Maine Postpones Verizon-FairPoint Deal Vote One Week to Consider Settlement
Maine regulators delayed final action on the $2.7 billion Verizon-FairPoint merger until Dec. 20 to review of a last-minute proposal by some parties to settle major financial, broadband deployment, ratemaking and service quality issues. The settlement offer to the Public Utilities Commission was agreed to by the two companies, state public advocate, PUC staff and wireless carriers. Others, notably competitive landline carriers and unions representing Verizon workers, refused to sign onto the proposal, citing major objections.
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Verizon and FairPoint said the settlement would require that FairPoint reduce its dividend 35 percent and put at least a $35 million yearly toward debt payment. Verizon would contribute $235.5 million to FairPoint’s working capital, effectively reducing FairPoint’s debt. The proposal “provides a fair value to Verizon for its wireline properties,” Verizon said. “At the same time it addresses financial concerns raised in regulatory proceedings in Maine and New Hampshire.” But the CWA and IBEW oppose the settlement and want hearings, they said. “The terms of the proposed stipulation would not enable FairPoint to meet reasonable standards of financial fitness,” the unions said jointly. “As such, approval of the proposed transaction, even under the terms of the proposed stipulation, would not serve the public good.”
The unions call the package a bad deal because it posits a far smaller price cut than the $600 million recommended by PUC staff and the public advocate, would allow FairPoint to pay dividends “greatly in excess” of its net income, includes no financial cushions to help FairPoint weather unexpected adverse operating results, doesn’t guarantee vacant jobs will be filled or funding of retirement health benefits, doesn’t guarantee network investment beyond what Verizon spends, and dramatically changes expense and revenue projections. Given the divisions among the parties, the PUC requested they continue settlement negotiations and report results Dec. 20.
“Consumers may rest assured that we will diligently deliberate this case and reach a conclusion that serves the state,” PUC Chairman Kurt Adams said, announcing the delay. “Employees of these companies may also be assured that we will not permit any merger to occur that is so financially unreasonable that it leaves a company unable to fulfill its obligations to its employees and retirees.” Adams said the settlement doesn’t address wholesale market issues, back- office functions, service quality measurement, privacy issues or federal regulatory implications.
The impact isn’t clear of Maine’s postponement of final action on the timetables of New Hampshire and Vermont. The New Hampshire PUC is to meet Dec. 17 and the Vermont Public Service Board on Dec. 18, but staffers with both states said the Verizon-FairPoint merger won’t be on the agendas. They declined to speculate on when the merger will be considered.