FairPoint Is Bouncing Back
FairPoint Communications announced Wednesday that it is on better footing than three months ago, the company has finished cutting more than 200 jobs in the past year, and it will have the option to use federal money to build out broadband.
FairPoint was in the black in the second quarter, which runs from April to July, even though the company lost $45.2 million in the first three months of the year. The news marks the first time the landline telephone and Internet provider has had a positive net income report since a four-month-long labor strike ended in February.
FairPoint is a publicly traded company based in North Carolina that operates in 17 states, including Vermont, New Hampshire and Maine. It goes by $FRP on NASDAQ and has a market capitalization around $455 million. The company released its latest numbers in its second quarter conference call Wednesday.
According to information from the news release, FairPoint made $214.1 million in revenue, had $40.3 million in net income and was down to $9.1 million in cash on hand at the end of the second quarter. By comparison, the company had a net loss of $22.7 million in the second quarter of 2014.
According to the earnings report, sales of high-speed Internet service to business customers were 11 percent of total revenue in the second quarter, compared to 9.3 percent a year ago. Demand is driven by “regional banks, health care networks and wireless carriers,” the company said.
After announcing disappointing first-quarter earnings and alluding to a possible sale, FairPoint announced a plan in May to eliminate hundreds of jobs nationwide starting in the second quarter. The company cut 64 jobs when it closed its South Burlington call center in July.
The company said it finished its nationwide workforce reduction July 29, during the third quarter. The reduction in force totaled 63 in the second quarter and 229 workers from a year ago.
That brings payroll down to 2,931 employees. The company expects the layoffs will save between $7 million and $9 million over the remainder of 2015 compared to the first half of 2015.
In April, FairPoint CEO Paul Sunu said the company “must consider a merger or acquisition” as part of its company strategy. Sunu said Wednesday the company has been “active over the past three months” in exploring “strategic alternatives” for the company.
“When you’re evaluating these alternatives, everything comes into play, and you need to factor in the elements,” Sunu told one of the shareholders Wednesday. “We’ll be looking at everything from repricing to refinancing to possible share buybacks or dividends.
“We would consider whether or not our operating platform should be something to scale up, (or whether it) would be available as adding scale to someone else,” he said. “It just would be inappropriate to talk about any specifics at this point.”
Sunu said Wednesday that the Federal Communications Commission has offered FairPoint $38 million this year to build broadband to unserved rural areas through the Connect America Fund II program.
The unserved locations do not have access to Internet speeds of 10 megabits per second downloading and 1 Mbps uploading. In Vermont, the Public Service Department says the FCC has offered roughly $8 million per year for six years to reach 38,000 addresses.
“We believe in and support the positive intent of (Connect America Fund II), to provide infrastructure and bring quality broadband to those in remote locations,” Sunu said Wednesday. “The cost of reaching some of these remote areas cannot be cost justified, even with (federal) funding.”
The company has until Aug. 27 to decide whether to reject the federal money for broadband buildout.
FairPoint also took over Vermont’s enhanced 911 system as of July 31. The Vermont contract is worth $11.2 million and runs for five years.