FairPoint Communications, a provider of telephone service in numerous small communities around the United States, is about to become the nation’s eighth largest phone company.

FairPoint (NYSE: FRP) and Verizon Communications announced plans to form a new venture in a deal worth $2.72 billion. The company has yet to be named.

Verizon plans to spin off its local wireline operations in Maine, New Hampshire and Vermont into a new venture that will merge with FairPoint.

FairPoint management will operate the combined company, and FairPoint stockholders will own an estimated 40 percent of the venture.

The combined company will have some 1.6 million access lines, 234,000 high-speed data customers and 600,000 long distance customers.

Verizon, which is the second largest phone company behind AT&T, said the move is part of its strategy to focus on its Verizon Wireless and television services.

FairPoint will pay some $1.02 billion in stock as part of the venture. The remaining value of the deal is debt associated with Verizon’s spinning off of assets involved in the merger.

As of Sept. 30, 2006, FairPoint operated 252,000 access lines in 31 markets spread across 18 states. Nearly a third of those lines are in Maine, New Hampshire and Vermont.

“We believe that this combination remarkably accelerates our existing plan to ensure favorable returns for FairPoint shareholders, while continuing to emphasize high-quality service for our customers and a rewarding work environment for our employees," said Gene Johnson, chairman and chief executive officer of FairPoint. "The ability to integrate and serve these northern New England operations will establish FairPoint as one of the preeminent telecommunications operators in the region.”

In a statement, FairPoint said it had “financing commitments in place” for a “substantial” portion of the $1.7 billion in debt.

The combined company will have a nine-member board of directors, including three from FairPoint.

FairPoint and Verizon plan to complete the merger within a year, pending regulatory approval.

The Verizon operations involved generated $1.2 billion in revenues and $431 million in earnings before income taxes and other expenses.