Verizon, Fairpoint Finance Dance

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| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Verizon, Fairpoint Finance Dance

Verizon (VZ) has been given approval by the FCC and the state PUC in VT, ME, and NH to sell its landline business in New England to Fairpoint. The sticking point is that Fairpoint is a company too small to acquire VZ's assets -- a company that is 5x the size and scope. Plus as Alltel/Windstream discovered in Eastern KY, most assets in this region have been neglected.

So how does a smaller fish buy a bigger fish AND expand the broadband network in that area? Mainly marketing. Just keep telling everyone things will be fine. Repeat the message often. Eventually, you win. That's marketing.

The details on the financials is the fun stuff, As TechJournal South reports:

FairPoint Communications Inc. has commenced a $540 million bond offering. The notes are being offered for sale by certain selling security holders to qualified institutional buyers. The notes will be initially issued to Spinco Inc., a subsidiary of Verizon, and subsequently exchanged by Verizon for outstanding indebtedness of Verizon held by the selling securityholders. Spinco merges into FairPoint immediately prior to completion of the offering.

It's a great deal for Verizon. It's a lousy deal for just about everyone else - consumers, the states, the workers. Even the businesses in this region will suffer because lack of a solid communications network means they will lag behind businesses with big pipes.

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