Is Fairpoint Headed For Disaster? > Buy Back

Buy Back

reply to PoloDude
i seriously hope it's not. i would think the IRS would love to reconsider their tax write-off as it's too fishy.

reply to PoloDude

reply to tschmidt
No, they will not be buying back the territory. Verizon has no interest in the low RoI areas it has dumped, and will continue to dump. The company will be focusing on the continued deployment of FIOS in its larger RoI markets and the continued growth of the wireless division. The upper midwest [WI, MI, OH, IL, and IN] will be the next area that Verizon will sell off-- comments from managers to "find a new job before the end of the year" seem to indicate something afoot. The timing is right as the current contract expires in March 2010. Staffing has been cut by nearly 50% across all departments serving this region in addition to quarterly budget cuts. Look for TDS Telecom, Windstream, and/or Century Tel to be in on the deal as the footprint would compliment areas served by these 3 companies in particular.

Bottom line is that once Verizon sells a territory off it is gone for good from their portfolio.

I can't imagine that Verizon will have an interest in a buy-back, Tom...

Just an opinion, but they jumped ship right after they put fiber in large areas of seacoast NH, southern NH, and along the ME/NH I95 corridor.

It must not have been a good investment for 'em in the first place. (Although I was surely pleased to get it.)
--
"Do not meddle in the affairs of dragons, for thou art crispy and good with catsup."

reply to tschmidt

reply to tschmidt
Thouroughly understand, as spent 24 years of my life in the 'burbs--mostly Naperville. LOL, there were only 30,000 people when moved there in 1980--it has become the 3rd largest city in the state. The towns/cities with serious growth potential, that VZ serves in IL, are Bloomington, Belleville, DeKalb. Sycamore, and Somonauk. The burbs keep growing and will extend non-stop to DeKalb [along the I-88 corridor] within the next 10 years. However, that is only about 1/2 the customers they service within the state. The largest geographic swaths that VZ covers also has the least population density within the cornbelt. We are talking about a lot of 1 stop sign towns with negative RoI.

The same holds true for the rest of the midwestern states. The largest city served in this territory is Ft wayne, IN. Many of the small to mid cities that VZ services have lost population as they were "company towns" with no alternatives for employment when the companies left. The most recent example would the former DHL Headquarters in Wilmington, OH. The loss of DHL has created a ripple effect within that town as the other businesses frequented by DHL employees have lost their prime source of income. Other such affected towns would be Elkhart, IN, Muskegeon, MI, and etc.

Do know that TDS Telecom went on a hiring burst starting in about Oct/Nov 08 and lasting thru Feb 09. Their National Hdqtrs are here in Madison, WI--so an aquisition of the WI assests would seem logical. VZ is willing to breakup the states if needed to complete the sale [ie WI and IL to carrier A, IN and OH to carrier B, and MI to carrier C].

Century Tel and Windstream have purchased assets from VZ previously, so the transition should be smoother than the Fairpoint and Hawaiian Tel transitions have gone. Century Tel and Windstram also have assests either within these states and/or in states that share borders with VZ's midwest assets. The determining factor will probably be based upon who can actually get the financing to purchase the assets. This is all speculation, but will not be suprised if it happens. Hopefully we won't be unlucky enough to be swapped out to Qwest as VZ tries to acquire their backhaul network. The backhauls that GTE and MCI had were the primary reason that BA/Verizon aqcuired them. The population growth in FL, PA, VA, TX, and CA areas once serviced by GTE has worked out nicely...just as the government contracts were that came along with the purchase of MCI.

Please excuse the length of my reply.

reply to Dolgan

reply to tschmidt

reply to Dolgan

reply to tschmidt

reply to patcat88
Thoroughly know the area as I spent the last 4 years taking calls in the SP EVRC for Verizon. The midwest was our prime area of responsibility, but we also took calls for CA, WA, OR, FL, SC, NC, AZ, and NV. Have experienced the decline in customer service/QoS Verizon has been providing first hand. Wish the employees and customers I left behind the best of luck, because they are going to need it.

reply to PoloDude
No, VZ will not buy Fairpoint back. VZ already told you what they are going to do with Fairpoint. VZW (which is owned by VZ and has ZERO union workers/pentions etc) will deploy LTE 4G all in Fairpoint's area! They will eat away at Fairpoints core customers. Fairpoint will go into bancruptcy, crush the union contracts and try to fight off the competition. Sounds like a similar story in the Northwest: QWEST.

There is NO money in telephone anymore! It's dead. Wireless, business lines, addition tie in's (TV service, free telephone) is how you make money. RIP Fairpoint. /congrats to all the politicians, regulators, and even users who wanted this sale.

VZ is just so sneaky As a shareholder I say, "good job". As an "advocate" for rural broadband and a national coverage policy I say, "shame on you: VZ, Fairpoint, and regulators".

reply to PoloDude
The email newsletter DSLprime, AKA Dave Burstein, reports that VZ holds the paper on their sale to Fairpoint. Who knew? Using "the" paper begs the question how much of "the" paper. Certainly not all. I feel confused.

How much credence to put in Mr. Burstein's report I cannot say. His missives are blurtations occasionally so unstructured as to make little sense to me. He comes off as too busy & involved with More Important Things than giving us his free Expert & Connected Insights. That said he may be the real deal, he may be a good Samaritan genius. My readings are very infrequent and no better assessment can I offer.

Here's the full text of his bit on Fairpoint etal's situation from the Tue, March 31, 2009 mailing:

Fairpoint, Hawaii and Charter Essentially Insolvent. Are BT, Qwest, CenturyTel, and Frontier Next?
Wireline only telcos are hurting badly, with Fairpoint having trouble meeting an interest payment. BT, Qwest, CenturyTel, Frontier and the other North American regionals face a similar problem: Minimal wireless, wireline dropping as much as 12%, DSL growth minimal as we approach saturation. Many of these companies made Charter’s error of paying $4,000 per line for acquisitions, far more than likely earnings can support.

BTand Qwest are among the worst-performing telcos, The growth of DSL for several years compensated for declining landlines, but with 70% of US and UK households connected there isn’t much more room for growth.

I wrote a little while ago “Fairpoint, the New England telco, fell 14% a few days after I told a friend to be cautious with his short position. That’s why I warn people I’m not an investment advisor, even as most of the analysts swap ideas with me. Any financial analysis shows them soon insolvent. They paid so much to Verizon for the lines it’s hard for them ever to cover the debt. However, Verizon is carrying the paper, and has no upside in forcing them into bankruptcy. In addition, they are pressing the states hard to get them what amounts to a federal bailout via USF, stimulus, or whatever works. Fairpoint stock dropped to a level that is nonsensical unless they face imminent bankruptcy, which they should be able to avoid. It rebounded 21% today - maybe folks are covering their shorts because there wasn't much room to go down much further.

My friend is one of the sharpest tech investors on the street, and can take risks like that. Most of us shouldn’t.” Since then, the stock has continued to plummet; the current price only makes sense if bankruptcy is imminent. I have to look further, but that seems unlikely. I was surprised S&P is maintaining a BB+ rating and was very late putting them on Creditwatch. Their debt to equity and other ratios have been scaring the street for a while. S&P needs to re-evaluate all the wireline only telcos. I’m not saying they will all follow Fairpoint and Hawaiian Tel, but I’d want to be very cautious here.