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State increases customer protections in approving purchase of Embarq by CenturyTel
May 28, 2009
Docket Number: UT-082119
OLYMPIA, Wash. – Washington state regulators today approved the merger of telecommunication providers CenturyTel and Embarq Corp, subject to conditions to protect Washington customers of the two companies. Once the transaction is complete, the merger will create the fourth largest telephone company in the United States.
The Washington Utilities and Transportation Commission (UTC) adopted a settlement agreement that allows CenturyTel to merge with Embarq, but ensures that existing Washington customers of both companies will not experience service changes or price increases due to the merger.
Washington is the last of 15 state public utility commissions to approve the merger. Shareholders of both companies have voted to support the transaction, which still awaits approval from the Federal Communications Commission. The merger is expected to close in the second quarter of 2009.
The UTC attached conditions to its approval of a settlement agreement filed April 22 by four parties in the case: CenturyTel, Embarq, the Public Counsel section of the Attorney General’s Office and UTC regulatory staff members. The companies originally filed their merger application last November.
The UTC imposed additional conditions on the new phone company that will require increased financial reporting from the newly merged company on cost-cutting measures and efficiencies, and each dividend declared. The parties will have five calendar days to state objections to the additional conditions placed on the transaction by the UTC.
Some provisions included in the settlement agreement are:
· Restricting dividend payments under certain conditions.
· Extending Embarq’s Service Quality Guarantee program to customers of both companies for one year after the deal is completed.
· Requiring a credit of $15 to residential and $25 to business customers for missed service repairs or installation appointments.
· Informing customers of any name change or new billing system.
· Ensuring costs incurred as branding or transition expenses will not be passed on to Washington ratepayers.
· Committing to extend high speed Internet service to an additional 2,200 residential customers over the next three years.
· Allowing a 90-day window for Washington customers who use CenturyTel or Embarq for their long-distance carrier to choose another provider without incurring a $5 switching fee.
· Imposing a one-year minimum ban on requests to raise basic residential phone rates.
Embarq’s corporate headquarters are in Overland Park, Kan. Embarq is the fourth largest local phone company in Washington, serving about 68,000 access lines in communities such as Chimicum, Glenwood, Goldendale, Granger, Klickitat, Mabton, Mattawa, Poulsbo, Prosser, Toppenish, Wapato and Zillah.
When complete, the newly combined company will have about 7.5 million access lines, more than 2 million broadband customers and about 400,000 video subscribers in 33 states.
The UTC is the state agency in charge of regulating the rates and services of telephone companies operating in Washington.
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Editor’s note: A copy of this decision, including the settlement agreement, is available at the commission’s Web site: www.utc.wa.gov/082119.
Staff contact: Marilyn Meehan
Posted/updated: 08/18/2009
