FairPoint Communications 2007 Annual Report Download - page 36

Table of Contents
payment of monthly fees to Verizon for an additional period and may limit our ability to introduce new services. See “Item 1. Business —
Regulatory Environment — State Regulation — Regulatory Conditions to the Merger.”
  
  
 
In order to operate following the merger, we will be required to identify, acquire or develop, test, implement, maintain and manage
systems and processes which provide the functionality currently performed for the Northern New England business by over 600 systems
of Verizon. Of these Verizon systems, approximately one third relate to customer sales, service and support. Another third of the Verizon
systems support network monitoring and related field operations. The remaining Verizon systems enable finance, payroll, logistics and
other administrative activities. Over 80% of the information systems used in support of the Northern New England business are Verizon
proprietary systems.
We entered into the MSA with Capgemini to assist in the identification and conversion of systems to be deployed following the
merger. The collective experience and knowledge of FairPoint, Capgemini (during the term of the MSA) and Verizon (during the pre-
closing period and the period of the TSA) will be essential to the success of the integration. The parties’ inability or failure to implement
successfully their plans and procedures or the insufficiency of those plans and procedures could result in failure of or delays in the
merger integration and could adversely impact our business, results of operations and financial condition. This could require us to
acquire and deploy additional systems, extend the TSA and pay increasing monthly fees under the TSA.
The failure of any of our systems could result in our inability to adequately bill and provide service to our customers or meet our
financial and regulatory reporting obligations. The failure of any of our billing and operational support services systems could have a
material adverse effect on our business, financial condition and results of operations. We are also implementing new systems to provide
for and meet financial and regulatory reporting obligations. A failure of these systems may result in us not being able to meet our financial
and regulatory reporting obligations.
 
The success of the merger will depend, in part, on our ability to realize the anticipated synergies, cost savings and growth
opportunities from integrating our and Spinco’s businesses. Our success in realizing these synergies, cost savings and growth
opportunities, and the timing of this realization, depends on the successful integration of our and Spinco’s businesses and operations.
Even if we are able to integrate our and Spinco’s business operations successfully, this integration may not result in the realization of the
full benefits of synergies, cost savings and growth opportunities that we currently expect from this integration within the anticipated time
frame or at all. For example, we may be unable to eliminate duplicative costs, or the benefits from the merger may be offset by costs
incurred or delays in integrating the companies.
 

Pursuant to the distribution agreement, the Verizon Group will contribute to Spinco and entities that will become Spinco’s
subsidiaries (i) specified assets and liabilities associated with the local exchange business of Verizon New England in Maine, New
Hampshire and Vermont, and (ii) the customers of the Verizon Group’s related long distance and Internet service provider businesses in
those states. The contributed assets may not be sufficient to operate our business. Accordingly, we may have to use assets or resources
from our existing business or acquire additional assets in order to operate the Spinco business, which could adversely affect our
business, financial condition and results of operations.
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