Illinois company to seek regulatory OK in FairPoint merger

PORTLAND, Maine (AP) - FairPoint Communications has struggled with the loss of traditional telephone customers, labor unrest and customer service problems in northern New England. But Consolidated Communications sees an opportunity.

Consolidated Communications will begin laying out its plans for the merged company during meetings with federal and state entities that oversee and regulate its activities in coming weeks and months.

The company plans to submit documents with federal officials next week, and will file with regulators in 13 states including Maine, New Hampshire and Vermont by month's end. The filings will include some details based on initial discussions with regulators, said Jennifer Spaude, company spokeswoman.

In northern New England, regulators stung by FairPoint's performance when it took over Verizon's landlines will give close scrutiny to details.

FairPoint bought Verizon's landline holdings in northern New England for $2.3 billion in 2007 and filed for bankruptcy 18 months later after losing customers because of operational and integration problems. It has continued to struggle since emerging from bankruptcy in 2011. Federal entities regulating it sought to make FairPoint stick to its promises to expand broadband and to meet customer service expectations.

The merger calls for Consolidated to buy North Carolina-based FairPoint in a deal worth $1.5 billion. The companies hope to complete the transaction this summer.

So far, details on Consolidated Communications' long-term plans for Maine, New Hampshire and Vermont have been scant. But analysts see positives in the deal for both companies, especially FairPoint, which is experiencing revenue declines of 4 to 5 percent per year.

Part of Illinois-based Consolidated's success has been placing a greater focus on business customers - with residential voice customers accounting for only 10 percent of business, compared to 32 percent for FairPoint, said Jonathan Charbonneau, an analyst at Cowen and Company.

Mergers have been common in recent years as telecommunication companies seek to increase their service footprint and expand their customer base in an era in which many traditional telephone customers are switching to cable companies or abandoning land lines in favor of cellphones.

FairPoint's shareholders have been beating the drums for the company to be sold since the end of a strike by 1,700 workers in February 2015.

In that regard, workers and shareholders were united. There was no love lost between FairPoint management and the International Brotherhood of Electrical Workers. Some customers, like John Bouchard, also welcomed the change in ownership.

Bouchard dumped FairPoint's broadband, which he said was unreliable, retaining FairPoint only basic telephone service at his home in Robbinston, 12 miles from the Canadian border.

"It certainly can't hurt at this point. They might need some fresh blood in there to stir things around," he said.