1062613--2/29/2008--FAIRPOINT_COMMUNICATIONS

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{system, service, information}

{debt, indebtedness, cash}

{acquisition, growth, future}

{control, financial, internal}

{tax, income, asset}

{cost, operation, labor}

{regulation, change, law}

{investment, property, distribution}

{interest, director, officer}

{regulation, government, change}

{cost, regulation, environmental}

{stock, price, share}

{capital, credit, financial}

{cost, contract, operation}

{loan, real, estate}

{personnel, key, retain}

{provision, law, control}

{operation, natural, condition}

{stock, price, operating}

{product, market, service}

{competitive, industry, competition}

{condition, economic, financial}

To operate and expand our business, service our indebtedness and complete future acquisitions, we will require a significant amount of cash. Our ability to generate cash will depend on many factors beyond our control. We may not generate sufficient funds from operations to pay dividends with respect to shares of our common stock, repay or refinance our indebtedness at maturity or otherwise, to consummate future acquisitions or fund our operations. Our substantial indebtedness could restrict our ability to pay dividends on our common stock and have an adverse impact on our financing options and liquidity position. In anticipation of the merger, we have spent and will continue to spend a significant amount of money on assets and services that are not useful in our existing business. The Company is a holding company and relies on dividends, interest and other payments, advances and transfers of funds from its operating subsidiaries and investments to meet its debt service and other obligations. Our existing credit facility and other agreements governing our indebtedness contain covenants that limit our business flexibility by imposing operating and financial restrictions on our operations and the payment of dividends. Limitations on usage of net operating loss carryforwards, and other factors requiring us to pay cash to satisfy our tax liabilities in future periods, may affect our ability to pay dividends to our stockholders. Investors holding shares of our common stock immediately prior to the merger will, in the aggregate, have a significantly reduced ownership and voting interest after the merger and will exercise less influence over management. The price of our common stock may fluctuate substantially, which could negatively affect holders of our common stock. Future sales or the possibility of future sales of a substantial amount of our common stock, including as a result of the merger, may depress the price of our common stock. Our certificate of incorporation and by-laws and several other factors could limit another party s ability to acquire us and deprive our investors of the opportunity to obtain a takeover premium for their securities. We may, under certain circumstances, suspend the rights of stock ownership the exercise of which would result in any inconsistency with, or violation of, any applicable communications law. Risks Related to Our Business We provide services to customers over access lines, and if we lose access lines, our business, financial condition and results of operations may be adversely affected. The merger may present significant challenges to our management that could divert management s attention from day-to-day operations and have a negative impact on our business. We are subject to competition that may adversely impact our business, financial condition and results of operations. We may not be able to successfully integrate new technologies, respond effectively to customer requirements or provide new services. Our relationships with other communications companies are material to our operations and their financial difficulties may adversely affect our business, financial condition and results of operations. Our business, financial condition and results of operations could be adversely affected if we fail to maintain satisfactory labor relations. We face risks associated with acquired businesses and potential acquisitions. A network disruption could cause delays or interruptions of service, which could cause us to lose customers. Our billing systems may not function properly. We depend on third parties for our provision of long distance and bandwidth services. We may not be able to maintain the necessary rights-of-way for our networks. Our success depends on our ability to attract and retain qualified management and other personnel. We may face significant future liabilities or compliance costs in connection with environmental and worker health and safety matters. We are exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act. We have identified a material weakness in our internal controls over financial reporting as of December 31, 2007. If we fail to remedy this material weakness, that failure could result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our common stock. Risks to the Company If the Transactions are Consummated The integration of our business and Spinco s business may not be successful. The integration of our business and Spinco s business may present significant systems integration risks, including risks associated with the ability to convert from Spinco s customer sales, service and support operations platform into our new customer care, service delivery and network monitoring and maintenance platforms. We may not realize the anticipated synergies, cost savings and growth opportunities from the merger. If the assets transferred to Spinco by Verizon are insufficient to operate our business, it could adversely affect our business, financial condition and results of operations. Conditions imposed by state regulatory authorities in connection with their approval of the spin-off and the merger may diminish the anticipated benefits of the merger. Our business, financial condition and results of operations may be adversely affected following the merger if we are not able to replace certain contracts which will not be assigned to Spinco. The geographic concentration of our operations in Maine, New Hampshire and Vermont following the merger will make our business susceptible to local economic and regulatory conditions, and an economic downturn, recession or unfavorable regulatory action in any of those states may adversely affect our business, financial condition and results of operations. If the spin-off does not constitute a tax-free spin-off under section 355 of the Internal Revenue Code, or the merger does not constitute a tax-free reorganization under section 368(a) of the Internal Revenue Code, including as a result of actions taken in connection with the spin-off or the merger or as a result of subsequent acquisitions of stock of Verizon or our stock, then Verizon, us or Verizon stockholders may be responsible for payment of substantial United States federal income taxes. We may be affected by significant restrictions following the merger with respect to certain actions that could jeopardize the tax-free status of the spin-off or the merger. Risks Related to Our Regulatory Environment We are subject to significant regulations that could change in a manner adverse to us. Regulatory changes in the communications industry could adversely affect our business by facilitating greater competition, reducing potential revenues or raising our costs.

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1062613--2/29/2008--FAIRPOINT_COMMUNICATIONS_INC