Posted on: Sunday, October 3, 2004

COMMENTARY
Carlyle Group is committed to Hawai'i

By William E. Kennard

The telephone is so much more than a utility. It's an indispensable lifeline between friends, families, businesses and customers, citizens and the government and countless other individuals who need to connect daily.

That's why The Carlyle Group takes seriously its plan to purchase Verizon Hawaii, make it a local company again and serve the interests of customers, employees and the community.

When Carlyle announced in May that it planned to buy Verizon Hawaii, most residents were unfamiliar with Carlyle. On the eve of public hearings that will explore this proposed transaction, I'm pleased to have the opportunity to explain to the public who we are and what our plans are for Verizon Hawaii.

The Carlyle Group, founded in 1987, is a global investment firm based in Washington, D.C. We have more than 500 employees in 14 countries managing more than $18 billion in assets. Carlyle's primary business is buying healthy private companies and making them even better by combining our know-how with the insights of local management. Our investors are mostly public and private pension funds, including the California Public Employees Retirement System, the largest pension fund in the world.

Carlyle has great expertise in managing large telecommunications companies. Our founder, William Conway, is the former chief financial officer of MCI; Carlyle managing director James Attwood is the former executive vice president of Verizon and GTE; Carlyle managing director Daniel F. Akerson is the former president of MCI, chairman and CEO of Nextel Communications, General Instruments and XO Communications; and I served as chairman of the Federal Communications Commission under President Clinton. Collectively, we have more than 50 years in the telecommunications business.

Experience is important, but perhaps the most crucial ingredient is Carlyle's commitment to the success of this company. In the short term, success means that the concerns and interests of all parties — customers, employees, regulators and elected officials — are aired and addressed, which the Public Utilities Commission hearings process will afford. In the long term, success means that customers receive innovative products and quality service at a fair price, and employees have good working conditions and wages, and are treated with respect.

Here are the key points we will make in the public hearings:

• Make it a local company again.

We will make Verizon Hawaii a local company again — locally branded, managed and operated. All major functions will be located in Hawai'i and staffed with employees who reside in Hawai'i. There will be strong local representation on the board of directors and senior management.

• Maintain competitive edge.

We will develop innovative products and services to stay ahead of the competition and provide consumers with state-of-the-art services.

• Investment in infrastructure.

We expect to invest millions of dollars to modernize the network and facilities in the near term. This will support new services, such as broadband, and ensure the integrity of the phone system for decades to come.

• Maintain rates.

The business plan we have submitted to the PUC assumes that we can meet our objectives for the business without raising rates over the next 10 years. While this is not a guarantee, it is certainly our expectation.

• Add jobs.

The experience and expertise of Verizon Hawaii employees will be critical as we transform it into a stand-alone local company. New positions will be added as we develop and install the back-office systems in Hawai'i that are now done on the Mainland.

• Comparable employee benefits.

We will provide benefits that are comparable in the aggregate to the benefits Verizon Hawaii employees are currently receiving, in accordance with the collective bargaining agreement. Carlyle is committed to providing a competitive benefits package that is tailored to local employees on an ongoing basis.

• Partner with employee union.

We will honor the union contract and all its obligations. Carlyle has a track record of working constructively and successfully with the International Brotherhood of Electrical Workers, the union that represents many Verizon Hawaii employees, through our ownership of Dex Media. Similarly, we look forward to forging an effective working relationship with the IBEW in Hawai'i.

• Commitment to community.

Once the PUC approves the acquisition, Carlyle will fully support the new company in becoming an integral part of the community.

Carlyle understands the importance of dependable, affordable phone service to the entire state of Hawai'i. Our vast financial and telecommunications experience superbly positions Carlyle to make Verizon Hawaii a local company again while maintaining and respecting the public trust inherent in a utility. We look forward to the public hearings and to supporting the Hawaii-based management team as they take this venerable local institution to a new level.

William E. Kennard is a managing director at The Carlyle Group.