AUGUSTA (AP) – Maine’s consumer advocate wants two telecommunications companies to restructure their proposed sales agreement to reduce the cost by $600 million in an effort to make the planned new entity more financially viable.
FairPoint Communications Inc. of North Carolina proposes buying Verizon Communications Inc.’s landline business in northern New England for $2.7 billion.
A lower price is one of 23 conditions that Maine Public Advocate Richard Davies says should be imposed by the Maine Public Utilities Commission before the acquisition is approved.
Lowering the price would allow a new FairPoint to operate with less debt, Davies said.
“Because, under Maine law, Verizon does not have the right to abandon service without the commission’s approval, the public advocate believes that it is appropriate for the commission to require Verizon to lower its price in order to ensure FairPoint’s long-term financial viability. Without a significant reduction in the price, this proposal will not work for Maine’s residential and small business customers,” Davies said in a statement.
FairPoint is seeking to add 1.6 million Verizon lines in Maine, New Hampshire and Vermont to its current business which operates 300,000 lines in 18 states.
The proposal is currently before the regulators in all three states – all of whom must approve the deal for it to take place.
The conditions put forth by the Maine public advocate were offered as a recommendation to the Maine PUC.
A Verizon spokesman told the newspaper Friday the company did not share the public advocate’s view.
“We strongly disagree with (the public advocate’s) analysis,” Peter Reilly said, adding that Verizon was “confident the PUC will weigh all the evidence before them and consider all viewpoints.”
The Bangor newspaper said FairPoint officials could not be reached for comment on Friday afternoon. Telephone message left by The Associated Press on Saturday were not immediately returned.
Pete McLaughlin, spokesman for the International Brotherhood of Electrical Workers, which opposes the sale, told the newspaper the proposed conditions “all hit the mark of what we’ve been saying all along.”
The Maine PUC recently concluded statewide hearings on the proposed sale, which has been criticized by some Verizon employees who are members of the IBEW and the Communications Workers of America.
Davies said his office would recommend that the commission not approve the acquisition unless all 23 conditions are adopted.
The public advocate’s statement grouped the conditions in seven categories including FairPoint’s financial viability, its obligation to provide high quality service, and prices for telephone and broadband services.
Also addressed in the recommendations are FairPoint’s technical ability to implement new operational systems, its commitment to deliver DSL broadband service throughout Maine, FairPoint’s continued delivery of wholesale network services to competitive carriers and its obligations to maximize federal support to keep telephone rates as low as possible.
“The risks presented by this case are enormous, and all potential adverse impacts must be addressed now. Otherwise the commission should reject this deal,” William Black and Wayne Jortner, the attorneys who represent the Public Advocate’s Office in the proceedings before the Maine commission, said in last week’s statement.
Black said Saturday the public advocate wanted to see the $1.7 billion debt portion of the proposed acquisition reduced to $1.1 billion.
The public advocate’s condition Number 1 states expressly: “The proposed transaction must be restructured to allow FairPoint to reduce its bond debt level by $600 million, thereby reducing the associated interest expense and debt leverage levels.”
AP-ES-10-13-07 1132EDT
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