Public Service Board rejects Fairpoint-Verizon deal

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The state Public Service Board has rejected Fairpoint Communication’s request to buy Verizon’s land line phone service in Vermont.

In an order released late this morning, the board found that FairPoint had not demonstrated that it would be financially sound as it seeks to operate Verizon’s service territories in Maine, New Hampshire, and Vermont.

The case is being closely watched in northern New England. Fairpoint needs approval of regulators in all three states for the deal to go forward.

The Vermont decision is the first to be released. The Public Service Board said there were potential benefits to the deal, including improved service quality and expansion of broadband Internet service.

But it said it remained concerned about FairPoint’s financial resources. FairPoint will have to borrow $2.5 billion dollars to acquire Verizon’s assets. And the board said the new debt – and Fairpoint’s projections of future revenue – could force the company to reduce operating expenses or slow the expansion of broadband services.

The board said it would be open to a new proposal that addressed its financial concerns.

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