FairPoint Communications' (Nasdaq: FRP) recent move to cut 400 employees from its roster could be just the first stage of a broader layoff effort as the service provider may be forced to cut even more jobs, an analyst forecast says.
The potential job cuts, which will likely take place in FairPoint's New England region, relate to the ongoing decline in traditional voice access lines.
"The work force that they came with was used to support the access lines that Verizon had (in New Hampshire), over 500,000 of them. FairPoint now has about 240,000 access lines," said Kate Bailey, director of the telecommunications section at the New Hampshire Public Utilities Commission in a Nashua Telegraph article. "We expect FairPoint to run their operations efficiently."
But to reach that level of efficiency FairPoint may have to lay off another 400 workers mainly in its New England region following the already announced job cuts, according to David Tawil, a Maglan Capital analyst.
Following a $27 million Q2 loss, FairPoint said that the job cuts it announced last week would save the service provider about $34 million a year.
In New England alone--FairPoint's largest territory--the service provider plans to lay off 190 workers in New Hampshire and 185 in Maine and Vermont. Outside of New England, FairPoint will cut about 25 workers in the 15 other markets where it operates smaller telephone networks.
The majority of the initial layoffs will affect FairPoint's landline technician workers who are represented by the International Brotherhood of Electrical Workers (IBEW). Meanwhile, FairPoint still has to address layoffs for its call center workers, who are represented by the Communications Workers of America (CWA) under a separate contract.
For more:
- Nashua Telegraph has this article
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