PORTLAND, Maine — The words “sale” and “FairPoint” can trigger bad memories for Mainers who experienced systemwide troubles after the North Carolina company bought telecom giant Verizon’s landline telephone business here.
Fear of a repeat lingered in 2014, when the Legislature passed a bill so transparently setting a higher bar for regulatory review of FairPoint that Gov. Paul LePage named the company in vetoing it.
But a key detail has long been missing: Who’s it going to be?
On Monday, the Illinois-based Consolidated Communications unmasked itself as the fateful and, according to company officials, capable suitor.
Jennifer Spaude, senior communications and investor relations director for Consolidated, said this time around will be different for customers because of one key detail: the company’s computer systems are staying put.
“We’ve got a really successful track record of integrating companies, and we have a very disciplined approach and a playbook that we will draw on,” Spaude said.
With the news still fresh and Consolidated unfamiliar to them, officials with the company’s employee union said they’re “cautiously optimistic.” Tim Schneider, Maine’s consumer advocate, also said he’s not familiar with the buyer, but that his office “want[s] to make sure, whoever they are, that they’re interested in providing telephone service in Maine.”
While Consolidated’s big push to investors is about fiber, company officials say they have experience with rural telephone service, too.
Wired residential phone service is a dwindling market. But that “legacy” business will become a much bigger part of Consolidated’s income with the purchase of FairPoint.
A presentation to investors Monday showed Consolidated gets about 83 percent of its revenue from business and broadband service. FairPoint’s at about 62 percent, with almost one-third coming from residential voice services.
The merged company would have about one-fourth of its revenue from voice services, with those numbers.
Mike Shultz, Consolidated’s vice president of regulatory and public policy, said the company has experience with rural voice customers in Illinois and Minnesota and areas of California, Philadelphia and Texas, where it provides regulated phone service.
“We’ve been very successful at doing those kinds of integrations,” Shultz said.
The company said it plans to ditch the FairPoint name some time after the expected close of the sale in mid-2017, though it said billing and FairPoint-issued email addresses will remain the same.
The FairPoint purchase would be Consolidated’s largest.
Consolidated would become the ninth-largest fiber-optic cable network operator in the country through the deal, more than doubling its network to 35,000 miles. That network is the data backbone for much of the state, and it can branch off with copper lines and other connections directly to home and business customers.
Consolidated said that network “creates a broader platform from which to expand our services to more effectively compete in the communications industry.”
The company said that it expects the merger will allow it to save $55 million annually, mostly by sharing operating costs for its corporate offices, its network and IT support. It expects about $10 million of the savings will come from professional services and back office systems.
The company’s optimism prompted “cautious optimism” from union leaders.
“Our members and our customers have been through the ringer with FairPoint over the last eight years, and our primary concern is that this transaction [will] result in a more stable company that puts a priority on strengthening communities, not enriching Wall Street hedge fund owners,” Don Trementozzi, president of the Communications Workers of America Local 1400, said in a prepared statement. The CWA union primarily represents about 150 FairPoint workers in northern New England.
FairPoint’s hedge fund owners already got a big boost from the news Monday. The share price jumped about 10 percent, up $1.85 to $18.85.
Layoffs are still coming, and the future employment picture is uncertain.
FairPoint recently announced it would lay off 110 workers in Maine, New Hampshire and Vermont. About 46 layoffs were slated to happen in Maine.
Union officials said in a statement that those layoffs are still coming despite the news Monday. And the picture for future employment is not yet clear.
In a list of questions and answers from Consolidated, the company deferred, saying that “a detailed transition and integration plan is currently being developed, but it’s important to remember we are early in what will be a several-month closing process.”
That process could have its own twists and turns.
The list of entities that could derail or challenge the merger are long, ranging from federal authorities to state legislatures and the shareholders of both companies.
While the merger won’t have to go through the extreme vetting proposed by lawmakers in 2014, it will require approval from the three-member Maine Public Utilities Commission.
The purchase marks the end of a long road out of bankruptcy for FairPoint.
FairPoint has had a few tough years after emerging from bankruptcy in 2011, experiencing the longest worker strike of 2014 and continuing trouble meeting landline service quality requirements set by regulators.
After cutting employees and winning concessions from its unions, it closed 2015 with the first profitable year since emerging from bankruptcy, an achievement driven by lower operating costs and focusing on the high-capacity broadband internet service and fiber-optic connections to cell towers that attracted Consolidated as interested buyers.