research at IPO Value
Monitor in New York. "If you look at their growth record for the past
three years, you can understand the interest in the stock."

Excel's revenue grew from $30.8 million in 1993 to $506.7 million in
1995. During the same period, net income rocketed from $2.4 million to
$44.5 million. In the first quarter of 1996 alone, net income was $34
million on revenue of $280.8 million.

Excel is a reseller of long-distance service, although it is eyeing
building parts of its own network.

The company relies on multilevel marketing, whereby independent sales
representatives -- not employees -- sell the service. These sales reps
get commissions based on sales to their own customers, as well as the
customers of reps they've signed up for Excel.

In an unrelated matter, four Excel sales representatives have sued the
company for $400 million in Tulsa, alleging that the company
interfered with their incomes.

Bloomberg Business News contributed to this report.

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