Verizon in talks to sell lines

0

NEW YORK (AP) – Verizon Communications Inc. is looking at selling off phone lines in the Northeast and Midwest, the company told employees Wednesday.

The company said in an e-mailed message to The Associated Press that no decisions have been made, and did not provide further details. The message was a partial confirmation of a report Wednesday in The Wall Street Journal, which said Verizon said it was looking to sell 5 million phone lines on the fringes of its service area for up to $8 billion.

The Journal said Verizon is shopping around two packages of lines: one in Vermont, New Hampshire and Maine; and another in Indiana, Illinois, Ohio and Michigan. The paper cited “people familiar with the matter.”

Prospective buyers were not identified, but the Journal speculated that two small phone companies, CenturyTel Inc. and Citizens Communications Co., would be among them.

The article said that for tax reasons, Verizon was looking to spin the companies off to shareholders, then merge them with a company so small that Verizon shareholders would be a majority. That would rule out larger acquirers.

In a research report, Stifel Nicolaus analyst Christopher King said CenturyTel shareholders would be unlikely to agree to such a deal. He pointed to some even smaller companies like Iowa Telecommunications Services Inc., Fairpoint Communications Inc. and Commonwealth Telephone Enterprises Inc., as possible buyers.

Verizon has indicated before that it is looking to sell access lines, with mixed outcomes. Talks to sell phone lines in upstate New York fell through in 2004. The company did sell its phone lines on Hawaii to private-equity firm The Carlyle Group last year for $1.65 billion.

Verizon put further discussion of line sales on the “back burner” while it pursued the purchase of MCI Inc., Verizon spokesman Robert Varettoni said. That acquisition closed in January.

Verizon is also looking to position itself as a growth company by selling its directory-publishing unit, a highly profitable but mature business. Conversely, it wants to take full ownership of Verizon Wireless, a growth business, by buying out its joint venture partner, Vodafone Group PLC.

Shares of Verizon fell 36 cents to $32.49 in midday trading on the New York Stock Exchange.

Advertisement
SHARE