Illinois-based Consolidated Communications plans to purchase FairPoint Communications for $1.5 billion in a proposed merger that has been approved by the boards of directors at each company.

Consolidated Communications, a broadband and business communications company, entered into an agreement to buy the North Carolina-based FairPoint in a deal that is expected to close by next year. Consolidated will assume FairPoint’s debt, reported at about $887 million as of Sept. 30.

Bob Udell, Consolidated’s president and CEO, said Monday that the agreement combines two companies serving 24 states.

FairPoint’s largest network is in northern New England. The company serves over 377,000 voice connections, including residential lines, as well as 325,000 broadband subscribers across the country, according to a presentation for investors.

Leaders of the unions representing FairPoint workers in Maine, New Hampshire and Vermont said they viewed the sale, which is subject to approval by shareholders and state regulators, with “cautious optimism.”

“It’s clear that the ill-advised sale of (Verizon’s landline business) to FairPoint in 2008 has had a profound negative impact on workers and consumers in Northern New England. Just last month, FairPoint announced another major layoff of nearly 10 percent of its workforce even as regulators continue to investigate their service quality failures,” Peter McLaughlin, business manager of International Brotherhood of Electrical Workers Local 2327 in Maine, said in a written statement Monday.


In an interview Monday afternoon, McLaughlin said members are disappointed with FairPoint and have hoped for a new owner since the Verizon deal. Among other issues, McLaughlin mentioned frustration over delays in service for customers.

“We like being the telephone man, and it hasn’t been that way in recent history,” he said. “We haven’t been good at customer service. When you’re the face of the company, it’s disheartening when you can’t provide a good service to the customer you have to go face-to-face with.”

The Maine Public Utilities Commission has been considering a $500,000 fine against FairPoint for failing to meet minimum service standards for landline customers in 2014 and 2015, and decided last week to expand the investigation to the second quarter of 2016.

FairPoint said last month that it was laying off at least 110 workers, including 35 in Maine, because of a downturn in its traditional telephone service. According to a statement issued Monday by union leaders, those layoffs are expected to go forward as planned.

FairPoint had already laid off 79 line workers and technicians in Maine after a bitter four-month strike that ended in February 2015. Those workers were part of a larger, 260-person layoff across 17 states. About 800 workers in Maine were affected by the 2015 strike.

Don Trementozzi, president of Communications Workers of America Local 1400, also said in a written statement that “our members and our customers have been through the wringer with FairPoint over the last eight years, and our primary concern is that this transaction results in a more stable company that puts a priority on strengthening communities, not enriching Wall Street hedge fund owners.”


Union leaders said they intend to scrutinize Consolidated Communications’ finances, technical capacity and history of labor relations. In particular, they are waiting to hear expert opinions on the company’s financial stability, Trementozzi said in an interview.

“Everybody’s hopeful that anybody but Fairpoint would be better,” he said.

FairPoint provides advanced data, voice and video technologies to businesses and consumers. The telecommunications industry is not regulated in Maine, with the exception of mandated telephone service providers in rural areas.

In 2007, FairPoint bought Verizon’s landline system in Maine, New Hampshire and Vermont, creating its northern New England division, for $2.3 billion. Less than two years later it filed for bankruptcy protection because of crushing debt, emerging from that process in January 2011.

Paul Sunu, Fairpoint’s CEO, was optimistic that the deal would help the company’s shareholders and customers.

“This transaction offers a number of benefits for FairPoint’s shareholders, including the enhanced scale of the combined company, the opportunity to benefit from the realization of synergies and the receipt of an attractive dividend going forward,” Sunu said in a joint statement released by the two companies. “I am confident the new combined company will accelerate our progress and bring numerous benefits to our customers, employees and shareholders.”

The statement said Udell will serve as president and CEO of the combined company if the deal is approved, and one director from the FairPoint board would join the Consolidated Communications board of directors.

The combined company would retain the Consolidated Communications name and be headquartered in Mattoon, Illinois.


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

filed under: