CWA Cautions Frontier Shareholders on Verizon Transaction

CWA member Elisabeth Choate, fourth from right, warned shareholders about Frontier’s transaction with Verizon.

Robert Masciola of the AFL-CIO Organizing Department describes how  workers at Frontier Communications are calling attention to a deal with Verizon that workers say is bad for shareholders and workers. 

Shareholders for Connecticut-based Frontier Communications and its top executives heard from an employee about how the proposed deal to acquire Verizon’s assets in West Virginia and 13 other states “may be good for Verizon, but will leave Frontier a much weaker company.” 

With support from CWA Local 1298 in Connecticut and the AFL-CIO, Elisabeth Choate traveled to Stamford, Conn., to attend the Frontier special meeting where shareholders voted to approve the deal.

A movement in West Virginia and 13 other states led by CWA and the Electrical Workers (IBEW) opposes the deal—and the unions are not alone.  Fran Hughes, chief deputy attorney general for West Virginia, doesn’t believe Frontier has the ability financially to live up to the commitments it has made to the West Virginia Public Service Commission. 

Choate, a CWA Local 2276 leader who works as a programmer at Frontier’s facility in Bluefield, W.Va., put it this way at the special meeting: 

Shareholders should look carefully at what we are buying.

No other phone company in the U.S. has attempted a deal of this complexity and size that includes integrating almost 5 million access lines across 14 states. The next largest deal ever attempted—with FairPoint Communications in northern New England—has been beset with customer-service, order-fulfillment and billing problems. Before the FairPoint deal was announced, its stock price was almost $20 a share. Today, its stock is trading at about 20 cents a share. And yesterday, the company declared bankruptcy. 

Ron Collins, CWA District 2 vice president, pointed out that “Frontier says that its goal in the 14 states is to cut expenses by 21 percent or $500 million annually by 2013.” 

To achieve savings of this magnitude, Frontier will need to substantially reduce its workforce and deeply cut other costs.  By comparison, when FairPoint purchased Verizon’s access lines, it projected reducing costs by only 8 to 10 percent.  Yet, FairPoint has not come close to achieving even those savings. The magnitude of savings projected by Frontier for a transaction of this size is totally unrealistic. 

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