Final Regulator Clears FairPoint Sale to Consolidated
Consolidated Communications may close its $1.5 billion acquisition of FairPoint, after securing the last needed state regulatory approval Wednesday from the Illinois Commerce Commission. Commissioners unanimously approved at their livestreamed meeting. Consolidated pledged tens of millions of dollars in network investment to get state clearances in FairPoint's major Northeast markets. FairPoint had a rocky integration when it acquired Verizon wireline assets in 2008. Consolidated CEO Bob Udell pledged a “seamless” transition for customers.
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Federal approvals lacked conditions (see 1705080053 and 1701120039). Consolidated and FairPoint made network investment and other commitments in northeastern states where FairPoint faced service quality complaints. In Maine, they promised to spend at least $17.4 million annually on the network. In New Hampshire, the companies pledged three years of capital spending equal to 13 percent of intrastate revenue and $1 million yearly to repair and maintain the network (see 1705240044). They agreed to reinvest 14 percent of Vermont revenue for three years after closing, plus $1 million per year on areas identified by the Department of Public Service as facing service quality problems (see 1706260061). In New York, they pledged to invest $4 million in network reliability and service quality improvements over three years (see 1706150027).
The Maine Office of Public Advocate was “very satisfied with the terms of the final settlement,” which occurred before settlements in the other big FairPoint markets, Vermont and New Hampshire, emailed Tim Schneider, Maine public advocate while the deal was in review who left this month. “There’s always a risk in settling first,” but “we’re pleased with Consolidated’s commitment to invest in their network in Maine in the coming years,” he said.
The next challenge after closing is the transition, observers said. “History tells us that these integrations never go as well as planned,” said Technology Business Research analyst Chris Antlitz. “I would suspect that even with the conditions, some customers will be concerned during this transition, particularly business customers. However, given how challenged FairPoint’s service quality has been, things might actually get better for customers over the long-run under Consolidated Communications’ leadership.” Knowing FairPoint’s history, Consolidated will go into the integration with caution, Antlitz predicted. “The FairPoint-Verizon integration created wide ranging issues, some of which were chronic, and all of the stakeholders involved in this transaction are very aware that that cannot happen again.”
This integration is different, Schneider said. “Most of the issues in the previous FairPoint sale involved the failed immediate transition to new back office systems,” the former public advocate said. “We don’t expect that to be an issue because Consolidated anticipates leaving those systems in place in the near term and phasing in the changeover over time.”
“This merger will benefit customers and communities across the combined 24-state service area as we become an even stronger and more competitive company with greater scale, resources and access to an expanded 36,000 fiber-route-mile network,” Consolidated's Udell said in a statement. “We are committed to ensuring this merger is seamless for customers and look forward to bringing our expanded product and services portfolio to FairPoint customers in the future.”