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THIS WEEK'S NUMBER: 1 as in Number one condition for sale
Maine public advocate: Lower Verizon's price
A $600 million cut is one of 23 conditions the Maine PUC is urged to impose on the acquisition.
By FRANCIS X. QUINN
Associated Press
October 14, 2007
AUGUSTA - 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 business that operates
300,000 lines in 18 states.
The proposal is 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, reported
Saturday by the Bangor Daily News, 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 advocate wanted to see the $1.7 billion
debt portion of the proposed deal reduced to $1.1 billion.
The public advocate's condition No. 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."
There are many, many more issues that need to be examined. This is just a snippet of what's wrong with this deal. For more in depth details, please go on-line to www.no-deal.org. This is a bad deal for consumers, tax payers, rate payers, our communities and for the economic growth of New Hampshire.
