RSSWest Virginia wants to stop sale of Verizon landline business
By Tim Conneally | Published July 17, 2009, 7:20 PM
In May, Verizon announced that it was selling its landline business in 14 U.S. states to Frontier for an approximated $8.6 billion. When the transaction closes next year, Fronter will be the largest rural triple play provider in the United States, with more than 7 million access lines in 27 states.
But all is not well in the Mountain State, West Virgina, where both the state legislature and communications union laborers are skeptical about the deal.
"Given the struggling economy, the critical importance of maintaining quality jobs, and the need to make sure that West Virginians have access to the tools of the 21st century, a complete review of all aspects of this important proposal is critical," read a letter from the West Virginia House of Delegates to the state Public Service Commission.
While Verizon had plans for a FiOS deployment in West Virginia, many fear that those plans will be scuttled now that Verizon is divesting from its wireline business.
The Communications Workers of America and The International Brotherhood of Electrical Workers said, "The deal calls for Frontier to take on $3.3 billion in debt; Verizon gets that amount in debt relief. That leaves Frontier saddled with debt that will lessen the potential amount available for investment in high speed broadband deployment. Similar tax-free transactions by Verizon, especially those involving the Reverse Morris Trust tax provisions, haven't worked out so well, especially for consumers in New England now served by FairPoint Communications."
To address these concerns, Verizon spokesman Harry Mitchell issued a statement which said, "We believe that, at the end of the day, the commission and West Virginians will realize the many benefits of this transaction, including accelerated broadband deployment in the state."
But this is not the CWA's only concern. It has also criticized Frontier's plan to cut back workers' hours, saying "CWA believes Frontier is using the economic downturn as an excuse to cut workers' hours in advance of its deal with Verizon...This shortsighted plan should be stopped now."
Frontier CEO Maggie Wilderotter told the Charleston Daily Mail yesterday that West Virginia was the only state to present so much opposition to the deal.
Tim, there’s no evidence to back up your headline or your premise. You take a couple of news releases from the CWA – and a letter from 31 state legislators who urge the state Public Service Commission to do what it’s planning to do anyway (review the Frontier-Verizon transaction) – and from there breathlessly leap to the conclusion that West Virginia wants to stop the Frontier-Verizon transaction.
A few points offer a different perspective:
• This transaction will move West Virginia forward, as Frontier has said it will increase broadband availability in the state and establish a major presence in Charleston, including its southeast regional headquarters.
• Frontier can best speak to this, but Frontier has a highly successful track record of acquiring, operating and investing in telecommunications properties serving rural, suburban and smaller-city areas. Frontier’s previous acquisitions include landline assets purchased from Verizon’s predecessor company GTE from 1993 through 2000. Frontier’s management team has deep experience in running a wireline network company.
• Frontier has said that this transaction will make it a larger and financially stronger company. The transaction will provide Frontier with enhanced scale and scope, improved positioning, a stronger balance sheet and the capability to generate greater cash flow. This is a deleveraging transaction for Frontier, as its debt ratio will decrease with this transaction. Frontier has also stated that it will be reducing its dividend by 25 percent at the close of the transaction, which will give it added financial flexibility.
• Verizon never made a commitment to deploy FiOS services in West Virginia.
• The union’s opposition to Frontier’s furlough program is a bit confused as the Charleston Daily Mail pointed out that bargaining units elsewhere – including others in West Virginia – already have approved the policy.
Harry Mitchell
Director-Media Relations
Verizon Communications
Score: -1
|You've got a "Fronter" in there.
My parents in Indiana haven't been well-served by Verizon since they bought GTE years ago. There are only a few places, mostly with older people, where land lines are going to be preferable. However, the surcharges and taxes are even causing older people to consider mobile phones.
How will anyone make money when the need for land lines is going away and the typical response is to increase pricing?
Score: 1
|Gregmir, Same here in Maine, Verizon sold out to Fairpoint and it's been a complete and total disaster, we tried to have an existing DSL line turned back on, ordered the service reconnected on March 23rd, and they finally re-activated it on may 30th. I know people who are still watiting to have seasonal lines turned back on.
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|You have to wonder what would have happened if BellAtlantic had never bought Nynex. It could have been picked up for pennies and you'd have been in such a situation for more than 10 years, right?
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|When Verizon sold their landline service in Kentucky to Alltel (now Windstream), it's all been downhill from there.
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