Fairpoint profits tumble

Associated Press

May 17, 2008 08:57 am

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CHARLOTTE, N.C. (AP) — Telecom carrier FairPoint Communications Inc. said yesterday its first-quarter profit fell 34 percent, weighed down by some one-time customer credits and increased competition.

The results reflect only the financial results of the former local-exchange operations of Verizon Communications in Maine, New Hampshire and Vermont.

Fairpoint completed its merger with Northern New England Spinco Inc., the company formed to hold the Verizon businesses in the three states, as of March 31. The deal expanded FairPoint's footprint to 18 states, including about 1.6 million telephone lines and 230,000 high-speed Internet customers.

Net income dropped to $9.5 million, or 18 cents per share, from $14.4 million, or 27 cents per share, in the prior year.

Sales for the period ended March 31 slipped 5 percent to $282.4 million from $298 million due to one-time credits given to some customers.

Analysts polled by Thomson Financial expected Fairpoint to break even on revenue of $142.5 million.

Voice access lines at March 31 totaled 1.57 million, down 9.1 percent from the 1.73 million reported a year earlier.

"We believe that Spinco access line losses trended higher in the first quarter than what was reported to us in previous quarters due principally to competitors' marketing and promotional activity around the time of the closing of the merger," said Gene Johnson, chairman and CEO of FairPoint. "We are implementing marketing and operating strategies that are expected to reduce the rate of loss of access lines and increase HSD sales in the Spinco business."