Verizon Communications Inc. on Wednesday terminated its merger agreement with NorthPoint Communications,
citing the deterioration in NorthPoint’s business, operations
and financial condition since Aug. 7 when the two companies agreed to merge their digital subscriber line (DSL) businesses.
One week after unveiling disappointing third quarter financial results, NorthPoint Communications is reviewing its options after absorbing the news.
Marvin Wamble, NorthPoint spokesperson, said his company had just found out the news Wednesday afternoon and was reviewing its options in light of the Verizon break off.
In its statement, Verizon said it was under no obligation to provide NorthPoint with additional funding. The agreement Aug. 7 stipulated NorthPoint operations, business and financial conditions to remain materially the same until the acquisition was complete, slated for sometime next year.
The competitive local exchange carrier losses for the quarter were more than $90 million, with revenues of only $24 million. NorthPoint had previously reported $30 million in revenues, with a EBITDA loss on the quarter of nearly $80 million.
NorthPoint maintains its financial erosion is due to delinquent payments by privately-held Internet service providers, who together account for more than 26,700 DSL lines. What’s more, installation of in-process lines has been halted until the ISPs make its payments. Until then, the CLEC is moving the lines to well-funded service providers, officials said.
Liz Fetter, NorthPoint president and chief executive officer, was confident at the time of the revised third quarter report, saying “we continue to be on track with our prior expectation of closing the Verizon transaction in the first half of 2001.”