Verizon Spins Off Northern New England Operations In $2.72B Deal

The complex deal, which will result in some 3,000 Verizon employees moving to FairPoint, will have a value of $2.72 billion. Verizon said the assets will be moved to a wholly owned subsidiary of Verizon, which will then be spun off to its stockholders and merged into FairPoint.

Verizon will keep assets of Verizon Wireless, Verizon Business (formerly MCI), Federal Network Systems, Verizon Network Integration, Verizon Global Networks, and Verizon Federal.

The FairPoint operation will pick up Verizon's switched and special access lines, Internet service, enterprise voice equipment accounts, and some long-distance voice and private-line customer accounts.

"In our view," Virginia Ruesterhold, president of Verizon Telecom, said in a statement, "this agreement provides a fair value for this property and allows Verizon to focus more intently on operations in other markets."

Verizon has been concentrating on growing its fiber optics broadband offerings and Verizon Wireless, which it owns with partner Vodafone Group. The former Baby Bell—second in size to AT&T in the telecom industry—has been experiencing rigorous competition from AT&T in wireless communications and from cable companies in its emerging cable TV business.

About 300 Verizon employees in the three northern New England states will remain with Verizon in support positions. Verizon added that FairPoint expects to eventually add 600 new positions in the region.

About 1.5 million telephone access lines are involved in the spin-off, along with 180,000 DSL lines.

Verizon has been working on spinning off the Maine, New Hampshire, and Vermont operations as a package for several months along with another effort involving operations in Indiana, Illinois, Ohio, and Michigan. In yet another effort to spin off older technologies, Verizon said last fall that it will spin off its yellow pages directories.

"The ability to integrate and serve these northern New England operations will establish FairPoint as one of the pre-eminent telecommunications operators in the region," said Gene Johnson, chairman and CEO of FairPoint, in a statement. "We are confident that our experience as a national operator will enable us to provide high levels of service and innovative new products."