FairPoint Communications makes $10M prepayment on debt
FairPoint Communications (Nasdaq: FRP) on Monday made an additional $10 million voluntary prepayment of debt on its term loan, out of cash on hand.
In 2012, the service provider made a total of $43 million in voluntary and scheduled repayments on its term loan. These payments have reduced its debt balance from $1 billion at the beginning of this year to $957 million.
David Tawil, co-founder and portfolio manager of Maglan Capital, told FierceTelecom in an e-mail this "is another good step in the right direction," adding that "at this rate the company should be able to refinance its debt, push out maturities and loosen covenants."
One of the other big moves FairPoint made to reduce its debt load recently was to sell its Idaho telephone network properties to Blackfoot Telecommunications Group for $30 million.
When it completes the sale of Blackfoot early next year after getting necessary state and federal approvals, FairPoint plans to use the proceeds to pay off more debt.
Paying down its debt is coming at a time when the service provider is growing its business service revenues, mainly in its three-state New England territory: Maine, New Hampshire and Vermont.
In Maine and New Hampshire, the 100-year old state telecom laws were updated, enabling the telco to more easily respond to CLECs and cable operators with competitive prices on business and broadband services.
While it continues to see expected revenue losses in its traditional landline voice service, business services, particularly Ethernet, are rising every quarter. In Q3 2012, FairPoint reported that Ethernet services contributed about $10.7 million of revenue.
Its dedication to providing Ethernet service is attracting a number of large-scale businesses, including New England Telehealth Consortium (NETC). NETC recently awarded the telco a $16 million contract to provide Carrier Ethernet services to over 400 health care sites throughout its northern New England territory.
- see the release
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