FairPoint to sell off its Northern New England payphone operations

FairPoint Communications (Nasdaq: FRP) has reached a deal to sell off its northern New England payphone business--a dying business for traditional wireline operators--to Pacific Telemanagement Services (PTS). 

Ajay Sabherwal, EVP and CFO for FairPoint said that with the ongoing decrease in payphone use over the past decade, the company can divert its capital spending for other projects like expanding residential broadband and deploying new business services like Ethernet.

"We believe we can best deploy our resources to focus on our core lines of business including bringing more broadband service to northern New England," he said in a statement.

The service provider said that the ongoing decline in usage is making the business "unprofitable." Currently, FairPoint operates about 4,000 payphones throughout northern New England, a business that generates only about $1 million in annual revenue.

The Charlotte, N.C.-based ILEC's move is part of an ongoing trend in the wireline telecom industry. Other traditional service providers, including Verizon (NYSE: VZ), AT&T (NYSE: T) and Sprint (NYSE: S), have also sold off their payphone businesses.

Exiting the payphone business is not just relegated to large ILECs. Nebraska-based K&M Telephone Co. has asked the state's Public Service Commission to take down the two payphones it operates in Chambers, Neb. and Inman, Neb., which both collected a total of $19.58 in 2011.

Under the terms of the agreement, PTS will buy monthly access from FairPoint for any payphones it continues to operate after the deal is closed. FairPoint and PTS expect that the acquisition will be completed later this year.

For more:
- see the release

Special report: Wireline in the first quarter of 2012

Related articles:
FairPoint's Q1 2012 revenue stabilizes as broadband, Ethernet services grow
Wholesale provider leaders to watch in 2012
Maine's new telecom regulatory structure allows FairPoint to respond to competition
FairPoint's voluntary retirement, layoffs reduce costs by $6.6M
FairPoint, Maine law enforcement crack down on phone scammers targeting seniors

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