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The Honolulu Advertiser
Posted on: Tuesday, July 13, 2004

Verizon purchase raises concern

By Sean Hao
Advertiser Staff Writer

The Department of Defense, the International Brotherhood of Electrical Workers and a local telecommunications company expressed reservations about a pending sale of Verizon Hawaii before a Public Utilities Commission deadline yesterday.

IBEW Local 1357, which represents 1,300 Verizon employees, asked to be a party in the PUC's decision on whether to approve the proposed $1.65 billion purchase of the telephone company by the Washington, D.C.-based investment firm The Carlyle Group. In its filing the union said it was concerned about the pension benefits of retirees, including free local telephone service and stock options. The union also said it was concerned about what might happen to a surplus in the company's pension plan.

In addition, Honolulu-based Verizon competitor Pacific LightNet filed a motion to participate in PUC proceedings, stating that the deal won't work out for businesses and consumers.

The proposed deal, which is expected to close late this year or early next year, will increase Verizon Hawaii's debt and result in higher operating costs, said Patrick Bustamante, Pacific LightNet's president.

Bustamante added that Carlyle lacks the experience to successfully relocate Verizon back-office operations from the Mainland to Hawai'i in such a short period.

Carlyle, among the world's largest private equity investors with $18 billion under management, has said it expects to increase local employment as operations now done by Verizon on the Mainland — such as information technology, management, legal and human resources — are brought to Hawai'i. Verizon Hawaii has about 1,700 employees.

Verizon Hawaii and Carlyle officials were unavailable for comment late yesterday. Scot Long, business manager for Local 1357, also was unavailable for comment.

In addition to the IBEW and Pacific LightNet the Department of Defense sought to intervene in the Verizon proceedings by a 4:30 p.m. filing deadline yesterday.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.