FairPoint prepares network takeover

The Associated Press
Posted Jan. 13, 2009, at 7:51 p.m.

SOUTH PORTLAND, Maine — Since paying $2.3 billion for Verizon’s northern New England wired telephone and Internet business, FairPoint Communications Inc. has lost more than 80,000 customers and its stock has plummeted as it integrates Verizon’s system into it own.

But Gene Johnson, FairPoint’s CEO, is confident the company will win back old customers and lure new ones after it takes total control of the Verizon system on Jan. 31.

“In many respects it’s the beginning, it’s a commencement,” Johnson told The Associated Press in an interview at FairPoint’s offices. “We really feel for the first time this is our company and it’s in our hands and in our control. We never really had that before; our destiny is now in our hands.”

FairPoint’s acquisition of Verizon Communications Inc.’s wired telephone lines and Internet network in Maine, New Hampshire and Vermont has been two years in the making.

The deal underwent more than a year of regulatory review before completion last March 31. In buying the system, North Carolina-based FairPoint added 1.5 million phone and Internet lines to its other holdings of roughly 300,000 lines in 18 states.

In the months since, the company has been working to integrate Verizon’s computer systems into its own, but it hasn’t been easy.

The so-called “cutover” date, when FairPoint takes control, has been delayed twice because of the sheer complexity, Johnson said. Equipment malfunctions and human error led to several 911 system glitches that left people unable to reach a 911 operator.

On the business side, FairPoint lost more than 65,000 residential customers, 15,000 business customers and 6,000 high-speed Internet customers it inherited from Verizon between March 31 and Sept. 30, according to the company’s earnings reports.

“There’s a lot of reasons for it, but one of the reasons is that it took 14 months to get this deal approved and during that 14 months every competitor was fighting like crazy to get customers and to paint us in a bad light,” Johnson said. “So we were starting with both hands tied behind us and it made it a real uphill battle from day one.”

When the cutover is complete, the company will launch new pricing plans and marketing efforts, which should result in a rising customer count, Johnson said.

FairPoint’s stock price, meanwhile, has taken a plunge since the transaction — falling from about $8 a share to less than $3. Part of the reason is because investors are looking hard at FairPoint’s performance in northern New England, Johnson said.

Johnson said there’s no rational basis for the low stock price on the New York Stock Exchange. He said he recently bought 100,000 shares for himself.

“I think people now want to see us do what we say we can do,” he said. “I’m quite bullish on the stock … and I think the stock will do quite well.”

Come Jan. 31, FairPoint will shut down Verizon’s 600 computer systems that serve northern New England and begin transferring the data to its new network of 60 computer systems. The process will take about a week.

Between Jan. 23 and Feb. 9, the company won’t process orders for new telephone service or add options to existing phone service. In the first week of February, customers should expect slower response time from customer service agents as employees familiarize themselves with the new system.

But nobody should lose telephone service, and 911 and repair services should go on as usual. Internet customers who now have Verizon e-mail accounts will get new e-mail addresses, but there will be a grace period in which the old addresses will continue to work.

In the months ahead, FairPoint will work to become a “local” company for the northern New England region, Johnson said.

Already, the company has added more than 1,000 new jobs in the region with 1,400 employees in Maine, 1,175 in New Hampshire and 530 in Vermont. It’s been turning to local companies to buy vehicles and for its printing and other needs.

http://bangordailynews.com/2009/01/13/business/fairpoint-prepares-network-takeover/ printed on September 19, 2014