FairPoint executives’ financial plans for life after the merger include the assertion that the company will pay down $318 million in debt over the next seven years, though they don’t say how, and have not promised — or disclosed to regulators any possible plans — to do so. Even worse, the company is basing its financial predictions on interest rates being lower than they are today. Even if they are, PUC filings say FairPoint will have to refinance as much as $1.5 billion in debt to extend its repayment period, in order to continue to afford debt payments.
The FairPoint/Verizon deal has come under withering fire in all three states, with Maine’s Office of the Public Advocate recommending 24 conditions be imposed if our Public Utilities Commission approves the sale — including dropping the price by $600 million. Vermont’s Department of Public Service has recommended that state’s Public Service Board impose as many as 56 conditions before the sale is approved, such as requiring state approval before FairPoint can transfer any Vermont revenue to company operations outside the state. The New Hampshire Office of Consumer Advocate has not specifically recommended conditions, but has testified before its state’s Public Utilities Commission that there are major problems with the proposed deal.
FairPoint has countered those criticisms, claiming it will be a financially viable company, and pledging to expand high-speed Internet access in all three states (see“Internet Disconnect,” by Jeff Inglis, August 24).
But its own plans, as described in PUC filings, indicate that its finances will, in fact, be tremendously shaky, and that any expansion of service will have to cost the company nothing beyond the initial investment to install equipment. Another big problem, the documents at the PUC say, is that the broadband service FairPoint is promising as a great boon — to regulators, shareholders, and the public — actually “loses more and more money as time goes on.”
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