CHARLOTTE, N.C. – The former local-exchange operations of Verizon Communications in Maine, New Hampshire and Vermont dragged down FairPoint Communications Inc. earnings 34 percent for the first quarter.

The company attributed the slide to one-time customer credits and increased competition.

Net income dropped to $9.5 million, or 18 cents per share, from $14.4 million, or 27 cents per share, in the prior year, the company said yesterday.

The unaudited results reflect only the performance of the former local-exchange operations of Verizon Communications in Maine, New Hampshire and Vermont because under the terms of the merger with FairPoint Communications, FairPoint merged its legacy, or existing, telecommunications business into the larger Verizon spin-off on March 31 even though the merged business took on the FairPoint name.

The legacy FairPoint business was only part of the larger, merged entity for one day at the end of the quarter.

Revenues for the period ended March 31 slipped 5 percent to $282.4 million from $298 million.

Analysts polled by Thomson Financial expected Fairpoint to break even on revenue of $142.5 million, The Associated Press reported.

Voice access lines as of March 31 fell to 1.57 million, compared to 1.73 million a year earlier, a 9.1 percent decline. Access lines served in northern New England fell 9.6 percent, while those at the pre-merger FairPoint fell 6 percent.

In a conference call with analysts, Gene Johnson, chairman and CEO of FairPoint, said the legacy FairPoint business sold high-speed data access lines to more than 30 percent of its voice customers while the former Verizon entity had total broadband penetration of less than 20 percent.

That gives FairPoint "a tremendous opportunity" to grow revenues in northern New England from expanded high-speed data sales, he said.

High-speed data penetration within Legacy FairPoint, excluding the access lines acquired from Verizon, increased to 30.1 percent, up from 24.9 percent at March 31, 2007.

In New Hampshire, FairPoint committed to increase broadband Internet availability to 75 percent of customers within 18 months, 85 percent within 24 months and 95 percent within five years.

FairPoint shares fell 68 cents, or 6.95 percent, to $9.10, on the New York Stock Exchange yesterday.