FairPoint's Takeover Of Verizon's New England Phone Lines Is Delayed

FairPoint Communications' takeover of much of Verizon Communications' landline operations in northern New England has run into its first glitch -- the planned cutover has been delayed for 60 days and is now scheduled for November.

FairPoint announced the delay this week after the Liberty Consulting Group, which is charged with monitoring the cutover, said FairPoint would have difficulty meeting a preset deadline for demonstrating cutover readiness by early July. Liberty was quoted as stating the cutover was "proceeding well and with more time FairPoint should be able to demonstrate cutover readiness."

The takeover of Verizon landlines and some related operations in Maine, New Hampshire, and Vermont was opposed by Verizon labor unions, which maintained that FairPoint didn't have the financial resources to properly fund all aspects of the proposed takeover. Verizon has sold landline operations in largely rural regions so it can concentrate on faster-growing parts of its business like Verizon Wireless and its FiOS high-speed broadband service.

Liberty was selected to monitor the cutover by the public utility commissions in the three states after regulators examined the proposal, which carries a price tag of about $2.5 billion. The deal was announced in January 2007 and was later approved by the FCC.

"We believe we have made considerable progress in addressing a number of areas and have further refined the necessary and critical steps to ensure a smooth cutover," said Gene Johnson, FairPoint's chairman and CEO, in a statement. "We are just as confident as Liberty in our ability to cut over at the end of November."

Johnson said the additional payments FairPoint will be required to pay Verizon for use of Verizon's systems will have no impact on FairPoint's debt covenants and that the two additional payments "are not expected to have a material impact on the financial strength of the Company (FairPoint) or its expected future dividend payments."