Fairpoint Communications held its first conference call as the country’s eighth-largest telco today, three weeks after closing its acquisition of Verizon’s local access business in three states. The company offered an unusual amount of detail about its financial expectations for the near future, though some key strategic questions remain unanswered.

The company imagined the integration of its hard-won assets (access lines in Vermont, New Hampshire and Maine) as a 24-month process, but it has already completed 18 months worth of that work. Fairpoint expects to continue relying on Verizon’s back-office systems (for which it will pay about $16.5 million per month) until September, when it should complete the final transition of all customers and lines.

Fairpoint has already completed the integration 17 different billing platforms on time and under budget, it said, despite the fact that one of its vendors “walked away” from the project, forcing Fairpoint to find another. The telco has so far spent more than $120 million on integration efforts, $40 million of which was contributed by Verizon. And it has hired more than 220 new employees to manage the transition.

With Cap Gemini as its chief system integrator, Fairpoint is decidedly migrating to platforms that are mostly off-the-shelf products. “We’re not in the system customization business,” said Peter Nixon, Fairpoint president.

Fairpoint said it could begin to realize operational savings from combining the two networks as early as the fourth quarter, when back-office synergies could amount to $111 million. Additional savings from various sources would follow.

In the near term, Fairpoint is expecting flat or slightly declining revenue, and it hopes to halt earnings declines next year or possibly as early as this year’s fourth quarter. “During this [six-month] transition, there’s not a lot we can do about that trend,” said John Crowley, the company’s chief financial officer.

Meanwhile, it also expects to swiftly build out broadband in the new footprint. In exchange for approving the asset purchase, all three states required Fairpoint to commit to certain broadband buildouts. But the carrier said those requirements mirrored its own internal buildout plans, at least in the near term. “The states were asking us to put in writing what was already in our plan,” Crowley said, adding that the additional requirements imposed by the states could add $20 million to Fairpoint’s capital expenditures in 2009.

The company hopes to migrate much of its network to IP and MPLS, pushing fiber out to nodes with help from equipment vendors Occam Networks, Pannaway and Cisco Systems. By 2010, Fairpoint expects to pass 80% of its customers with some sort of IP-based fiber access. In 5 years, it expects to pass 90%.

Some analysts have said Fairpoint would be wise to begin its post-merger life by charging hard at the business customers in the former Verizon footprint, using their new local access infrastructure advantage to steal those customers from Verizon Business. On today’s call, Fairpoint executives echoed that notion, promising a more dedicated focus on small and medium businesses in particular. Verizon devoted a salesperson to business customers with annual revenue of $250,000 and above, CEO Gene Johnson said, while Fairpoint will devote a salesperson to those with just $4,000 in annual revenue.

Meanwhile, Fairpoint is likely to lose residential wireline customers to Verizon Wireless in the new territory, following the same wireline erosion trends seen across the industry. Some analysts have suggested that Fairpoint could follow the example of Embarq, which bundles wholesale wireless service from its former parent, Sprint, with its own wireline services. However, on today’s call, Johnson hinted that although he expects Verizon Wireless to expand its network in this area, a wholesale arrangement may not be in the cards. “Drive through this area, and you’ll see that wireless coverage is particularly bad, and that is particularly true on the Verizon network,” he said. “This is not a market they’re particularly interested in. They clearly weren’t interested from a wireline standpoint. They’ve not shown a huge interest in it from a wireless standpoint. We’re working hard, though, with our own products and services, that will compete effectively with whoever. And frankly, I think the Fairpoint name is going to be very valued here a year from now, significantly more valued than the Verizon name. And people in New England have very long memories.”

According to Fairpoint, the increase in access line loss the company saw last year (Verizon lost about 10% of its lines there last year, while Fairpoint lost 6%) is mainly due to cable competition. In Northeast New England, Time Warner Cable passes about 35% of Fairpoint’s customers, Comcast another 25%, other local operators another 10%, so about 70% of Fairpoint’s access lines are passed by a cable company’s network, Crowley said. Comcast upgraded all its systems there to support VoIP last year, after acquiring some assets from Adelphia, he said. And Time Warner also acquired some Adelphia assets and upgraded sizable portions of it.

Johnson expects that line loss rate to come back down soon, especially since he vows to push back against the cable operators more aggressively than Verizon had. Verizon’s broadband penetration in the acquired territories was only 16% at the end of last year, while Fairpoint’s, in its historical territory, is 28%.

“We like to say there’s a new sheriff in town now,” Johnson said. “We’re running the business a little differently.”