Kenny Perdue: Frontier-Verizon deal means fewer jobs, investments in W.Va.
tly, Frontier CEO Maggie Wilderotter and other company officials have been promoting Frontier's proposed purchase of Verizon's telephone operations in West Virginia and 13 other states.
CHARLESTON, W.Va. -- Recently, Frontier CEO Maggie Wilderotter and other company officials have been promoting Frontier's proposed purchase of Verizon's telephone operations in West Virginia and 13 other states.
They've promised the deal will mean more jobs, expanded high-speed Internet access, and a financially stronger Frontier that poses little risk to West Virginians. However, a careful look behind those statements shows that the deal poses significant risks to West Virginia's consumers, workers and communities.
If this deal is approved by the West Virginia Public Service Commission, West Virginians can expect Frontier to cut, not add jobs. On Nov. 4, in an interview with Bloomberg News, Wilderotter finally admitted that Frontier "plans to cut jobs" -- as part of its effort to achieve cost savings of $500 million a year. Up until that interview, Frontier management maintained the fiction that the deal would mean more, not fewer, jobs. Cutting jobs isn't in the public's best interest.
The deal also will make our telephone utility in West Virginia weaker financially. Wilderotter touts the proposed deal (which will add $3.3 billion in debt to Frontier) will improve Frontier's financial health by improving its ratio of debt to operating cash flow. However, she fails to mention West Virginia customers will be worse off. Right now, the Verizon operations to be acquired have only about 34 cents of debt for every $1 of operating cash flow. Should the PSC approve the deal, this debt will increase 600 percent, to at least $2.60 in debt for every $1 of operating cash flow. For the largest telecom utility in the state to be financially weaker isn't in the public's best interest.
The deal will also mean less, not more capital investment. Frontier actually plans to cut capital expenditures below Verizon's historic levels in the properties to be acquired. These cuts will occur during the same period that Frontier claims it will be increasing investment to expand broadband and improve service.
Instead of investing in West Virginia, Frontier plans to ship its cash out of state to its shareholders. Frontier continually pays out more in dividends than it earns in net income -- 174 percent more in 2008 and 199 percent more in the first nine months of this year. Frontier execs promise to cut dividends by 25 cents but that still amounts to anywhere between 125 and 142 percent of net income. For a public utility to pay out so much in dividends isn't in the public's best interest.
The risks of the Frontier-Verizon deal were tragically illustrated by last week's bankruptcy of FairPoint. Hawaiian Telcom, another company to which Verizon sold its wirelines, already had gone bankrupt. Both these companies failed because of the massive debt they took on to finance their acquisitions and their inability to integrate the former Verizon systems. This is the same challenge facing Frontier. Frontier is now promising it's different than FairPoint -- just like FairPoint promised it was different from Hawaiian Telcom.
The bottom line for Verizon: It gets $3.3 billion tax free.
The bottom line for Frontier: From the income it receives from its new Verizon customers, its shareholders get money that should be reinvested in West Virginia operations.
The bottom line for West Virginia: We lose jobs, get less capital investment, and get saddled with a financially weaker telecommunications utility, with fewer resources for high-speed Internet expansion and customer service quality. This isn't a good deal for consumers, workers or communities and it's definitely not in the public's best interest.
Perdue is president of the West Virginia AFL-CIO, a group of more than 550 unions.
CHARLESTON, W.Va. -- Recently, Frontier CEO Maggie Wilderotter and other company officials have been promoting Frontier's proposed purchase of Verizon's telephone operations in West Virginia and 13 other states.
They've promised the deal will mean more jobs, expanded high-speed Internet access, and a financially stronger Frontier that poses little risk to West Virginians. However, a careful look behind those statements shows that the deal poses significant risks to West Virginia's consumers, workers and communities.
If this deal is approved by the West Virginia Public Service Commission, West Virginians can expect Frontier to cut, not add jobs. On Nov. 4, in an interview with Bloomberg News, Wilderotter finally admitted that Frontier "plans to cut jobs" -- as part of its effort to achieve cost savings of $500 million a year. Up until that interview, Frontier management maintained the fiction that the deal would mean more, not fewer, jobs. Cutting jobs isn't in the public's best interest.
The deal also will make our telephone utility in West Virginia weaker financially. Wilderotter touts the proposed deal (which will add $3.3 billion in debt to Frontier) will improve Frontier's financial health by improving its ratio of debt to operating cash flow. However, she fails to mention West Virginia customers will be worse off. Right now, the Verizon operations to be acquired have only about 34 cents of debt for every $1 of operating cash flow. Should the PSC approve the deal, this debt will increase 600 percent, to at least $2.60 in debt for every $1 of operating cash flow. For the largest telecom utility in the state to be financially weaker isn't in the public's best interest.
The deal will also mean less, not more capital investment. Frontier actually plans to cut capital expenditures below Verizon's historic levels in the properties to be acquired. These cuts will occur during the same period that Frontier claims it will be increasing investment to expand broadband and improve service.
Instead of investing in West Virginia, Frontier plans to ship its cash out of state to its shareholders. Frontier continually pays out more in dividends than it earns in net income -- 174 percent more in 2008 and 199 percent more in the first nine months of this year. Frontier execs promise to cut dividends by 25 cents but that still amounts to anywhere between 125 and 142 percent of net income. For a public utility to pay out so much in dividends isn't in the public's best interest.
The risks of the Frontier-Verizon deal were tragically illustrated by last week's bankruptcy of FairPoint. Hawaiian Telcom, another company to which Verizon sold its wirelines, already had gone bankrupt. Both these companies failed because of the massive debt they took on to finance their acquisitions and their inability to integrate the former Verizon systems. This is the same challenge facing Frontier. Frontier is now promising it's different than FairPoint -- just like FairPoint promised it was different from Hawaiian Telcom.
The bottom line for Verizon: It gets $3.3 billion tax free.
The bottom line for Frontier: From the income it receives from its new Verizon customers, its shareholders get money that should be reinvested in West Virginia operations.
The bottom line for West Virginia: We lose jobs, get less capital investment, and get saddled with a financially weaker telecommunications utility, with fewer resources for high-speed Internet expansion and customer service quality. This isn't a good deal for consumers, workers or communities and it's definitely not in the public's best interest.
Perdue is president of the West Virginia AFL-CIO, a group of more than 550 unions.
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Wired systems are toast, get over it.
Verizon's getting out, while they can. Without the continued drain of salary, benefit and pension costs to pull them under (more).
Are you HAPPY NOW? YOU helped negotiate the union into this situation. MERRY CHRISTMAS, Kenny. THIS IS YOUR LUMP OF COAL.
Look to BRAZIL to see how communications develop without wire.
LOOKIE, no wires, less investment, less labor, less maintainence.
PROBABLY TOO LATE TO REVERSE THE TREND without getting your MEMBERSHIP TO GIVE UP CELL PHONES. (You first, buddy. And remember, none of them are union made.)
LOve You too,
Santa
All the UNION BOSSES are doing is announcing to the Nation that West Virginia is CLOSED FOR NEW BUSINESS.
UNION BOSS Perdue knows NOTHING about Business, the UNION BOSSES only represent 8% of the workers in America, which means 92% are not permitting the AFL-CIO to extort their dues money to give to Politicians and pay themselves excessive wages.