The Illinois-based company that’s buying FairPoint Communications is likely to expand broadband and compete with cable companies for some TV customers in northern New England, a Wall Street analyst says.
Consolidated Communications already has video offerings in other markets, and the existing FairPoint network can support such service in parts of Maine, New Hampshire and Vermont, said Barry Sine, a telecommunications analyst at Drexel Hamilton.
Video offerings and expanded broadband would allow FairPoint to compete for cable TV customers in places where cable companies currently have a near-monopoly.
“Consumers in the states will see more competition. It’s very important and it benefits the consumer,” Sine said Tuesday.
Consolidated Communications plans to buy FairPoint in a deal worth $1.5 billion that already has been approved by the boards of both companies. It would assume FairPoint’s debt and offer dividends to stockholders.
The companies hope to close the deal in the summer. But it faces regulatory hurdles. Utilities regulators must review the plan to ensure that the transaction is good for consumers.
FairPoint’s acquisition of Verizon’s landline assets in northern New England was fraught with problems, and the states want to avoid a repeat.
“We learned a lot about what harm can be done in these transactions when these assets are sold,” said Maine Public Advocate Timothy Schneider.
FairPoint’s unionized workforce is welcoming the sale after contentious relations with management following the Verizon deal in 2007. The company struggled with debt, declining landline accounts and customer service problems before filing for bankruptcy, from which it emerged in 2011.
Workers led a four-month strike against FairPoint in late 2014 and early 2015, leading to a contract that made the company more attractive to suitors.
The company’s struggles have continued, however, as the number of traditional telephone customers has shrunk. FairPoint announced last month that it was laying off at least 110 workers.
“We are hopeful that Consolidated will work with us to create and maintain good jobs in our communities and really improve the quality of service that our customers deserve,” said Peter McLaughlin of Local 2327 of the International Brotherhood of Electrical Workers.
Overall, Consolidated Communications has maintained a better relationship with its workforce, and consumers can expect the company to continue to expand broadband service, Sine said. The company offers broadband to more than 90 percent of customers in communities in the 11 states it now serves, he said.
Consolidated said it’s too early to talk about expanded products. Instead, it’s focused on the regulatory process and ensuring a smooth transition, said company spokeswoman Jennifer Spaude.
Regulators expect formal filings soon.
The Vermont Public Service Department’s biggest concern is to ensure quality service for those customers for whom FairPoint has a monopoly, said Jim Porter, the agency’s telecommunications director.
He said he expects his department to hire outside financial experts to determine whether Consolidated Communications has the “financial wherewithal” to succeed if it acquires Vermont’s backbone telecommunications network.
Elected officials were taking a wait-and-see approach.
Maine Gov. Paul LePage said he hopes that the company can minimize the “growing pains” felt by FairPoint and that regulators have learned lessons from the miscues.
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