Verizon Hawaii
buyer in talks
to address concerns

The Carlyle Group is meeting
with the state consumer advocate

The state Office of Consumer Advocacy said it needs to talk further about its concerns over the proposed sale of Verizon Hawaii before giving a formal opinion on the deal.

The agency has asked for more time to vet the sale so it can talk with the local phone carrier and its suitor, the private-equity firm Carlyle Group. Yesterday was the deadline for public input to be submitted to the state Public Utilities Commission, which is investigating whether to approve the $1.65 billion deal.

"(Carlyle) agreed to address some of our concerns in certain ways and we want to discuss how they'll do that," consumer advocate John Cole said.

Cole has expressed concern that Carlyle's plan to raise the company's debt load by about $1 billion to finance the purchase might come back to haunt Hawaii consumers dependent on the state's dominant phone carrier.

He also said the PUC needs to weigh whether Carlyle -- which has no track record of running a local phone carrier -- can ensure reliable service and a smooth transition of ownership.

Cole said he has been talking with Carlyle Managing Director William Kennard as well as Verizon Hawaii representatives and expects more talks next week. Cole expects to have a final recommendation ready the week after Christmas.

The Washington, D.C.-based Carlyle Group, with links to political heavyweights such as former president Bush and about $18 billion under management around the world, has said it will reshape Verizon Hawaii into a stronger company called Hawaiian Telcom. The PUC has been holding public hearings on the acquisition during the past three months.

The Carlyle Group has promised to improve the phone carrier by investing heavily in its aging network. However, the PUC's hearings have been dominated by public testimony from citizens questioning Carlyle's commitment to the Hawaii market given its reputation for selling companies quickly for a profit.