(Host) Labor unions are criticizing a proposed settlement in Maine that would allow Verizon to transfer its telephone land lines to FairPoint Communications of North Carolina.
The deal would require FairPoint to cut its stock dividend and spend more money to improve service in northern New England. But unions representing 3,000 workers say the settlement would still leave the company in poor financial shape.
VPR’s John Dillon reports:
(Dillon) The Maine FairPoint case is being closely followed in Vermont, because the company needs the approval of all three states in Northern New England for the sale to go through.
Late Wednesday, the public advocate who represents consumers in Maine reached an agreement with the two phone companies.
The deal isn’t final – it still must be reviewed by the state’s utility commission. The proposed settlement requires Fairpoint to reduce its stock dividends by 35% and to invest $47 million a year for three years in the Maine phone network.
Those concessions were not enough to satisfy two labor unions that represent Verizon workers. They’ve urged regulators in Vermont, New Hampshire and Maine to reject the deal.
Ken Perez is an economist for the Communications Workers of America.
(Perez) The deal itself would have … modestly improved FairPoint’s finances. But even with that, the residents of Maine, in this case, but really the three state region, would still be left with a very financially risky company without sufficient resources to improve service quality or adequately expand high speed broadband.
(Dillon) Perez says the proposed settlement still allows FairPoint to pay out stock dividends that would exceed the company’s net income.
(Perez) It allows FairPoint to invest $40 to $50 million less in capital expenditures than Verizon’s historic levels, annual levels, in Maine, New Hampshire and Vermont.
(Dillon) In Vermont, the Department of Public Service – the state agency that represents consumers – has recommended tough conditions on the sale. Basically, the department wants Fairpoint to link improvements in service quality to the dividends it pays to investors.
FairPoint Spokeswoman Rose Cummings said any settlement discussions in Vermont were confidential.
And Cummings rejected the labor union criticism of the Maine settlement. She said the deal would strengthen the company’s finances, and clearly satisfied the concerns of the Maine public advocate.
(Cummings) We have said all along that our business models are sound, they’re conservative. We are in good financial condition. We always have been. We have the backing of major lenders, Bank of America, Lehman Brothers, Morgan Stanley have all weighed in on this transaction. It is a major transaction.
(Dillon) The Vermont case is now before the Public Service Board. A decision is expected by the end of the year.
For VPR News, I’m John Dillon in Montpelier.