As expected, FairPoint Communications (Nasdaq: FRP) is bringing down the axe on 90 wireline positions across Maine, New Hampshire, and Vermont over the next several months. The layoffs aren't a surprise as they were part of a collective bargaining agreement signed last year.
In addition to the planned layoffs, FairPoint handed pink slips to 30 managers in March. The 120 total job cuts are expected to save the carrier $11 million, a plus that won't show up in the ledgers until 2014. Severance or incentive payments to the affected employees will run between $5 million and $8 million total.
FairPoint, which provides broadband and other communication services to residential and business customers in 17 states, is emerging from a long period of struggle following its purchase of Verizon assets in the New England region in 2008. It declared bankruptcy in 2009 and was sanctioned by the state legislatures of Maine, New Hampshire and Vermont to ensure that it would meet its broadband buildout goals.
The telco has made steady progress in its recovery, including making a $10 million prepayment on its existing debt in December 2012 and a $25 million prepayment in September. That's thanks in part to a number of cost-cutting measure including voluntary and involuntary layoffs and a selloff of assets like the November 2012 sale of its Idaho operations to Blackfoot Telecommunications for $30 million in cash.
In addition, the telco got a competitive boost when each of the northern New England states relaxed certain regulations so that FairPoint could compete with CLECs on pricing while freezing the price of its PSTN services.
Broadband continues to drive the provider's balance sheet. In the fourth quarter of 2012, FairPoint saw a slight decline in revenues, to $240 million. But it added over 12,000 broadband subscribers for the year, a 3.9 percent gain.
- see this release
FairPoint's Q4 revenue driven by broadband, Ethernet services
FairPoint Communications makes $10M prepayment on debt
FairPoint's voluntary retirement, layoffs reduce costs by $6.6 million