Verizon-FairPoint deal announced

CHARLOTTE, N.C. – FairPoint Communications, Inc. announced last Tuesday that it has agreed to merge with a subsidiary of Verizon Communications Inc. owning the wireline operations of Verizon in Maine, New Hampshire and Vermont. Based on the number of access lines as of Sept. 30, 2006, the combined company will be the eighth largest telephone company in the United States.
    The combined company will serve approximately 1.6 million access lines, 234,000 high-speed data subscribers and 600,000 long distance customers. FairPoint plans to invest about $200 million – including $95 million to $110 million before closing – to accelerate the transition.
According to a news release, the transaction combines Verizon’s personnel and local exchange and related business assets from Maine, New Hampshire and Vermont with the focus and specialized expertise of FairPoint. As of Sept. 30, 2006, FairPoint served 252,000 access lines through its 31 local exchange companies in 18 states, with 64,000 access lines currently located in Maine, New Hampshire and Vermont.
Officials believe the merger will result in significant value creation opportunities through improved revenue opportunities and enhanced operational efficiencies.
“This is an important day that further validates our strategic vision and provides greater certainty for the future of our company,” said Gene Johnson, chairman and CEO of FairPoint. “We believe that this combination remarkably accelerates our existing plan to ensure favorable returns for FairPoint shareholders, while continuing to emphasize high-quality service for our customers and a rewarding work environment for our employees.
“The ability to integrate and serve these northern New England operations will establish FairPoint as one of the preeminent telecommunications operators in the region,” he said. “We are confident that our experience as a national operator will enable us to provide high levels of service and innovative new products.”
The merger is expected to create a range of benefits for customers. FairPoint plans to significantly expand DSL and other broadband availability from the current level provided over the Verizon network in the three-state region.
The initial expansion will be essentially completed within the first 12 months after the completion of the merger. Additionally, FairPoint will increase local operational presence and create new local service centers to deliver industry-leading customer service.
Officials said FairPoint is committed to a New England-based management presence focused on dedicating the necessary financial resources to benefit local communities. FairPoint intends to maintain union jobs, working with the union in a collaborative fashion, and continuing to honor the existing collective bargaining agreements.
Roughly 3,000 employees of Verizon will continue their employment with the operations of the local telephone operating companies for Maine, New Hampshire and Vermont that FairPoint will acquire in the merger. Approximately 2,500 of these positions are union represented. Most of the employees are in operations in the tri-state area. The affected employees will not see any changes to compensation or benefits as a result of this transaction, and should expect that service by them and for their customers will be transitioned smoothly.
When asked in a telephone interview Tuesday how the merger would affect the Presque Isle Verizon office, Jennifer Sharpe, director of corporate communications for FairPoint said, “We should all assume status quo for people and facilities.”
“There is absolutely no intention of eliminating employees or facilities,” said Sharpe, “because we’re integrating this into our own.”
As part of the agreement that was announced last week, FairPoint will assume pension and other post employment benefit obligations for all active, continuing employees of Verizon companies. The pension obligations will be fully funded as of the closing of the merger. Retired Verizon company employees from the region will continue to receive their benefits pursuant to the Verizon plans.
Incorporated in 1991, FairPoint owns and operates 31 local exchange companies located in 18 states offering an array of services, including local and long distance voice, data, Internet and broadband offerings.