Hawaii sale talks
An internal company memo says
no decisions have been made
Verizon Communications Inc., the No. 1 local phone company in the United States, acknowledged in an internal employee memo yesterday that discussions have taken place regarding the sale of Verizon Hawaii and the parent company's upstate New York local exchange.
The half-page communiqué, which originated from the New York headquarters, cautioned that no sale is pending and no decisions have been made.
A story originating in the Daily Deal on Wednesday said Verizon Hawaii was being shopped around and that one of the interested parties was the Carlyle Group, a Washington, D.C.-based private equity firm. Sources told the New York-based Daily Deal that Verizon Hawaii's lines could be sold for more than $1.5 billion, a valuation that would be lower than lines in other markets because of Hawaii's isolation. Verizon Hawaii has more than 1 million lines, including 715,000 voice-only lines.
Carlyle Group spokesman Chris Ullman said yesterday that the company does not comment on its investment activities. "Carlyle does have very extensive experience in the telecommunications and media sector," Ullman noted.
In the employee message, the parent company said "we've made clear many times that Verizon evaluates the assets and properties in our portfolio for strategic fit and financial performance, such as sales in 2002 of access lines in Missouri, Alabama and Kentucky, and other times these discussions lead nowhere."
The parent company, which has reduced its debt to $45 billion from $64.3 billion, has helped accomplish that by selling local exchange carriers. For example, 1.3 million local lines in Missouri, Alabama and Kentucky were sold to two companies for $4.1 billion in 2002.
Verizon Hawaii, which has been losing thousands of customers to wireless options and the Internet, saw its operating income fall 31.9 percent in 2002 to $83 million from $121.8 million in 2001. Revenues fell 2.9 percent to $531 million from $546.9 million. Full-year figures for 2003 are not yet publicly available.
Verizon Hawaii spokeswoman Ann Nishida said she couldn't add any information to what was in the corporate communication to the local unit's 1,800 employees and others nationwide.
Jerry Genovia, interim business manager of the International Brotherhood of Electrical Workers Local 1357, said he didn't know about the potential sale until yesterday morning when he and his wife saw it on a television newscast.
"I'm very concerned because it will definitely affect our members, and everybody's concerned about their jobs," Genovia said of the 1,400 union members. "We do have a contract going into 2007, and we do have a successor clause in there where (a potential buyer would have) to honor the contract until then. But it's past that that we're worried because the contract ends then."
Genovia said Verizon Hawaii President Melvin Horikami, who took over in September for the retired Warren Haruki, couldn't shed any light on the issue.
"He hasn't been able to give my anything I can even comment on," Genovia said. "He said, 'We explore every inquiry we get to purchase the company.' That's all he could tell me."