Verizon sells off New England lines
Verizon is among the phone companies fighting for the right to compete directly with cable companies.
KAI RYSSDAL: Verizon's about done with old-fashioned phone lines. The company announced today it's spinning off local lines in three New England states. Keith Shortall from the Maine Public Broadcasting Network reports.
KEITH SHORTALL: Under the deal, Verizon will transfer its local phone lines in Northern New England into a separate shareholder-owned subsidiary. That will then be merged into a new entity with North Carolina-based Fairpoint Communications.
Verizon Telecom president Virginia Reusterholz says the move will allow her company to focus on expanding its wireless and broadband cable business.
VIRGINIA REUSTERHOLZ: At the same time, Verizon receives a fair value for these properties and can now sharpen its focus on our other operations.
The deal is valued at $2.7 billion and follows an industry trend. Larger telecom companies are shedding more and more of their rural phone business, allowing smaller companies to pick up new customers. But the jury is still out for 3,000 Verizon customers affected by the deal.
Robert Breheny works for Verizon and is a member of the International Brotherhood of Electrical Workers in Maine. He says the union is concerned about what will happen after its current contract expires next year.
ROBERT BREHENY: How will our pension benefits — our medical benefits and our 401k — how will they translate over to the new company? Since right now our 401k and our medical benefits are probably the best in the industry.
Fairpoint officials vow to honor existing labor agreements, and they say they plan to add 600 new positions across the three New England states. When the deal is complete, Verizon stockholders will still own about 60 percent of the new company. FairPoint stockholders will own the remainder.
In Portland, Maine, I'm Keith Shortall for Marketplace.