Verizon, FairPoint Seek Merger Approvals in Me., N.H., Vt.
Me., N.H. and Vt. regulators received joint applications for approval of Verizon’s $2.7 billion spinoff of its wireline operations in those states to FairPoint. The companies told the states that “no existing services will be discontinued or interrupted, nor will any rates change” due to the transfer, and “existing wholesale arrangements will remain largely the same.” The companies said FairPoint will “assume all the rights and obligations of Verizon” in the 3 states. The companies said FairPoint plans to keep Verizon’s workforce in the states and will honor contracts with Verizon’s unionized employees.
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Each of the 250-page applications described how Verizon first would create a subsidiary for northern New England assets and transfer its state operating companies to that entity, which also would take over $1.7 billion in Verizon debt. The new company would be spun off, merging immediately into FairPoint. The Me., N.H. and Vt. operations would be FairPoint operating companies. FairPoint said $1 billion in new equity it plans to issue will provide the main financing for the deal, which will make it the nation’s 8th-largest telecom carrier, with 1.6 million lines.
FairPoint stressed its experience as a telecom provider with 31 operating companies in 18 states -- including Me., N.H. and Vt. and 13 years’ experience in integrating acquisitions. It said its post-merger structure will ensure acquisitions from Verizon have the attention of high-level decision-makers. It said its experience with rural and small-town markets will enable it to respond quickly, appropriately and effectively to customer needs in Verizon areas. FairPoint will set up new customer service centers in the states within a year after closing, it said. Other plans: hiring at least 600 employees and expanding broadband availability to unserved areas. FairPoint said it hired consulting firm CapGemini to handle change-over of the operations’ billing, ordering and other back-office systems from Verizon’s systems to those of FairPoint.
But state commissions should beware FairPoint’s claims, said the International Brotherhood of Electrical Workers (IBEW) and Communications Workers of America (CWA). The IBEW was particularly harsh, saying Verizon seems to be playing a “shell game” to pump up its bottom line and avoid having to spend money on rural broadband. The IBEW said FairPoint has done little with fiber-based broadband and video in existing service area. It said the deal would leave northern New England served “by a much smaller company with fewer resources to expand Internet access… billions of dollars in debt and a very small margin for innovation.”