Verizon sells Hawai'i operations for $1.65 billion
By Matt Sedensky
Carlyle Group is buying the Hawai'i telephone operations of Verizon Communications Inc., for $1.65 billion, a price slightly higher than expected, in a deal that was hotly contested among investment firms.
The purchase, long anticipated and announced by both sides today, includes the local telephone business, long distance and Internet services as well as Verizon's print yellow page business. These operations produced $610 million in sales last year.
Carlyle says it hopes to create a Hawai'i phone company newly committed to the Islands, and a new name to reflect that.
The group says it will eventually locate all major functions of the new company in Hawai'i. It says it plans to add new jobs and new services, including expanded broadband.
Verizon operations previously located on the mainland, including offices for human resources, legal affairs, finance and information technology, will now be based in Hawai'i, Carlyle spokesman Nathan Hokama said. He said the purchase would create about 100 new jobs here.
The transaction is subject to the approval of the state Public Utilities Commission, the Federal Communications Commission and the Justice Department and likely will not to be finalized until late this year or early 2005. The deal does not include Verizon Wireless operations.
While the dollar value of the sale is significant, Verizon customers will see few major changes, though Carlyle vows added services, including expanded broadband. Rates are regulated by the PUC, so the buyout does not mean there will be any increase in charges.
The two companies say employees won't see any major changes either. Carlyle says it will honor the contract reached with the International Brotherhood of Electrical Workers, which represents about 1,300 local Verizon employees, that runs through Sept. 1, 2007.
"For the employees, everything is pretty much the same," said Hokama.
A call to the union this afternoon seeking comment was not immediately returned.
The deal includes the transfer of all of Verizon's properties and vehicles in Hawai'i. Carlyle says it will name the company at a later time.
Carlyle is paying about $2,300 per line, far below the $3,000 per line price that was the going rate in better times for the telecommunications industry. Verizon's sale of the Hawai'i telephone operations flows from an industrywide effort to focus more on wireless business.
Bill Kula, an Irving, Texas-based spokesman for Verizon, said proceeds from the sale would also allow the company to continue to invest in other high-growth areas such as broadband and long distance.
Kula said the isolation of Hawai'i, high Internet demand here and significant reliance on long-distance service made its purchase enticing.
Verizon is also trying to sell a much larger set of phone lines in New York which could be worth up to $7 billion.