Plans by Verizon Communications to sell rural landlines in three New England states to Fairpoint Communications hit a roadblock as the Vermont Public Service Board (VPSB) rejected the deal due to fears that Fairpoint lacks the financial means to acquire and operate network facilities covered by the transaction. Announced last January, the $2.7 billion agreement encompasses 1.6 million fixed phone lines in the states of Vermont, Maine, and New Hampshire. In recent months, Verizon has accelerated the construction of fiber optic facilities that will support the company’s FiOS television service. Observers say that the Fairpoint deal reflects Verizon’s strategy of shedding underperforming fixed line assets in an effort to shift resources toward FiOS and advanced wireless network deployment. Noting that North Carolina-based Fairpoint—which operates about 310,000 phone lines—would be acquiring more than five times the number of lines it presently controls, the VPSB termed the Verizon line acquisition as a “massive and complex undertaking” as Fairpoint would have to borrow $2.5 billion to complete the transaction. As such, VPSB concluded that Fairpoint “had not demonstrated that it would be financially sound as it seeks to operate the newly-acquired territories” and that Fairpoint would be subject to “significant financial pressure” from the debt it would incur. While rejecting the deal as it now stands, the VPSB said it would consider approving the transaction if the companies agree to new terms that include a reduction in the purchase price. As a Verizon spokesman confirmed his company’s readiness to submit a revised proposal, Fairpoint described the VPSB’s action as “a procedural move that we consider an invitation to discuss the conditions.”