8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported )     May 16, 2008

	FairPoint Communications, Inc.
(Exact name of registrant as specified in its charter)

Delaware	333-56365	13-3725229
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

521 East Morehead Street, Suite 250, Charlotte, North Carolina	28202
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code     (704) 344-8150

	N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item  2.02 Results of Operations and Financial Condition

On May 16, 2008, FairPoint Communications, Inc. (the “Company”) issued a press release reporting the financial results for its first quarter ended March 31, 2008 (the “Earnings Release”).  A copy of the Earnings Release is attached to this Current Report as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure.

On May 16, 2008, the Company held a conference call to discuss the financial results of the Company for its first quarter ended March 31, 2008 (the “Earnings Call”).  A copy of the transcript (the “Transcript”) of the Earnings Call is attached to this Current Report as Exhibit 99.2 and is incorporated herein solely for purposes of this Item 2.02 disclosure.   The Transcript has been selectively edited to facilitate the understanding of the information communicated during the Earnings Call.

Item  7.01 Regulation FD Disclosure.

A copy of the Earnings Release is being furnished by being attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits
Exhibit Number	Description
99.1 99.2	Earnings Release Transcript

The information in this Current Report, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section.  The information in this Current Report, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FAIRPOINT COMMUNICATIONS, INC.
By:	/s/ John P. Crowley
	Name:	John P. Crowley
	Title:	Executive Vice President and Chief Financial Officer

Date:  May 20, 2008

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

FAIRPOINT COMMUNICATIONS REPORTS FIRST QUARTER 2008 RESULTS

Completed Merger and Successful Integration of Former Verizon Employees

CHARLOTTE, N.C. (May 16, 2008) – FairPoint Communications, Inc. (NYSE:FRP) (“FairPoint” or the “Company”), a leading provider of communications services to urban communities across the country, today announced its financial results for its first quarter ended March 31, 2008.  FairPoint completed its merger with Northern New England Spinco Inc. (“Spinco”), an entity that held Verizon Communications’ landline and certain related operations in Maine, New Hampshire and Vermont on March 31, 2008. From an accounting perspective, Spinco was deemed to have acquired FairPoint and, accordingly, the financial statements of the local exchange business of Verizon New England Inc. in Maine, New Hampshire and Vermont and the customers of Verizon’s related long distance and Internet service provider businesses in those states (the “Northern New England business”) are the relevant financial statements for the Company under GAAP following the merger. As a result, the GAAP financial statements, other than the balance sheet at March 31, 2008 contained in this earnings release, reflect only the financial results of the Northern New England business and do not reflect or include the operations of the FairPoint properties prior to the completion of the merger (“Legacy FairPoint”).  Accordingly, the Company is also reporting combined pro forma results for the first quarter 2008 reflecting the operations of both Spinco and Legacy FairPoint.

Commenting on the results, Gene Johnson, chairman and CEO of FairPoint Communications stated, “Once again, Legacy FairPoint has delivered strong incremental growth in our high-speed data (“HSD”) products.  Our marketing focus on high margin offerings that provide consistent average revenue per unit (“ARPU”) is providing measurable benefits. We are implementing a complementary yet customized strategy for the recently acquired Spinco business.”

He added, “We believe that Spinco access line losses trended higher in the first quarter than what was reported to us in previous quarters due principally to competitors’ marketing and promotional activity around the time of the closing of the merger.  We are implementing marketing and operating strategies that are expected to reduce the rate of loss of access lines and increase HSD sales in the Spinco business.  We are very pleased with the early stages of the merger integration, particularly the transition of the customer relationships and the positive attitude of the new employees. We remain encouraged by the progress we have achieved under the Transition Services Agreement (the “TSA”) since the merger closed and our expectations for a smooth and timely transition off the TSA remain intact.”

Results of the Northern New England Business for the Three Month Period Ended March 31, 2008
(presented on a GAAP basis)

Revenues for the first quarter of 2008 were $282.4 million, down 5.2% from the first quarter of 2007. Approximately $1.6 million of the decline in revenue is due to non-recurring credits issued to certain customers during the three months ended March 31, 2008.  The primary driver of this revenue decline was a decline in local revenue due to increased competition, partially offset by increases in intrastate and data and Internet services revenues. The rate of revenue decline is expected to abate, but meaningful improvements will not take effect until after the transition off of the TSA, expected to occur at the end of September 2008, at which time marketing programs and other initiatives can be fully implemented.

Selling, general and administrative (“SG&A”) expenses decreased $0.9 million to $63.1 million in the first quarter of 2008 compared with the same period in 2007. The decrease was primarily driven by lower allocated costs from Verizon affiliates and lower bad debt expenses in 2008, partially offset by higher costs in the Internet and high speed data business due to increased subscribers.

Total operating expenses decreased $4.8 million to $252.9 million in the first quarter of 2008 compared with the same period in 2007, primarily the result of a $4.0 million reduction in depreciation and amortization due to lower rates of depreciation as a result of changes in the estimated useful lives of depreciable assets and increases in reserve levels, as well as the decline noted above in SG&A expenses.

Net income for the three months ended March 31, 2008 was $9.5 million, or $0.18 per share, compared with $14.4 million, or $0.27 per share for the same period in 2007.  The variance in the year-over-year comparison is a result of the items discussed above.

Certain assets and liabilities of the Northern New England business (principally related to pension, OPEB and associated deferred taxes) were not distributed to Spinco in the merger, therefore the financial information of the Northern New England business contained herein does not reflect Spinco’s actual results for the three months ended March 31, 2008 and may not be indicative of Spinco’s and the Company’s (after giving effect to the merger) future results.

Pro Forma Financial Results

The pro forma statements of operations for the three months ended March 31, 2008 contained in this earnings release do not reflect revenues or expenses that were not transferred to FairPoint, reflect the combination of Legacy FairPoint and Spinco and reflect the combined capital structure of the Company post-merger.  For more information about pro forma financial results, including certain adjustments and assumptions, see the attachments to this press release.

Pro Forma Combined Adjusted EBITDA for the Three Month Period Ended March 31, 2008

On a pro forma combined basis, Adjusted EBITDA (as defined herein) for the three months ended March 31, 2008 was $162 million, compared with Adjusted EBITDA of $179 million for the same period in the prior year.  Excluding the non-recurring revenue credits in the three months ended March 31, 2008, Adjusted EBITDA would have been $164 million.  The decrease in Adjusted EBITDA is primarily due to the decline in revenues, particularly in the Northern New England business.

Pro Forma Combined Operating Results for the Three Month Period Ended March 31, 2008

HSD penetration increased to 18.8% of voice access lines at March 31, 2008, compared with 15.6% at March 31, 2007.  HSD penetration within Legacy FairPoint, excluding the access lines acquired from Verizon, increased to 30.1%, up from 24.9% at March 31, 2007, reflecting the continued success and momentum Legacy FairPoint has consistently reported on a quarterly basis for the past several years. This is partly the result of Legacy FairPoint’s significantly higher percentage of homes capable of subscribing to the Company’s HSD offerings, which is a strategy that will be replicated in Northern New England.

Voice access lines at March 31, 2008 were 1,570,169, down 9.1% from 1,727,954 reported at March 31, 2007. When excluding the impact of the merger, FairPoint’s access lines decreased at a rate of 6.0%, compared with a rate of decline of 9.6% at Spinco. In addition, FairPoint’s access line equivalents were negatively impacted by two one-time events. First, there was reclassification of 486 official lines that had no revenue impact. The second one-time event impacting FairPoint’s access line equivalents was the launch of a triple play by a cable operator in one of FairPoint’s markets. This launch included a significant marketing push and a heavily discounted introductory offer. Legacy FairPoint has experienced that after such prior launches, normalized rates are expected to be achieved within Legacy FairPoint’s systems after several quarters.

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Interstate long distance penetration for the combined company at March 31, 2008 increased to 42.8% of voice access lines compared with 42.3% at March 31, 2007.

Total pro forma access line equivalents were 1,865,747 as of March 31, 2008.  Total pro forma access line equivalents as of March 31, 2008 decreased 6.6% compared with March 31, 2007 and decreased 2.2% compared with December 31, 2007. When excluding the impact of the merger, total access line equivalents year-over-year for Legacy FairPoint would have declined 2.2% compared with the 7.4% loss reported at Spinco.

Pro Forma Access Line Equivalents

	3/31/2008		3/31/2007		12/31/2007		% change 3/31/07 to 3/31/08
FairPoint
Residential access lines		178,659		191,571		182,182		(6.7	%)
Business access lines		54,692		56,795		55,892		(3.7	%)
Wholesale access lines		-		-		-		-
Subtotal: Access lines		233,351		248,366		238,074		(6.0	%)
HSD subscribers		70,168		61,814		67,703		13.5	%
Total access line equivalents		303,519		310,180		305,777		(2.2	%)
Spinco
Residential access lines		851,961		952,503		882,933		(10.6	%)
Business access lines		365,307		386,586		371,041		(5.5	%)
Wholesale access lines		119,550		140,499		124,123		(14.9	%)
Subtotal: Access lines		1,336,818		1,479,588		1,378,097		(9.6	%)
HSD subscribers		225,410		208,153		222,874		8.3	%
Total access line equivalents		1,562,228		1,687,741		1,600,971		(7.4	%)
Pro forma combined total access   line equivalents		1,865,747		1,997,921		1,906,748		(6.6	%)

Page 3 of 5

Conference Call and Webcast

As previously announced, FairPoint will host a conference call and simultaneous webcast to discuss its first quarter results at 8:30 a.m. EDT on May 16, 2008.  Participants should call (888) 253-4456 (US/Canada) or (706) 643-3201 (International) and request the FairPoint Communications first quarter earnings call or Conference ID# 46956451.  A telephonic replay will be available for anyone unable to participate in the live call.  To access the replay, call (800) 642-1687 and enter the confirmation code 46956451.  The recording will be available from May 16, 2008 at 1:00 p.m. (EDT) through May 23, 2008 at 11:59 p.m. (EDT).

A live broadcast of the earnings conference call will be available via the Internet at www.fairpoint.com under the Investor Relations section.  An online replay will be available beginning at 1:00 p.m. (EDT) on May 16, 2008 and will remain available for one year.

During the conference call, representatives of the Company may discuss and answer one or more questions concerning the Company’s business and financial matters. The responses to these questions may contain information that has not been previously disclosed.

Non-GAAP Financial Measures

EBITDA (as defined herein) and Adjusted EBITDA are non-GAAP financial measures (i.e., they are not measures of financial performance under generally accepted accounting principles) and should not be considered in isolation or as a substitute for consolidated statements of operations and cash flows data prepared in accordance with GAAP.  In addition, the non-GAAP financial measures used by FairPoint may not be comparable to similarly titled measures of other companies.  For definitions of and additional information regarding EBITDA and Adjusted EBITDA, and a reconciliation of such measures to the most comparable financial measures calculated in accordance with GAAP, please see the attachments to this press release.

FairPoint believes EBITDA is useful to investors because EBITDA is commonly used in the communications industry to analyze companies on the basis of operating performance, liquidity and leverage. FairPoint believes EBITDA allows a standardized comparison between companies in the industry, while minimizing the differences from depreciation policies, financial leverage and tax strategies.

Certain covenants in FairPoint’s credit facility and the indenture governing its senior notes and the regulatory orders contain ratios based on Adjusted EBITDA and the restricted payment covenants in such agreements regulating the payment of dividends on FairPoint’s common stock are based on Adjusted EBITDA. If FairPoint’s Adjusted EBITDA were to decline below certain levels, covenants in FairPoint’s credit facility that are based on Adjusted EBITDA may be violated and could cause, among other things, a default under such credit facility, or result in FairPoint’s inability to pay dividends on its common stock.

While FairPoint uses these non-GAAP financial measures in managing and analyzing its business and financial condition and believes they are useful to its management and investors for the reasons described above, these non-GAAP financial measures have certain shortcomings.  In particular, Adjusted EBITDA does not represent the residual cash flows available for discretionary expenditures, since items such as debt repayment and interest payments are not deducted from such measure.  FairPoint’s management compensates for the shortcomings of these measures by utilizing them in conjunction with their comparable GAAP financial measures.

The information in this press release should be read in conjunction with the financial statements and footnotes contained in FairPoint’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission.

Page 4 of 5

About FairPoint

FairPoint Communications, Inc. is an industry leading provider of communications services to communities across the country. Today, FairPoint owns and operates local exchange companies in 18 states offering advanced communications with a personal touch including local and long distance voice, data, Internet, television and broadband services. FairPoint is traded on the New York Stock Exchange under the symbol FRP.  Learn more at www.fairpoint.com.

This press release may contain forward-looking statements by FairPoint that are not based on historical fact, including, without limitation, statements containing the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions and statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include those risks described from time to time in FairPoint’s filings with the Securities and Exchange Commission ("SEC"), including, without limitation, the risks described in FairPoint’s most recent Annual Report on Form 10-K on file with the SEC.  These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements.  All information is current as of the date this press release is issued, and FairPoint undertakes no duty to update this information.  FairPoint's results for the quarter ended March 31, 2008 are subject to the completion and filing with the Securities and Exchange Commission of its Quarterly Report on Form 10-Q for the quarter ended March  31, 2008.

Source: FairPoint Communications, Inc., www.fairpoint.com.

Investor Contact: Brett Ellis (866) 377-3747, bellis@fairpoint.com

Media Contact: Rose Cummings (704) 602-7304; rcummings@fairpoint.com

# # #

Attachments

Page 5 of 5

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets Under GAAP

	March 31,			December 31,
		2008(A)			2007(A)
	(unaudited)
	(Dollars in thousands)
Assets
Current assets:
Cash	$	10,961		$	—
Restricted cash		19,200			—
Accounts receivable, net		168,330			160,130
Other receivables		40,233			18,579
Materials and supplies		10,136			4,229
Other		43,344			21,180
Deferred income tax, net		27,382			9,730
Short term investments		—			37,090
Total current assets		319,586			250,938
Property, plant, and equipment, net		1,890,403			1,628,066
Intangibles assets, net		232,973			2,019
Prepaid pension asset		70,080			36,692
Debt issue costs, net		29,271			—
Other assets		79,517			20,457
Investments		6,856			—
Goodwill		611,624			—
Total assets	$	3,240,310		$	1,938,172
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of capital lease obligations	$	2,029		$	2,064
Accounts payable		206,599			175,866
Dividends payable		13,970			—
Accrued interest payable		282			—
Interest rate swaps		27,079			—
Other accrued liabilities		58,679			47,115
Total current liabilities		308,638			225,045
Long-term liabilities:
Capital lease obligations		9,472			9,936
Employee benefit obligations		170,675			408,863
Deferred income taxes		248,802			140,911
Unamortized inviestment tax credits		5,738			5,877
Other long-term liabilities		39,290			28,378
Long-term debt, net of current portion		2,177,381			—
Interest rate swap agreements		47,588			—
Total long-term liabilities		2,698,946			593,965
Minority interest		6
Stockholders' equity:
Common stock		890			538
Additional paid-in capital		800,321			484,383
Retained Earnings		(489,766	)		634,241
Accumulated other comprehensive loss		(78,725	)		—
Total stockholders' equity		232,720			1,119,162
Total liabilities and stockholders' equity	$	3,240,310		$	1,938,172

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations Under GAAP

(Unaudited)

	Three months ended
	March 31,
		2008(A)			2007(A)
	(Dollars in thousands)
Revenues	$	282,414		$	297,950
Operating expenses:
Cost of services and sales, excluding depreciation and amortization		135,837			135,715
Selling, general and administrative expense, exluding depreciation and amortization		63,116			64,033
Depreciation and amortization		53,925			57,898
Total operating expenses		252,878			257,646
Income from operations		29,536			40,304
Other income (expense):
Interest expense		(14,522	)		(17,793	)
Other		986			906
Total other expense		(13,536	)		(16,887	)
Income before income taxes		16,000			23,417
Income tax expense		(6,457	)		(8,979	)
Net income	$	9,543		$	14,438
Weighted average shares outstanding:
Basic		53,761			53,761
Diluted		53,761			53,761
Earnings per share:
Basic	$	0.18		$	0.27
Diluted	$	0.18		$	0.27

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows Under GAAP

(Unaudited)

	Three months ended
	March 31,
	2008				2007
	(Dollars in thousands)
Cash flows from operating activities:
Net income		$	9,543		$	14,437
Adjustments to reconcile net income to net cash provided by
operating activities of continuing operations:
Deferred income taxes			16,021			1,052
Provision for uncollectible revenue			3,874			6,330
Depreciation and amortization			53,925			57,898
SFAS 106 post-retirement accruals			22,522			22,472
Other non cash items			(27,956	)		(47,684	)
Changes in assets and liabilities arising from operations:
Accounts receivable and other current assets			(28,399	)		15,700
Accounts payable and other accrued liabilities			(37,870	)		(24,487	)
Other			(11,956	)		—
Total adjustments			(9,839	)		31,281
Net cash provided by operating activities of continuing operations			(296	)		45,718
Cash flows from investing activities of continuing operations:
Acquired cash balance, net			11,552			—
Net capital additions			(24,604	)		(36,169	)
Net proceeds from sales of investments and other assets			—			7,765
Net cash used in investing activities of continuing operations			(13,052	)		(28,404	)
Cash flows from financing activities of continuing operations:
Loan origination costs			(29,238	)		—
Proceeds from issuance of long-term debt			1,635,500			—
Repayments of long-term debt			(685,441	)		—
Contributions from Verizon			344,629			(16,891	)
Restricted cash			(80,886	)		—
Repayment of capital lease obligations			(255	)		(423	)
Dividends paid to stockholders			(1,160,000	)		—
Net cash provided by (used in) financing activities of continuing operations			24,309			(17,314	)
Net increase in cash			10,961			—
Cash, beginning of period			—			—
Cash, end of period		$	10,961		$	—
Supplemental disclosure of cash flow information:
Non-cash equity consideration		$	316,290		$	—
Non-cash issuance of senior notes			551,000			—

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Unaudited Pro Forma Combined Statement of Operations (Non-GAAP)

For the Three Months Ended March 31, 2008

(in millions, except per share data)

			Northern New England business (A)	Legacy FairPoint (B)	Merger Related Costs		Pro Forma Adjustments		Pro Forma Results for Combined Businesses
Revenues			$282	68	-		(1)	(C)	$349
Operating expenses:
	Cost of services and sales, excluding depreciation and amortization		136	28			(10)	(C)(D)	154
	Selling, general and administrative expense		63	12	47	(I)	(50)	(D)(J)	72
	Depreciation and amortization		54	13			5	(F)	72
		Total operating expenses	253	53	47		(55)		298
		Income from operations	29	15	(47)		54		51
Other income (expense):
	Interest expense		(14)	(11)	-		(22)	(E)(H)	(47)
	Interest and dividend income		-	-	-		-		-
	Loss on derivative instruments		-	(22)	-		-		(22)
	Other nonoperating, net		1	-	(32)	(K)	32	(K)	1
		Total other expense	(13)	(33)	(32)		10		(68)
		Income before income taxes	16	(18)	(79)		64		(17)
Income tax (expense) benefit			(6)	7	25	(L)	(19)	(L)	7
		Net income	$10	(11)	(54)		45		($10)
Basic weighted average shares outstanding			53.8	35.3					89.1
Diluted weighted average shares outstanding			53.8	35.3					89.1
Basic earnings per common share:
	Continuing operations		$0.19						($0.11)
Diluted earnings per common share:
	Continuing operations		$0.19						($0.11)

The accompanying notes are an integral part of these unaudited pro forma combined condensed financial statements.

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Unaudited Pro Forma Combined Statement of Operations (Non-GAAP)

For the Three Months Ended March 31, 2007

(in millions, except per share data)

			Northern New England business (A)	Legacy FairPoint (B)	Merger Related Costs		Pro Forma Adjustments		Pro Forma Results for Combined Businesses
Revenues			$298	70	-		(1)	(C)	$367
Operating expenses:
	Cost of services and sales, excluding depreciation and amortization		136	30			(9)	(C)(D)	157
	Selling, general and administrative expense		64	11	8	(I)	(11)	(D)(J)	72
	Depreciation and amortization		58	13			5	(F)	76
		Total operating expenses	258	54	8		(15)		305
		Income from operations	40	16	(8)		14		62
Other income (expense):
	Interest expense		(18)	(10)	-		(19)	(E)(H)	(47)
	Interest and dividend income		-	-	-				-
	Loss on derivative instruments		-	-	-				-
	Other nonoperating, net		1	2	-		(2)	(G)	1
		Total other expense	(17)	(8)	-		(21)		(46)
		Income before income taxes	23	8	(8)		(7)		16
Income tax (expense) benefit			(9)	(3)	3	(L)	3	(L)	(6)
		Net income	$14	5	(5)		(4)		$10
Basic weighted average shares outstanding			53.8	35.3					89.1
Diluted weighted average shares outstanding			53.8	35.3					89.1
Basic earnings per common share:
	Continuing operations		$0.26						$0.11
Diluted earnings per common share:
	Continuing operations		$0.26						$0.11

The accompanying notes are an integral part of these unaudited pro forma combined condensed financial statements.

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Unaudited Reconciliation of Net Income under GAAP to Pro Forma Adjusted EBITDA (Non-GAAP)

(in millions)

	Three Months Ended
	March 31,			March 31,
	2008			2007
Net Income under GAAP	$	10		$	14
Depreciation and amortization		54			58
Interest expense		14			18
Income taxes		6			9
Northern New England business EBITDA (1)		84			99
FairPoint EBITDA (1)
Net Income		(11	)		5
Depreciation and amortization		13			13
Interest expense		11			10
Income taxes		(7	)		3
Pro forma adjustment for earnings in investees		—			(2	)
Loss on derivatives		22			—
FairPoint Adjusted EBITDA (2)		28			29
Combined EBITDA (1)		112			128
Pro forma pension and OPEB adjustment		12			11
Estimated quarterly cost savings (3)		28			28
Non-cash pension and OPEB		10			12
					—
Pro forma Adjusted EBITDA (2)	$	162		$	179

(1)	EBITDA is defined as net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization.
(2)	Adjusted EBITDA is defined as EBITDA adjusted to exclude unusual or one-time non-recurring items, non-cash items and other adjustments and to include anticipated cost savings related to the merger and other adjustments.
(3)	Represents the quarterly run-rate cost savings as a result of the merger, which FairPoint expects to achieve within twelve months following the closing of the merger, assuming the Transition Services Agreement is terminated six months after the closing of the merger. These cost savings relate to the expected elimination of approximately $390 million (based on full year 2007 results) in annual costs and expenses, primarily consisting of shared corporate expenses allocated to the Northern New England business by Verizon. FairPoint believes that it can perform the corporate services provided by Verizon at a cost that is substantially less than that which was historically allocated to the Northern New England business. These costs will be replaced by (i) certain increased costs of approximately $254 million annually, (ii) the elimination of $18 million of annual revenue as a result of rate adjustments in Maine and (iii) the elimination of $6 million of annual revenue as a result of anticipated reductions in access charges in the future if a proceeding that is currently before the New Hampshire Public Utilities commission is decided adversely. In order to achieve these net cost savings, FairPoint expects to incur approximately $400 million in net one-time operating costs and capital expenditures, a significant portion of which will be capitalized. These costs do not include other merger related costs that were financed with the proceeds of the sale of FairPoint’s investment in the Orange County-Poughkeepsie Limited Partnership or reimbursed by Verizon. These costs include payments of $200 million to Capgemini under the master services agreement, payments of $133 million to Verizon under the TSA (assuming FairPoint no longer needs services under the transition services agreement following the six-month anniversary of the closing of the merger) and additional merger and transition related expenditures. FairPoint estimates that it will incur approximately $335 million of these costs following the closing of the merger. There can be no assurances that these or any other cost savings will actually be reailzed.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 (A)  On March 31, 2008, FairPoint completed a merger with Spinco, pursuant to which Spinco merged with and into FairPoint with FairPoint continuing as the surviving corporation for legal purposes.  Spinco was a wholly-owned subsidiary of Verizon and prior to the merger Verizon and its subsidiaries transferred certain specified assets and liabilities of the local exchange business of Verizon New England in Maine, New Hampshire and Vermont and the customers of the related long distance and Internet service provider business in those states to subsidiaries of Spinco.  The merger was accounted for as a “reverse acquisition” and, therefore, Spinco is treated as the acquirer for accounting purposes.  As a result, the statement of operations and the financial information derived from the statement of operations as reported under GAAP reflects only the financial results of the Northern New England business.  The balance sheet and financial information derived from the balance sheet reflect the combined assets and liabilities of Legacy FairPoint and Spinco at March 31, 2008.  Certain assets and liabilities of the Northern New England business (principally related to pension, other post-employment benefits and associated deferred taxes) were not distributed to Spinco in the merger and were effectively contributed back to Verizon.  The statement of operations as reported under GAAP reflects the actual results of the Northern New England business for the three months ended March 31, 2008 and may not be indicative of Spinco’s and the FairPoint’s future results (after giving effect to the merger).

All results presented herein prior to March 31, 2008 represent the historical financial results of the Northern New England business and represent special-purpose combined financial statements prepared to present the balance sheets, statement of operations and cash flows of the Northern New England business in contemplation of a proposed merger with Legacy FairPoint and related transactions.  These special-purpose combined financial statements were prepared in accordance with U.S. generally accepted accounting principles.  Prior to March 31, 2008, these financial statements were prepared using specific information where available and allocations where data was not maintained on a state-specific basis within the Northern New England business’ books and records.

The special-purpose combined financial statements include the wireline-related businesses, Internet access, long distance and customer premises equipment services provided by the Northern New England business to customers in the states of Maine, New Hampshire and Vermont.  All significant intercompany transactions have been eliminated.  These special-purpose combined financial statements also included the assets, liabilities and expenses related to employees who support the Northern New England business, some of whom remained employees of Verizon following the merger.

(B)   To reflect operating results recognized by FairPoint prior to the merger as if the merger had occurred as of January 1, 2006.

(C)   This adjustment reflects revenues and related expenses associated with VoIP and wireless directory assistance services which were not transferred to Spinco. For the three months ended March 31, 2008 and 2007, the Northern New England business recorded approximately $1 million and $1 million in revenue and $1 million and $1 million in expenses, respectively, associated with VoIP and wireless directory assistance services.  In addition, it reflects certain revenues and related expenses associated with customers of VSSI-CPE that were not transferred to Spinco.

(D)   This adjustment reflects the reduction in pension and OPEB expense of $12 million and $11 million for the three months ended March 31, 2008 and 2007, respectively, for the Northern New England business, determined using an actuarial study of employees to eliminate the pension and OPEB expense that were not be transferred to Spinco. Of the $12 million adjustment for the three months ended March 31, 2008, $9 million was included in cost of services and sales and $3 million was included in selling, general and administrative expenses. Of the $11 million adjustment for the three months ended March 31, 2007, $8 million was included in cost of services and sales and $3 million was included in selling, general and administrative expenses.

(E)   This adjustment reflects the removal of allocated interest expense of $14 million and $18 million recorded by the Northern New England business during the three month period ended March 31, 2008 and 2007, respectively, associated with affiliate notes payables and long-term debts held by Verizon.

(F)   This adjustment reflects the amortization of the finite-lived identifiable intangible assets recorded in this transaction. The weighted average estimated life of FairPoint’s customer relationships is estimated to be 9.7 years and amortization expense is $5 million for the three months ended March 31, 2008 and 2007.

(G)   The adjustment to equity in net earnings of investees and net gains on sale of investments includes the elimination of FairPoint’s equity in net earnings of investors in the Orange County — Poughkeepsie Limited Partnership. In April 2007, FairPoint sold this investment to Verizon Wireless and another third party for $55 million.

(H)   This adjusts reported interest expense to the pro forma interest expense to be recognized on the debt structure of the combined company following the spin-off and merger.  The adjustment considers (1) the interest expense for the three months ended March 31, 2008 and 2007 recognized on the newly issued debt of the combined company, (2) the amortization of capitalized debt issuance costs associated with the newly issued debt, and (3) the elimination of interest expense and amortization of debt issuance costs related to the debt of Legacy FairPoint that was repaid upon consummation of the merger.

(I)    This adjustment is to separate certain merger related costs incurred by Legacy FairPoint prior to the merger.  These costs consist of various transition and transaction related costs required to close the merger, hire new employees and begin the transition process.

(J)   This adjustment is to eliminate the merger related costs discussed in (I) above of $47 million and $8 million incurred by Legacy FairPoint prior to the consummation of the merger during the three months ended March 31, 2008 and 2007 which are directly related to the merger and related transactions.

(K)   This adjustment consists of fees and charges incurred in connection with the closing of the spin-off and merger, principally including investment banking fees, write-off of debt issuance costs on Legacy FairPoint’s old credit facility and other costs incurred at the closing of the merger.

 (L)   This adjustment reflects the income tax impact on adjustments described above.

EX-99.2

Exhibit 99.2  

Final Transcript
Conference Call Transcript FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call Event Date/Time: May. 16. 2008 / 8:30AM ET

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May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

CORPORATE PARTICIPANTS

 Brett Ellis

 FairPoint Communications, Inc. - Investor Relations

 Gene Johnson

 FairPoint Communications, Inc. - Chairman and CEO

 John Crowley

 FairPoint Communications, Inc. - CFO

CONFERENCE CALL PARTICIPANTS

 Simon Flannery

 Morgan Stanley - Analyst

 Tom Seitz

 Lehman Brothers - Analyst

 David Sharret

 Lehman Brothers - Analyst

 Dennis Leibowitz

 Act II Partners - Analyst

 PRESENTATION

 Operator

 At this time I would like to welcome everyone to the FairPoint Communications first quarter 2008 earnings conference call. (OPERATOR INSTRUCTIONS). At this time I would like to turn the call over to Mr. Ellis.

 Brett Ellis - FairPoint Communications, Inc. - Investor Relations

 Good morning, everyone, and thank you for joining the FairPoint first-quarter earnings conference call. Participating on today's call are Gene Johnson, our Chief Executive Officer, and John Crowley, our Chief Financial Officer.

Before we begin, I would like to remind you that certain statements made during this conference call which are not based on historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events, or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include those risks described from time to time in FairPoint's filings with the Securities and Exchange Commission, including without limitation the risks described in FairPoint's most recent annual report on Form 10-K on file with the Securities and Exchange Commission. All information is current as of the date of this earnings call, and FairPoint undertakes no duty to update this information. In addition, FairPoint's results for the quarter ended March 31, 2008 are subject to the completion and filing with the Securities and Exchange Commission of its quarterly report on Form 10-Q for such periods.

Having said this, allow me to introduce Gene Johnson, our Chairman and CEO.

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 Thank you, Brett. Good morning, everyone. Before I actually talk about the results, let me take care of a couple of housekeeping items. John Crowley will be joining me on today's call, our CFO, as you know. Peter Nixon, our President, will not be joining us, but he will make a very detailed presentation next week at the investor day, the details which, I think, we announced in a press release this morning. The investor day on

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May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

the 22nd is going to focus almost exclusively on the merger, with emphasis on the Transition Services Agreement, merger integration efforts, and the process of cutting over to our new systems. A number of the members of Peter's team will be (technical difficulty) as we go through that.

So, as a result of that, we'll keep today's call relatively brief and focused on the first-quarter earnings results. We're going to provide you with a review of the first-quarter financial and operational results, and then we're going to leave some time for Q&A. So, John and I will make a few comments, and then we'll open the lines for Q&A.

During the call -- and we're going to try to be consistent about this going forward for at least the next year or so -- John and I will refer to Legacy FairPoint, meaning the business that we operated prior to March 31st; Northern New England, meaning the business we acquired on March 31st from Verizon, and we'll use the term FairPoint to mean the combined business. So let's get right to the numbers.

The quarterly results that we reported for Legacy FairPoint remain strong. They closely mirror the results we reported throughout last year. Access line losses for both Legacy and Northern New England trended slightly higher in the first quarter, and John is going to give you some detail on that as he makes his comments. The real takeaway from our perspective, and the thing I want to spend the most time talking about, is the broadband business, high-speed data business. I think it's important that we focus on that because not only do we have strong growth in that business, and have a lot of room for more growth in the business, but it really represents the future of our company, and of our industry, quite frankly.

It provides a stable and consistently higher revenues, actually, than if we just offer landline service, which will lead us to nowhere. Our products will continue to grow as we continue to offer new speeds. We continue to expand our footprint, so we expect that we're going to see some real growth in that area.

During the quarter, HSD subscribers at Legacy FairPoint grew to just over 70,000 customers, 13.5% year-over-year growth, and our penetration is now past 30% at 30.1%. We're very proud of that. Northern New England grew to over 225,000 customers, representing just an 8.3% year-over-year increase, and the total penetration there is well less than 20%, so we've got great opportunity there. There's a lot of hard work ahead of us, but it's a tremendous opportunity for us to grow those revenues.

I'm sure all of you are aware that part of the reason for the restrained growth in Northern New England is the lower number of addressable homes, significantly less addressable homes in that footprint than in the Legacy footprint. And you've heard us say, and many of you probably read the stipulations, the agreements with the public utility commissions in the three states, we have a very specific plan in place to significantly raise the number of addressable homes, and to significantly increase speeds and the like.

Another factor driving the penetration rates in Northern New England is, quite frankly, allocation of marketing dollars, the lack of (inaudible) on sales and marketing; in fact, little or no sales or marketing efforts during the past few quarters. We've already begun some limited marketing efforts there, and we have increased our direct sales efforts. Once we get off the Transition Services Agreement, which we still expect to happen at the end of September, we're going to implement a more aggressive marketing program. That's going to be designed to win back subscribers lost to the incumbent cable companies, as well as target new subscribers that are able to sign up for our products for the first time because it's the first time they've had them available to them.

The offerings that we expect to provide are going to include a much more kind of broader range of products than are currently available. You'll hear a lot more about that in future calls. But for competitive reasons, I'm not going to go into much detail today as to where we're going with the products we're going to be rolling out. But I can tell you that you can expect the offerings to be very, very compelling, and also very competitive.

You've also heard us talk about our plans for an advanced IP network, or an MPLS infrastructure. It's a very flexible and powerful network that's going to create a platform for a large number of highly reliable, efficient business-class services, and also provide the foundation for the growth of our broadband services in general. It's going to enable very, very compelling offerings for our residential marketplace. We've already begun to work on this, and it is a major emphasis in our capital expending activities in the future. Peter will talk about it in more detail next week.

We also have a well-defined plan in place to increase HSD availability in the Northern New England systems. We have a well-defined marketing strategy. We have a detailed plan to enhance the product itself, and we're very excited about what this can mean for our customers and the growth of our company. We see HSD growth as the engine for the Company for many years to come, and we're going to ensure that all the necessary resources are devoted to keeping our HSD penetration and availability numbers at some of the industry's highest. And that's where Legacy FairPoint is today, and that's where we expect all of FairPoint to be very soon.

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May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

We also have a plan in place to ensure we aren't losing any more landline customers then we should, and that we're aggressive in winning back those we have lost. We believe that a laser-like focus on the business, which it has been lacking, a customer-centric culture, which is what the FairPoint culture is all about, is going to pay significant dividends to our shareholders.

So, that's all I want to say by way of my comments. John Crowley, our CFO, will dive into the financial highlights for the quarter, provide a brief operational update as well, and then we'll go to Q&A.

 John Crowley - FairPoint Communications, Inc. - CFO

 Thanks, Gene. Good morning, everybody. Before I get into the fundamentals, let me tell you what it is that you're looking at. For accounting purposes, Spinco acquired FairPoint, and did so on March 31st. As such, the operations of legacy FairPoint are not included in the GAAP results for the first quarter. So, as a convenience, and to keep you fully informed, we have pro forma'ed in the results of Legacy FairPoint in the back of the earnings press release.

Because the merger was completed on 3/31, the balance sheet does include the assets and liabilities of both legacy FairPoint and Spinco. The merged entity is FairPoint, so as Gene says, I'll try to be careful to refer to FairPoint, the Company today and since 3/31, and Legacy FairPoint, the Company prior to 3/31.

Finally, I want to point out that Spinco was created on 3/31 from the business and assets of the Northern New England operations of Verizon, and therefore, they reflect a cost structure that, to a great extent, we did not inherit. So, our 10-Q will reflect the balance sheet of FairPoint after the merger with Spinco, but the income statement of Northern New England only, because -- and this sounds odd to say -- from an accounting standpoint we didn't own Legacy FairPoint until the very end of the quarter.

Now let me talk about the results of Northern New England, and then Legacy FairPoint, and then our view of the Company pro forma.

In Northern New England, revenue for the quarter was $282 million, down 5% from the previous year, but in reality only down 4%, as I'll explain in a second. Net income was $10 million, or $0.18 per share. Those results reflect the old cost structure under the Verizon group organization and include its expense allocations.

There are three adjustments you have to make in order to anticipate what costs we inherited: allocated expenses in the quarter to the local exchange carrier, the regulated business, was $58 million; allocations to the non-regulated business were $32 million; and expenses included for the retiree pension and health of the non-transferred employees was $12 million. Then, on the revenue side, there was a negative adjustment in the quarter of $2 million to account for over-billing in prior periods, which you need to add back to see a run rate level of revenue and of EBITDA.

Operating expenses declined $5 million compared to the first quarter of 2007, and operating expenses, excluding depreciation and amortization, declined $1 million. Earnings per share were $0.18 for the quarter, versus $0.27 in the first quarter of 2007. But of course, this does not reflect the interest expense on the debt that we took on at March 31st.

Year-on-year access lines declined 9.6% in the Northern New England operations. We don't have hard data to explain this, except to say that we do know that non-pay disconnects did not contribute to the increase; they were flat. We know that competitors stepped up advertising and made some quite negative claims to our customers about merger disruption, which of course didn't happen. In the quarter, Northern New England added 2,536 HSD accounts, which means that legacy FairPoint almost outsold its nearly six times larger sister. Northern New England finished the quarter with 16.9% high-speed data penetration, and legacy FairPoint, as Gene mentioned, over 30%.

The starting point in access lines is not where we want it to be; however, we can make up the difference with a combination of improved access line trends, HSD sales, and business sales. Further, the inherited costs, the direct cash expenses of the LEC, or regulated business, were less than expected in the first quarter. And the one month of April -- not really enough of a data point to make a firm prediction -- but all of our testing indicates that direct costs, cash receipts and sales results, especially in business accounts, cause us to believe that we can stay on plan for 2008.

Access lines at Legacy FairPoint declined 6% versus 3/31/07. Of the 4,700 decline in access lines in the quarter, 486 were reclassification of official lines and so had no revenue impact. Adjusted for that clerical item, access lines declined 5.8% year-on-year. Non-pay disconnects continue to come down, as we've seen in the past two quarters.

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May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

The only other unusual item in the quarter for legacy was a cable VoIP triple play introduction in one of our markets. That represents 0.5% of the 6% in year-on-year losses. And in that market, the trend back down to normal trends, appears to have occurred now. So those two unusual items imply a longer-term trend of very low 5% loss; however, we are anticipating two new cable VoIP introductions this year in legacy, so we would expect a new surge, and then a tail behind it in access line losses at some point in 2008.

Legacy FairPoint had a great quarter for HSD sales, adding 2,465 HSD accounts; as I said, very nearly equal to what Northern New England did in the same quarter, which has six times the base of access lines to sell to. Legacy HSD penetration is over 30%, and ARPU still at about $40.

Financial performance at Legacy FairPoint was on plan as to adjusted EBITDA. Revenues were down 3% and operating expenses, excluding depreciation and merger-related expense of 47 million, were down 2%.

Of greatest use to understand FairPoint going forward, look at the pro forma Adjusted EBITDA. On the last page of the press release, you'll see the combined EBITDA in the first quarter of $112 million. We add back the expense related to retiree benefits that did not transfer of $12 million, the expected savings, which is our new expected cost structure added in and the Verizon group allocations deducted, and then we have added back the non-cash portion of the pension and OPEB. That's the portion that was transferred to FairPoint, for Adjusted EBITDA of $162 million.

Keep in mind, as we've said before, that we expect continued annual EBITDA declines through this year and possibly next in the 4 to 5% range, and there is a step function decline of $6 million in the second half due to the rate case that was settled as part of the transfer in Maine. You've heard us talk about that before; we refer to that as the AFOR settlement.

Finally, let me make a few key points on the balance sheet. First, as I said, this is the balance sheet of the merged company, both legacy FairPoint and Spinco. You'll see $19 million in restricted cash. This is set aside for special projects in New Hampshire to be determined by the PUC, and for network remediation in Vermont. This $19 million is just the current portion. The remainder of the 81 million in restricted cash is included in the non-current section as other assets.

Then you'll see a $70 million prepaid pension asset. That is new. The funding assumptions for the transfer of the pension liability were actually very conservative, so we are over-funded on our pension obligation.

The deferred tax asset -- I'll just mention that because it gives me the opportunity to point out that net operating loss carry-forwards are now $251 million at 3/31/08.

You see the interest rate swaps on the balance sheet; I just want to point out here that our floating to fixed rate swaps that we entered into on our debt will not qualify for hedge treatment. So, in future quarters you'll see the mark-to-market in our income statement. That would be readily identifiable. A few lines below, you'll see that the OPEB obligation is lower than we forecast. This is due to greater attrition.

I think everyone's familiar with our new debt structure, so I won't rehash that. But, if you do want that information, we filed some slides on April 17 as part of our investor call, and you can go into our Web site and look at them there.

With that, I think we can go ahead and open up the line for questions. Thank you.

QUESTION AND ANSWER

Operator

 (OPERATOR INSTRUCTIONS). Simon Flannery, Morgan Stanley.

 Simon Flannery - Morgan Stanley - Analyst

 I wanted to get some more clarification around the sort of degree of marketing activity, both by Verizon and by competitors. You mentioned that there were some cable companies that were talking about merger disruption. Was that as sort of a March event, or was that going on all through the quarter? And was there less marketing activity by Verizon in Q1 versus the run rate in 2007, or was it fairly stable? Just so we can get in context, is this something we might see going through the next few quarters? Any sort of general comments on the economy? You mentioned the

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May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

non-pay disconnects being fine. Anything else you're seeing in relation to housing impact, wireless substitution, or any sort of business failures, or anything like that in any of your markets?

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 I'll comment on the marketing question, and then John can comment on what he's seen in the economy up there. Our sense is that there was essentially no marketing activities in these markets during that period. The only activity that we saw in the last quarter or so was kind of the spillover for markets that are -- the Boston area, for instance -- close to New Hampshire and so on.

Our marketing activities are picking up, but I want to remind you that we really can't put new bundles in, we can't really change products and services because of Verizon's inability to provide -- to build those for us while we're still on the TSA. So, we don't expect to be able to significantly increase our marketing activities. However, we are doing marketing of the existing products and services that are available today of the existing broadband offerings, for instance, that have not been previously marketed, and we can be fairly aggressive about that.

We have stepped up our sales activities, both on the business side and on the consumer side. I think we've indicated before that we actually have salespeople on the street calling on customers above $333 a month in revenues, and that something that's never happened before. We also have stepped up already very quickly the sales efforts for the small businesses below $333 a month through our call centers, where we are actively making those kind of calls, which was not happening before. And likewise we have stepped up the activity in our calling centers for our residential business. I'm sure you'll hear more about that next week. But quite frankly, I don't expect to see significant change in our results from our marketing and our sales efforts until later this year, probably third, fourth quarter timeframe, just because of the fact that we can't put our new offerings in place until we cut over from the TSA to our own systems. John, you want to talk about the economy?

 John Crowley - FairPoint Communications, Inc. - CFO

 It's interesting -- I think we talked about this on either the fourth quarter call or the third quarter call. The peak of non-paid disconnects for us, and appears also for Spinco, really occurred in the third and fourth quarter, and it's trended back down.

The other thing, of course, that we're watching super close is the quality of the assets, in particular in Spinco because of its sheer size. The write-offs are not trending out of line there, and the retail days sales outstanding, a measure of the quality of accounts receivable, is -- I would almost call it flat; it's actually down slightly, from almost 33 days to about just under 32 days. And similar improvements on the business side. We're seeing the same thing on the Legacy side -- I'm trying to get my terms right -- that the accounts receivable do not seem to be moving in the wrong direction. So, fingers crossed, we're out of the woods.

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 I don't think I completely answered your question, so let me come back and (multiple speakers). (inaudible) the competitors. They really did pick up pretty aggressively, and we had -- to the point that one PUC, and maybe two, now that I think about it, actually issued public notices warning customers against slamming. We know that customers were being told that the world is going to fall apart; FairPoint is not going to be able to provide service to you. And the cable companies particularly picked up their marketing quite aggressively, attacking us during the first quarter of this year.

 Simon Flannery - Morgan Stanley - Analyst

 Thanks a lot.

Operator

 Tom Seitz, Lehman Brothers.

 Tom Seitz - Lehman Brothers - Analyst

 

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May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

 Just to follow up on Simon's question, can you tell us what their level of activity looks like now? Pretty well into the second quarter on the marketing side. And then, can you explain to us what if anything they're doing on the small business side? Given that that's pretty critical for you guys to stabilize pretty quick, it would be helpful to understand what cable has been doing in that market as well. Thanks.

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 They're still being fairly aggressive, although some of the thunder is taken away, now that the system didn't collapse around the customers' feet when we closed. So, a little more reality is kind of coming into the marketplace. We're not right now seeing, I think it's fair to say, a particularly aggressive attack on the small-business market, although we're going very hard now after that marketplace, and we'll go even harder about it, after it, as we continue to get closer to September 11th. And quite frankly, this network architecture that we're in the process of redesigning to put the MPLS in, and all the capital that goes along with that, is going to make a significant difference in the kind of products and services we can provide. But we've not seen (technical difficulty) pickup in that (technical difficulty)

 Tom Seitz - Lehman Brothers - Analyst

 When do you expect the MPLS product sets to be rolled out?

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 I don't want to talk about that right now. I don't mean to be evasive, but this is a very competitive marketplace up there. And we're trying to come in -- quite frankly, for the first time, really effectively and aggressively compete against these guys. That's not been going on, and we just don't want to give away our timeframe for doing that. So we'll be talking broadly about we're in the process already of rolling out the MPLS network. But I don't want be real specific -- Tom, I hope you can appreciate that -- in talking about timeframes, because we'd like to catch them by surprise a little bit.

 Tom Seitz - Lehman Brothers - Analyst

 Is there anything -- I understand that you're sort of limited on the product side, but is there stuff that you can do on the marketing side? I know you guys were on television in a couple of the states prior to the PUC's voting. Is there stuff that you can do along those lines to get the brand out there and get people comfortable with the FairPoint name?

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 Yes. We've already rolled out -- we started about three weeks ago, maybe four weeks ago now, with our first state-wide, region-wide television advertisements. We're now moving into the second phase of those. The first phase was strictly brand recognition. We're going to now talk about some specific products and start selling our products. In addition to that, we are targeting the print media, our targeted advertising, and we're moving fairly aggressively that way as well.

I can tell you that the efforts in the first month, coming from zero, from kind of a - -- coming out of the starting blocks, with no sales efforts and no marketing efforts, have produced the good results. We had excellent results in our consumer and small business sales centers, well above our goal for the first month. And we're quite pleased with our business sales effort the first month as well.

So we have started; we're not sitting back waiting until the end of the year. We're going very, very hard on this already. We're also in the process of training a number of new CSRs to talk to the customers. Every call we get from a customer, and we're getting an awful lot of them right now, is an opportunity for us to sell something, and we're converting those sales. This is from a force that previously didn't do that. And it's pretty gratifying to see how excited they are, and how quickly they're taking the bull by the horns to run this business differently.

 Tom Seitz - Lehman Brothers - Analyst

 But all that being said, you're telling us to be pretty conservative in our assumptions for the Northern New England business, until such time as you can respond with more robust bundles later in the year.

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Final Transcript

May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

Gene Johnson  - FairPoint Communications, Inc. - Chairman and CEO

 I don't want you to -- I think it's fair to say I don't want to over-promise and under-deliver, and we know we've got some challenges until we can put our own programs in place. So, until we have a better handle on what our results would be, I don't want to tell you something and then it not come to fruition. But, I will tell you that we're very pleased with where we are right now. We, quite frankly, are doing better than I thought we would at this point.

 Tom Seitz - Lehman Brothers - Analyst

 Thank you very much.

Operator

 At this time there are no questions. (OPERATOR INSTRUCTIONS). David Sharret, Lehman Brothers.

 David Sharret - Lehman Brothers - Analyst

 If I can ask just on -- in terms of the competitive launches, you mentioned the first quarter and expecting throughout the rest of the year. If you can update us on the percentage of your lines where you're now seeing a competing triple play voice service against you, and based on -- just to understand the scale -- where you're expecting that to reach by the end of the year, based on those launches.

 John Crowley - FairPoint Communications, Inc. - CFO

 I'm going to have to give you two answers to that at this point. The percentage of the Northern New England lines that are passed by a cable VoIP product we put at 46%. And the percentage of legacy lines that has a cable VoIP we put at -- got to look this up -- I believe 16%. 16%. As I referred to before, we think that the legacy will be close to 30% by the end of this year. But my understanding is in the Spinco markets that there isn't actually too much movement in that. And the reason for that is, of course, because it's already so high to begin with. It nearly doubled last year because of the Adelphia acquisition. So, I think that answers your question.

 David Sharret - Lehman Brothers - Analyst

 And the launch you saw in the first quarter, that was in legacy?

 John Crowley - FairPoint Communications, Inc. - CFO

 That was in legacy. That's right. And that represented about 0.5% of the access line losses, the rate of access line losses.

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 Let me just add to that that we have found one of the really pleasant surprises after closing is -- I guess you could call this a pleasant surprise -- is that there are a significant number of homes that have either fiber to the home, what we call FANs -- since FiOS is a branded network right now, we're calling it FAN internally, the fiber access network. Later on we'll come up with our own name for that -- (technical difficulty) a significant number of homes passed by that fiber access network, passed by broadband with a DSL product, that have DSLAMs installed, etcetera -- $12 million spent last year, for instance, in Maine by Verizon -- that have never been marketed. You can, obviously, expect us to go after those pretty hard, pretty soon. We don't need new products and services there. So we're going to be attacking that marketplace fairly soon.

 David Sharret - Lehman Brothers - Analyst

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Final Transcript

May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

 Thanks.

Operator

 At this time there are no further questions.

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 We'll give it another second to see if anybody else gets on the queue. If they don't (inaudible)

Operator

 (OPERATOR INSTRUCTIONS).

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 I guess there are no other calls in the queue right now?

Operator

 Dennis Leibowitz, Act II Partners.

 Dennis Leibowitz - Act II Partners - Analyst

 (technical difficulty) (inaudible) on the 22nd?

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 What was the question? I'm sorry.

 Dennis Leibowitz - Act II Partners - Analyst

 Can you give the details of your analyst meeting on the 22nd? I don't see it in the release.

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 Brett Ellis is here with us. Brett, why don't you give us the details of that?

 Brett Ellis - FairPoint Communications, Inc. - Investor Relations

 We issued a separate press release this morning that talks about it. It's next Thursday on the 22nd, from 8 AM until 11, at the Pierre in New York.

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 It will be Webcast live also.

 Brett Ellis - FairPoint Communications, Inc. - Investor Relations

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Final Transcript

May. 16. 2008 / 8:30AM ET, FRP - Q1 2008 FairPoint Communications, Inc. Earnings Conference Call

 The details of the Webcast are in the press release that went out this morning.

 Dennis Leibowitz - Act II Partners - Analyst

 Thank you.

 Gene Johnson - FairPoint Communications, Inc. - Chairman and CEO

 There are no other questions, I understand, in the queue. So with that, let me just say thank you all very much. We'll try to continue to be as transparent as we possibly can. We know we're being compared to another transaction like this, and we think you're going to see that this is going to go much, much better. We look forward to seeing many of you next week on the 22nd at the Pierre. I appreciate all of your support of FairPoint. Thanks very much. Have a wonderful day.

Operator

 Thank you for participating in today's conference. You may now disconnect.

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