Fairpoint is the eighth largest wireline telephone company in the United States, based on number of access lines as of September 30, 2008. It operates in 18 states with approximately 1.8 million access line equivalents (including voice access lines and high-speed data lines, which include DSL, fiber-to-the-premises, wireless broadband and cable modem) as of September 30, 2008. It offers an array of services, including local and long distance voice, data, Internet and broadband product offerings to residential and business customers, primarily in northern New England.
Fairpoint is one of a number of rural telecom carriers that operate primarily in markets exempt from direct wireline competition by federal law. While these rural local exchange carriers (RLECs) still face modest competition, generally coming from wireless carriers offering large buckets of minutes, customer retention has been stronger, and their total access-line counts have held up better than those of their Baby Bell brethren.
RLECs have come under pressure as consumers swap traditional phone lines for wireless substitutes. Analysts have questioned whether these increased access line losses will affect the sustainability of revenue and free cash flow for RLECs. Additionally, extra competition has come in the form of cable companies that offer triple-play packages including voice services.
Industry consolidation continues despite tough economic conditions - ex. CenturyTel's $11.6 billion offer for Embarq on Oct. 27, 2008.
Previously, Fairpoint purchased the northern New England operations of Verizon's wireline business. That transaction (estimated to add 1.5 million access lines, 180,000 DSL customers and 600,00 long distance telephone customers) closed on March 31, 2008.
In a RLEC industry comparison, Stifel Nicolaus suggests EBITDA per access line is appropriate.