Current Verizon residential telephone and Internet customers in the Northern New England states of Maine, New Hampshire and Vermont may soon enjoy an increase in Broadband access due to an upcoming deal between Verizon andFairPoint.
According to a joint press release by Verizon Communications Inc. and FairPoint Communications Inc., Verizon will be spinning off some of its operations in Maine, New Hampshire and Vermont. Those operations will be merged with FairPoint.
The operations that Verizon is basically selling to FairPoint in Maine, New Hampshire and Vermont are properties that currently serve about 1.5 million access lines, 180,000 DSL customers and 600,00 long distance telephone customers.
The deal, after receiving shareholder and federal regulatory approvals, is expected to be completed within a year. When the deal is complete, FairPoint will own “switched and special access lines” in Maine, New Hampshire and Vermont, Internet service, long distance lines for private lines, and enterprise voice CPE (customer premises equipment) accounts.
The following Verizon customers will not be affected by the merger: Verizon Wirelesss, Verizon Business, Federal Network Systems LLC, Verizon Network Integration Corp., Verizon Global Networks Inc., or Verizon Federal Inc.
Benefits of the Verizon and FairPoint Deal
The deal benefits Verizon, because they can dump $1.7 billion dollars of new debt off on FairPoint Communications. Verizon will spin off the operations into a Verizon subsidiary before the merger. The new subsidiary will incur the $1.7 billion debt. The subsidiary will then be merged with FairPoint, becoming a FairPoint subsidiary.
Customers in Maine, New Hampshire and Vermont are expected benefit because FairPoint is accustomed to catering to rural markets, according to FairPoint Communications. FairPoint has plans to “significantly increase broadband availability” In Maine, New Hampshire and Vermont within the first year after the merger is completed.
Current Verizon customers in Maine, New Hampshire and Vermont will be billed by FairPoint Communications within in the year. FairPoint Communications has not addressed the issues of potential fee and rate hikes. There has also been no information forthcoming about an increase in customer service or technical service personnel that FairPoint Communications will need to service these additional lines and new customers.
FairPoint currently operates 31 local exchange companies in 18 states. FairPoint offers the standard array of telecommunications services including local voice, long distance voice, data, Internet, and broadband.
FairPoint is headquartered in Charlotte, North Carolina.
Verizon and FairPoint are both traded on the NYSE.