1. Fall 2015 GTCR Project
FairPoint Communications Proposal
December 1st, 2015

2. Introducing the Team
2
Project Analysts
Project Leaders
Daniel Lipka
Senior
Finance & Economics
Kevin Rajput
Senior
Finance
Janne Fuss
Freshman
IT Management
Chris Gauch
Junior
Finance & Economics
Chase Grable
Sophomore
Finance & Spanish
Charliepat Hart
Freshman
Finance
Bryan Lim
Freshman
Finance
Philip Rim
Freshman
Economics
Jake Sexton
Junior
Finance
Michael Romano
Freshman
Finance

3. 3
Table of Contents
▪ Opening Section
▪ Introducing the Team
▪ Table of Contents
▪ Executive Summary
▪ Industry Overviews
▪ Wired Telecommunications
▪ Porter’s 5 Forces
▪ Wireless Telecommunications
▪ Company Overview
▪ Company Overview
▪ Recent Stock Chart
▪ Executive Management
▪ Recent Quarter Performance
▪ Markets
▪ Operating Performance
▪ SWOT Analysis
▪ Asset Management
▪ Margins & Profitability
▪ Growth & CapEx
▪ Valuation
▪ Comparable Companies
▪ Precedent Transactions
▪ Discounted Cash Flow Model
▪ Sources and Uses / Capitalization Table
▪ Leveraged Buyout Model
▪ Considerations / Business Risks
▪ Final Recommendation
▪ Appendix

4. • Transaction value of $1,489.6mm
• Financed by $1,050mm term loan B at L+450
• 20% premium creating an offer price of $21.97 per share
• IRR of 6.31% and MOIC of 1.36x
• Sponsor equity check of 33.0%
Current Working Executive Summary
4
Company Overview
Industry Profile
Competitors
Investment
Recommendation
• Leading provider of advanced communication services to business, wholesale and
residential customers
• Services include Ethernet, high capacity data transport and other IP based
services, in addition to Internet access, high-speed data and local and long
distance voice services
• Territories span 17 states with 1.1 million access line equivalents and 322k
broadband subscribers
• Wired Telecom industry provides local and long distance voice communication
services
• Major products/services: fixed local telephony, fixed long-distance telephony,
wholesale network access and Internet access
• Mature industry with low revenue volatility
• Medium concentration with high barriers to entry
• Revenue expected to decline through 2021
• Leveraged buyout transaction not recommended
• Declining industry with limited growth opportunities
• Heavy capital expenditure needs and downsizing necessary
• Company has been reducing capex because of lack of cash flow
• Unable to obtain information on operating margin by segment
Transaction Summary

5. INDUSTRY OVERVIEWS
5

6. 6
Wired Telecom Industry Overview
Key Drivers
Overview
• Companies in this industry provide both local and long
distance voice communications services via the public
switched telephone network
• Mature industry facing continuing shift from consumer
demand toward wireless products
• 50% of adults aged 18-34 live in households with
only wireless phones
• Voice over Internet Protocol (VoIP) is also a significant
threat to traditional wired telephony
• Offers greater mobility at a cheaper price with
minimal regulation
• Carriers will focus on wireless business, hurting wired
industry revenue and decreasing its significance
Carrier’s Major Products/Services
• Mobile Internet Connections:
• Wireless telecom carriers are largest threat to
wired industry; number of mobile internet
connections is expected to increase in 2015
• Number of Broadband Connections:
• Demand for wired broadband connections has
increased significantly, partially offsetting the
decreasing demand for wired voice telephony
• Number of Cable TV subscribers:
• Cable providers compete with wired telephony
providers through VoIP services, and bundle these
services with cable TV and internet services
Verizon:
22.2%CenturyLink:4.1%
Other: 39.8% AT&T: 33.9%
The wired telecom industry is a very mature industry facing significant negative headwinds
44%
20%
12%
10%
14%
Internet Access
Fixed Local
Telephony
Wholesale
Network Access
Fixed Long-
Distance
Telephony
Source: IBISWorld
Market Segmentation

7. 7Source: IBISWorld
Wired Telecom Industry Overview
• Demand for industry’s core product is declining
• Substitutes like wireless and VoIP are
depleting demand for the wired voice
telephony
• Licensing from FCC required
• Network infrastructure and service equipment
• Capital-intensive
• Large infrastructure needed
• Market for traditional wired voice telephony is
declining at a rapid pace
• Rapid change of substitute technology
Barriers to EntryIndustry Life Cycle
• Mature and stable stage
• Bordering on technological decline
• More efficient means of communication are
surpassing the wired telecom industry
• Demand for internet access has surpassed demand
for wired telephony
• Bundling of services
• Internet, Video & Voice
• Shift in investments from voice services to high-
bandwidth fiber-optic networks
• Economies of scale pushing smaller firms into
buyouts or bankruptcy
Internet and Broadband Connections Industry Revenue 2005-21
0
100
200
300
400
500
2005 2010 2015 2020
(inmm)
Mobile Internet Broadband
150,000
160,000
170,000
180,000
190,000
200,000
2005 2008 2011 2014 2017 2020
(in$mm)
The wired telecom industry is a mature, but declining industry that is expected to
become more obsolete with the rise of wireless and satellite capabilities
Projected
Financial
Crisis
Projected

8. 8
Porter’s Five Forces: Wired Telecom
Industry Rivalry
Moderate
- Significant barriers to entry → No new entrants
- Decreasing demand for services → More competition
- Demand for access lines and traditional voice services
are decreasing → more focus on wireless business
- Price is critical → consumers cannot differentiate
amongst products
Bargaining Power of Suppliers
Moderate
- Decreasing demand for wired telephony products
entails more competition for telecom equipment
- As revenues decline, there will be less need for wired
telecom equipment from suppliers
Threat of
Substitutes
High
- Wireless technology services and
voice over internet protocol → lower
costs and higher mobility
- Technological innovation → more
efficient means of transferring data
Bargaining Power of Buyers
High
- Low company concentration → many options
- Buyer preferences extremely important → high
threat of substitutes
Threat of New
Entrants
Low
- Large upfront expenditures
- Demand for industry's main product
is decreasing
- Copper wire technology is not
sufficient for high-bandwidth data
needs
Source: IBISWorld

9. 9Source: IBISWorld
Wireless Industry Overview
Financial Performance as of March 2015
• Revenue: $248.7 bn
• Profit: $62.7 bn
• Annual Growth 10-15: 2.8%
• Projected Growth 15-20: 2.2%
• Market segmented into Consumer, Small Business and
Corporate Clients
74% 17% 9%
Consumer & Residential Clients
Small & Medium Businesses
Corporate Clients
Wireless Industry Revenue 2003-21 ($mm)
$100,000
$150,000
$200,000
$250,000
$300,000
2003 2006 2009 2012 2015 2018 2021
Projected
Revenue by Sector
52.2%
18.0%
16.7%
5.6%
0.5% 7.0%
Cellular Voice
Services
Advanced PCS
Services
Text Messaging
Services
Other Data Services
Paging
Other
Overview
• Companies in this industry provide cellular mobile phone
services, paging services, wireless internet access and
wireless video services
• Mature industry benefiting from the rapid development
of mobile devices and popularity of smartphones
• Two-thirds of US consumers own smartphones
• Long Term Evolution (LTE) is the preferred 4G
technology, and is expected to enable a more rapid
transition by consumers to 4G devices
• Expansion of data services as tablet computers
and e-readers achieve wider penetration
• Carriers will focus on 4G networks, encouraging more
customers to abandon landlines altogether
Financial
Crisis

10. COMPANY OVERVIEW
10

11. 85%
15%
Maine, New Hampshire,
and Vermont
Other
11Source: 10-K, Wells Fargo, Yahoo Finance, CapIQ
FairPoint Company Overview
FairPoint Key Statistics
FairPoint Communications Products
Operating Geography
• Ticker: FRP (NASDAQ)
• Founded: 1991
• 3,052 employees
• Communication Services Sector: Voice services to
residential, wholesale and business customers
• Provides Broadband Internet service, local wireline, and
cable service to customers
• Operates in 17 states with rural focus
• 1.1 million access lines & over 16,000 miles of fiber
85% of access lines are in Northeast U.S.
Data and
Internet
Main
revenue
driver
Voice
Services
Local
calling,
long
distance
Access
Services
Network
transport,
Interstate
Access
Other
Services
Directory,
video,
etc.
Emerged from Chapter 11 bankruptcy on January 24, 2011
HQ
Metric As of Nov 23rd, 2015
Market Capitalization $493mm
Enterprise Value $1,360mm
Rating B2 / B
EV / Revenue 1.97x
EV / EBITDA 4.74x
Beta 0.50
Revenue (LTM) $867mm
EBITDA (LTM) $291mm

12. $0
$5
$10
$15
$20
$25
$30
Bankruptcy: FRP emerges
from bankruptcy related to
2009 and financial crisis
Quarterly
Filing:
FRP reports
weak Q4
12Source: CapIQ
Annotated Stock Chart
Despite bankruptcy, price has been rebounding since the inception of Paul Sunu’s tenure
Executive/Board Changes:
Patrick Murphy appointed as
senior director of
competitive local exchange
carrier business development
Quarterly
Filing: FRP
reports weak Q1
Quarterly Filing:
FRP reports weak Q2
Investor Activism:
Maglan Capital provides
positive reviews on FRP
performances
Divestiture: divested pay
telephone operations
Downsizing/
Discontinued
Operations:
Closed operations
and cut headcount
Divestiture:
Idaho
operations
Strike: Northern New England
strike due to frozen pensions

13. 13
Executive Management Team
Source: Fierce Telecom, Company Website
FairPoint Communications Leadership Team
Takeover Analysis – Management Perspective
Paul H. Sunu, Chief Executive Officer
•Named CEO in August 2010; compensated at $1.24mm FY 2014
•Formerly CFO of Hargray Communications Group, Inc., Hawaiian Telecom and Madison river
Communications
•Over 20 years of operational experience
Ajay Sabherwal, Chief Financial Officer
•Joined FairPoint in July 2010; compensated at $0.52mm FY 2014
•Served as CFO for Aventine Renewable Energy and Mendel Biotechnology and Choice One
Communications
•Began his telecom career in 1989 in Canada with CNCP Telecommunications
John Lunny, Chief Technology Officer
•Joined FairPoint in 2008 and moved to his current role in 2013
•Prior to joining FairPoint, served as senior director of service delivery at Comcast Business Services
•More than 25 years of network operations, engineering and service delivery experience in the communications
industry
•"Understanding the reality of a consolidating industry, intense competition and secular headwinds, we must consider mergers
and acquisition as either seller or buyer as our overall strategy," Sunu said during FairPoint’s first-quarter earnings call.
•"We would consider whether or not our operating platform should be something to scale up or would be available as adding
scale to somebody else," Sunu said during second earnings call. "So all of this is available to us and we have the ability to do
some acquisitions under our current credit agreement, obviously that comes into play and the macro environment in terms of
what's going on also affects us."

14. Recent Quarter Performance
14
Revenue Decline by SegmentRevenue Decline
Key DriversQ3 2015 vs. Q3 2014
As compared to Q3 2014, Total Revenues declined $6.5M, Adj. EBITDA increased $5.0M,
Operating Income increased $101.3M, and EPS increased from ($1.43) to $1.97
• Leveraging outstanding operating platform
• Historically low trouble loads
• Completing more jobs per day
• Positive momentum in Ethernet and growth in broadband
• Ethernet services contributed approximately $24.8M of
revenue in Q3 2015 as compared to $20.7M a year ago,
an increase of 19.8% YoY
• Ethernet revenue was 11.2% of total revenue in Q3 2015
compared to 9.1% of total revenue in Q3 2014
• Total Ethernet revenue circuits grew by 21.0% YoY
• Accepted $37.4mm in annual funding from the FCC’s
Connect America Fund in August
$0
$100
$200
$300
$400
$500
2011 2012 2013 2014
Thousands
Voice services
Access
Data and Internet
services
Other
3Q 2015 3Q 2014
Revenue $221,569 $228,120
Operating Expenses 149,140 257,042
Loss from Operations 72,429 (28,922)
Net Income 53,054 (49,027)
Assets $1,358,151 $1,488,499
Long-Term Debt 900,634 909,048
Equity 25,403 (395,737)
Operating Cash Flow $37,855 $23,295
Voice services: declined $10.2 million due to the loss of
voice access lines versus a year ago combined with lower long
distance usage
Access: declined $4.8 million due to the continued loss and
conversion of legacy transport circuits to next generation
fiber-based services
Data and Internet services: increased $1.2 million reflecting
strength in retail Ethernet services and the mitigating impact
of speed upgrades and price increases on residential
broadband products offsetting subscriber declines
Regulatory funding: grew $6.5 million due to our acceptance
of CAF Phase II and the corresponding transitional revenue of
$7.0 million associated with that program
Source: FairPoint 10k

15. Markets
15
36%
29%
20%
4%
3%
3% 5%
Maine
New Hampshire
Vermont
Florida
New York
Washington
Other States
• Majority of LECs operate as the incumbent local
exchange carrier in each market in addition to
broadband subscribers
• Concentrated in Northeast
• Primarily serving small Urban and rural markets
• Access Line Equivalents of all types declining except
for broadband subscribers
• Other states includes: Missouri, Ohio, Virginia,
Kansas, Pennsylvania, Illinois, Oklahoma, Colorado,
Massachusetts, Georgia and Alabama.
• Listed in order of number of access line
equivalents
Access Line EquivalentsAccess Line Equivalents by State
Access Line Equivalents by State
-
200
400
600
800
1,000
2011 2012 2013 2014
Thousands
Residential
Business
Wholesale
Total Voice Lines
Broadband subscribers
Source: FairPoint 10k

16. OPERATING PERFORMANCE
16

17. 37% 30% 13% 13% 7%
Verizon AT&T
Deutsche Telekom Sprint Nextel
Other
17Source: 10-K, Jefferies, Citibank, Raymond James, IBISWorld
SWOT Analysis
Threats
Strengths Weaknesses
Opportunities
• Over 50% of its homes are capable of 100+ mbps
broadband speeds, but only 22% of homes are
subscribed to 20+ mbps
• Improved labor agreements implies costs savings
• Investment in fiber optics implies high margins
• $700+ million invested in infrastructure and future
technologies
• Great presence in northern New England
• Capacity to provide Ethernet services to 90% of
northern New England residents
• Invested in 16,000 miles of fiber line
• Solid rural presence, which entails high margin
business opportunities
• Slowing broadband sales in telecom sector
• Increasing rates of wireless substitution
• Greater level of triple-play service competition from
cable MSOs within its markets
• Shift in regulation could reduce substantial proportion
of revenue
• Comcast Business deepening presence in northern New
England markets
0
2
4
6
8
10
12
14
2008 2009 2010 2011 2012 2013 2014
• Small national presence → 90% of business is in
northern New England
• Consistently declining annual revenues
• Small market share of only 20% in enterprise and 30%
in consumer sector
• History of bankruptcy in 2011
• Past labor strike → disconnect between management
and workers
Average US Internet Speed (Mbps)
Telecom Market Share

18. 18Source: CapIQ
Asset Management
0.0x
0.1x
0.2x
0.3x
0.4x
0.5x
0.6x
0.7x
0.8x
2010 2011 2012 2013 2014
Total Asset Turnover Fixed Asset Turnover
0
50
100
150
200
250
300
350
2010 2011 2012 2013 2014
$mm
Depreciation & Amort. Capital Expenditure
Asset Turnover D&A and Capital Expenditures
Low cash balances and weak cash flows are causing reduced capital expenditures
• Asset turnover has experienced an increase over
the past five years, as FairPoint has divested
itself of relatively inefficient fixed assets
• PPE in 2010 and 2011: $6,274.60mm and
$1,943.60mm
• PPE CAGR from 2011 to 2014: 4.3%
• Total asset and fixed asset turnover follow the
same trend because PPE has consistently
remained the largest component of total assets
• Reduction in capex has lead to decrease in D&A
• Capital expenditures are expected to decline in
the future, further reducing depreciation and
amortization
• Cash from 2010 to 2014: $105mm, $17mm,
$23mm, $43mm, $38mm
• Cash flow from operations: $192mm in 2010 and
$121mm in 2014; CAGR: -8.8%
• 2015 capital expenditure guidance set at $110-
115mm
• Future capex at 13% of revenue

19. 19Source: CapIQ
Margins & Profitability
Margins Return on Assets
The company is struggling to control its costs, as the operating costs push margins down
significantly and result in negative EBIT and net income historically
(10.0%)
(8.0%)
(6.0%)
(4.0%)
(2.0%)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
2010 2011 2012 2013 2014
(30.0%)
(20.0%)
(10.0%)
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2010 2011 2012 2013 2014
Gross Margin % EBITDA Margin %
EBIT Margin % Net Profit Margin %
• Depreciation and amortization expense grew
from 2010 to 2012 and fell from 2012 to 2014
• EBIT margin follows this trend
• Positive net income in 2011 mainly due to a
reorganization following bankruptcy
• Primarily positive because of the debt
cancelation’s positive value
• In all 5 years, operating cost exceeds gross profit
• $897.5mm abnormal gain in 2011 during
bankruptcy reorganization process because large
amount of debt was cancelled
• Negative net profit margins have resulted in
negative return on assets
• Net profit margin in 2010 to 2014: -26.3%, 16.7%,
15.7%, 9.9%, and -15.1%

20. 2000
2200
2400
2600
2800
3000
3200
3400
3600
3800
4000
2011
Q2
Q3
Q4
2012
Q2
Q3
Q4
2013
Q2
Q3
Q4
2014
Q2
Q3
Q4
2015
Q2
Employees
NNE Telecom Group
20Source: FairPoint 10K, Investor Presentations
Growth and Capex
Capex Trend and Allocation
Northern New England
• Incumbent wireline provider with extensive
“enterprise class” network and scale in three
contiguous states of ME, NH and VT
• Over 1,800 Fiber-to-the-tower (FTTT) Ethernet
backhaul connections
• 32 markets with access to Ethernet connections
capable of symmetrical, dedicated data transport
speeds of up to 1Gig
• Low market share of residential/business customers
• ~90% broadband availability; 37.1% penetration
• 629,253 total switched access lines
• Everywhere except Northern New England
• Consistent, substantial cash flow generation
• Local presence and workforce; less competition
• ~90% broadband availability; 60.1% penetration
• 222,489 total switched access lines
Telecom Group
Headcount Rationalization
$100
$130
$160
$190
2010 2011 2012 2013 2014 2015
Guidance
Regular Regulatory FTTT
• Capex projected to increase at 13.3% of revenue
starting in 2015

21. VALUATION
21

22. 22Source: CapIQ
Comparable Companies
LTM NTM LTM NTM LTM NTM
CNSL Consolidated Communications $21.57 $1,091 $2,491 3.22x 3.22x 9.19x 7.85x NM 33.44x
CTL CenturyLink 27.31 14,949 35,008 1.96x 1.98x 5.24x 5.17x 21.02x 11.26x
FTR Frontier Communications 4.96 5,748 20,123 3.84x 3.81x 9.42x 7.60x NM NM
WIN Windstream Holdings 6.00 605 11,421 1.98x 2.03x 5.99x 7.95x NM NM
CBB Cincinnati Bell 3.74 803.8 2156.5 1.66x 1.82x 6.72x 7.34x 3.89x 44.52x
75th Percentile 21.57 5,748 20,123 3.2x 3.2x 9.2x 7.9x 16.7x 39.0x
Mean 12.72 4,639 14,240 2.5x 2.6x 7.3x 7.2x 12.5x 29.7x
Median 6.00 1,091 11,421 2.0x 2.0x 6.7x 7.6x 12.5x 33.4x
25th Percentile 4.96 804 2,491 2.0x 2.0x 6.0x 7.3x 8.2x 22.4x
FRP FairPoint Communications $17.85 $466 $1,362 1.97x 1.63x 4.74x 5.56x 105.93x 3.70x
Implied LMT EV (mean) $2,195 $2,218 $2,125 $1,879 $952 $1,030
Implied LMT (median) $1,716 $1,751 $1,953 $1,989 $952 $1,047
Implied LMT Market Cap (mean) $1,298 $1,322 $1,229 $983 $56 $134
Implied LMT Market Cap (median) $820 $855 $1,057 $1,092 $56 $150
Margins
1 Year 2 Year 1 Year 2 Year EBITDA
CNSL Consolidated Communications $774 $778 $271 $320 22.4% -0.8% 26.9% -2.1% 35.0%
CTL CenturyLink 17,862 17,843 6,663 6,854 -1.0% -0.6% -0.8% -1.8% 37.3%
FTR Frontier Communications 5,494 5,556 2,280 2,300 16.4% 15.3% 9.5% 14.5% 41.5%
WIN Windstream Holdings 5,781 5,769 1,907 1,611 -1.0% -2.9% -18.2% -10.7% 33.0%
CBB Cincinnati Bell 1,290 1,153 328 293 -9.8% 2.5% -17.7% 2.1% 25.4%
FRP FairPoint Communications $867 $862 $291 $262 -4.3% -3.3% 121.5% -5.5% 33.5%
EV/EBITDA Price/Earnings
Ticker Company Name
Latest Close
Price
Market
Cap
(USDmm)
Enterprise
Value (USDmm)
EV/Revenue
Ticker Company Name LTM Revenue
2015E
Revenue
LTM EBITDA
2015E
EBITDA
Exp. Revenue Growth Exp. EBITDA Growth

23. 23Source: CapIQ
Precedent Transactions
Target/Issuer Buyers/Investors Type Close Date Transaction Value EV Equity Value
M2 Group Ltd Vocus Communications Limited Strategic 9/28/2015 $1,749.88 $1,702 $196
NTELOS Holding Corp. Shenandoah Telecommunications Co. Strategic 8/10/2015 730.13 618 358
Lumos Networks Corp. Pamplona Capital Management, Llc Sponsor 8/5/2015 140.00 633 128
General Communication Inc. Searchlight Capital Partners Sponsor 12/4/2014 75.00 2,199 111
Partner Communications Company Ltd. Surwest Corporation Strategic 3/18/2014 41.81 1,451 1,074
Transaction Summary Transaction Values
EV/Rev EV/EBITDA EV/EBIT
1.53 10.34 11.39
1.36 5.90 14.20
3.12 7.57 17.44
2.45 7.38 16.69
0.32 1.49 3.57
Valuation
LTM Rev LTM Net Income 5 Year CAGR Rev
$1,116 $74 21.6%
454 1,116 2.0%
1,116 11 9.8%
896 (27) 8.8%
4,519 49 -9.3%
Operating Statistics
Target/Issuer Buyers/Investors Type Close Date
M2 Group Ltd Vocus Communications Limited Strategic 9/28/2015
NTELOS Holding Corp. Shenandoah Telecommunications Co. Strategic 8/10/2015
Lumos Networks Corp. Pamplona Capital Management, Llc Sponsor 8/5/2015
General Communication Inc. Searchlight Capital Partners Sponsor 12/4/2014
Partner Communications Company Ltd. Surwest Corporation Strategic 3/18/2014
Transaction Summary
Target/Issuer Buyers/Investors Type Close Date
M2 Group Ltd Vocus Communications Limited Strategic 9/28/2015
NTELOS Holding Corp. Shenandoah Telecommunications Co. Strategic 8/10/2015
Lumos Networks Corp. Pamplona Capital Management, Llc Sponsor 8/5/2015
General Communication Inc. Searchlight Capital Partners Sponsor 12/4/2014
Partner Communications Company Ltd. Surwest Corporation Strategic 3/18/2014
Transaction Summary

24. 24Source: CapIQ, Wells Fargo, Jefferies
Discounted Cash Flow Model
USD (Millions)
Assumes transaction close of 12/31/2015 2012A 2013A 2014A 2015A 2016E 2017E 2018E 2019E 2020E
Revenue $973.65 $939.35 $901.40 $855.78 $818.02 $791.17 $765.74 $744.17 $726.31
(1) Voice Services 446 405 376 337 304 277 252 229 209
(2) Access 336 322 300 294 273 260 247 234 223
(3) Data and Internet Services 143 161 175 178 183 195 209 223 239
(4) Other 49 51 50 47 57 60 59 57 56
Net Income (153.29) (93.45) (136.32) 76.31 158.37 (43.35) (44.37) (45.23) (45.95)
Plus: Interest Expense 68 79 80 78 79 75 75 75 75
Plus: Depreciation and amoritzation 377 282 221 223 214 206 199 193 189
Plus: Other adjustments (14) (3) 126 (124) (206) 0 0 0 0
Adj. EBITDA 277.41 265.03 290.57 253.34 245.41 237.35 229.72 223.25 217.89
Less: Pension Contributions (18) (20) (28) (28) (28) (28) (28) (28) (28)
Less: OPEB Contributions (3) (3) (6) (6) (6) (6) (6) (6) (6)
Less: Capital Expenditures (145) (128) (119) (113) (110) (103) (100) (97) (94)
Unlevered Free Cash Flow 111.4 113.3 137.0 105.9 101.4 100.5 96.2 92.5 89.5
Discount Factor 0.97 0.91 0.85 0.79 0.74
Discounted Free Cash Flow $98.10 $91.00 $81.50 $73.37 $66.42
DCF Analysis Details Terminal Value Calculation
Date 11/19/2015 Exit Multiple
WACC 6.85% 2020E EBITDA 217.9$
Terminal Value Method Exit Multiple Exit Multiple 6.0x
Implied Equity Calculation Terminal Value 1,307.4$
Present Value of Projection Period 410.4$ Present Value 970.5$
Present Value of Terminal Value 970.5$
% of TEV 70%
Implied Enterprise Value 1,380.9$ 17.95$ 5.0x 5.5x 6.0x 6.5x 7.0x
Less: 2015 Debt 913.3$ 4.85% 15.30$ 18.56$ 21.82$ 25.08$ 28.34$
Plus: 2015 Cash 17.0$ 5.85% 13.59$ 16.71$ 19.83$ 22.96$ 26.08$
Implied Equity Value 484.62$ WACC 6.85% 11.96$ 14.95$ 17.95$ 20.94$ 23.94$
Diluted Share Count 27.0 7.85% 10.41$ 13.28$ 16.15$ 19.02$ 21.89$
Implied Share Price 17.95$ 8.85% 8.93$ 11.68$ 14.44$ 17.19$ 19.95$
Exit Multiple
Historical Broker Reports Projected

25. 25Source: CapIQ, Wells Fargo, Jefferies
S&U / Capitalization Table
Assumptions:
• Assumes transaction close at
end of year, but shows cash as
of 9/30/2015
• EBITDA, CapEx and Interest
numbers are projected for
end of year
• L+450 and 9.500% interest
rates shown for illustrative
purposes
• Debt values do not include
discounts on existing term
loan or redemption premiums
Sources of Funds Amount
Sponsor Equity 516.8$
Tax Equity Partner -
Term Loan B 1,050.0
Senior Secured Notes -
Total Sources of Debt 1,566.8
Uses of Funds Amount
Transaction Value 1,489.6$
Fees 57.2
Cash Balance 20.0
Total Uses 1,566.8
($ in millions) Pro Forma
Pro Forma Capitalization Rate Maturity 12/31/2015 Adj 12/31/2015 % of Total
Cash $17.0 $3.0 $20.0
Revolving Credit Facility ($115) 2018 0.0 0.0
Existing Term Loan L+750 2019 640.0 (640.0) --
New Term Loan B L+450 2022 -- 1,050.0 1,050.0 67.0%
Total Secured Debt 640.0 1,050.0
Existing Senior Secured Notes 8.750% 2019 300.0 (300.0) --
New Senior Secured Notes 9.500% 2022 -- 0.0 0.0 0.0%
Total Debt $940.0 $1,050.0
Market Value / Sponsor's Equity $494.4 22.3 $516.8 33.0%
Total Capitalization $1,434.4 $1,566.8
Pro Forma Financials 12/31/2015 12/31/2015
Adj. EBITDA $253.3 $253.3
CapEx 113.4 113.4
Interest Expense 78.0 56.8
Total Secured Debt / Adj. EBITDA 2.53x 4.14x
Total Debt / Adj. EBITDA 3.71x 4.14x
Adj. EBITDA / Interest Expense 3.25x 4.46x
(Adj. EBITDA - CapEx) / Interest Expense 1.79x 2.46x
Assumes Transaction close 12/31/2015

26. 26Source: CapIQ, Wells Fargo, Jefferies
Leveraged Buyout Assumptions
Buyout Assumptions Transaction Assumptions
11/30 Close Price
Current Share Price 18.31 Minimum Cash Balance 20.0
Premium 20.0% Transaction Fees as % 2.0%
Buyout Share Price 21.97
FY 2015 EBITDA 253.3
Diluted Share Count 27.0 FY 2016 Pro forma Leverage 4.1x
Equity Purchase 593.3 Term Loan B Leverage 4.1x
Secured Notes Leverage 0.0x
Existing Debt 913.3 Entry Multiple 6.2x
Existing Cash 17.0 Sponsor Equity Check as % 33.0%
Transaction Value 1,489.6 Tax Equity Check as % 0.0%
Debt Assumptions
Term Loan B Price L + 450bps
Senior Secured Notes Price Lower of L + 800 bps or 9.5%
Term Loan B Amort. 2%
Senior Secured Notes Amort. Bullet
Refinancing Fees 3%

27. 27Source: CapIQ, Wells Fargo, Jefferies
Leveraged Buyout Model
Summary 2016E 2017E 2018E 2019E 2020E
EBITDA $245.4 $237.4 $229.7 $223.3 $217.9
Dep. & Amortization 214.1 205.7 199.1 193.5 188.8
Operating Income 31.3 31.6 30.6 29.8 29.1
Interest Expense 56.8 57.2 54.8 51.9 48.4
EBT (25.5) (25.6) (24.2) (22.1) (19.3)
Taxes
Tax Rate 0.0% 0.0% 0.0% 0.0% 0.0%
Earnings After-tax (25.5) (25.6) (24.2) (22.1) (19.3)
CapEx 110.0 102.9 99.5 96.7 94.4
Dep. & Amortization 214.1 205.7 199.1 193.5 188.8
Levered CF 78.6 77.3 75.4 74.6 75.1
Mandatory Amortization 21.0 19.4 17.9 16.4 14.9
CF Optional Debt Service 57.6 57.8 57.5 58.3 60.2
Excess CF - - - - -
Debt Schedule
Term Loan B 1,050.0 971.4 894.1 818.7 744.1
Senior Secured Notes - - - - -
Beginning Period Total 1,050.0 971.4 894.1 818.7 744.1
Term Loan B Amort. 21.0 19.4 17.9 16.4 14.9
Term Loan B Sweep 57.6 57.8 57.5 58.3 60.2
Total Paydown 78.6 77.3 75.4 74.6 75.1
Term Loan B 971.4 894.1 818.7 744.1 669.0
Senior Secured Notes - - - - -
Ending Period Total 971.4 894.1 818.7 744.1 669.0
2016E 2017E 2018E 2019E 2020E
Cash Balance
Beginning Cash Balance 20.0 20.0 20.0 20.0 20.0
Change in Cash - - - - -
Ending Cash Balance 20.0 20.0 20.0 20.0 20.0
Interest Expense
Term Loan B 5.6% 6.1% 6.4% 6.6% 6.8%
Senior Secured Notes 9.5% 9.5% 9.5% 9.5% 9.5%
Term Loan 56.8 57.2 54.8 51.9 48.4
Senior Secured Notes - - - - -
Leverage Multiples
Bank Debt / EBITDA 4.1x 3.9x 3.7x 3.5x 3.2x
Unsecured / EBITDA 0.0x 0.0x 0.0x 0.0x 0.0x
Total Debt / EBITDA 4.1x 3.9x 3.7x 3.5x 3.2x
Net Debt / EBITDA 4.0x 3.8x 3.6x 3.4x 3.2x
EBITDA Interest Coverage 4.3x 4.1x 4.2x 4.3x 4.5x
(EBITDA - CapEx) / Interest 2.4x 2.4x 2.4x 2.4x 2.6x
Sweep Metrics
Cumulative Secured Paydown 7.5% 14.8% 22.0% 29.1% 36.3%
Total Debt Paydown 7.5% 14.8% 22.0% 29.1% 36.3%

28. 28Source: CapIQ, Wells Fargo, Jefferies
Leveraged Buyout Exit
Cash on Cash Sensitivity
IRR Sensitivity Premium Paid
15.0% 17.5% 20.0% 22.5% 25.0%
5.2x (0.3%) (0.8%) (1.3%) (1.8%) (2.2%)
5.7x 3.8% 3.3% 2.8% 2.3% 1.8%
6.2x 7.4% 6.8% 6.3% 5.8% 5.3%
6.7x 10.5% 10.0% 9.4% 8.9% 8.4%
7.2x 13.3% 12.8% 12.2% 11.7% 11.2%
Premium Paid
15.0% 17.5% 20.0% 22.5% 25.0%
5.2x 0.98x 0.96x 0.94x 0.91x 0.89x
5.7x 1.21x 1.18x 1.15x 1.12x 1.09x
6.2x 1.43x 1.39x 1.36x 1.33x 1.30x
6.7x 1.65x 1.61x 1.57x 1.53x 1.50x
7.2x 1.87x 1.82x 1.78x 1.74x 1.70x
ExitMultipleExitMultiple
Sponsor Returns
Year 1/1/2016 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020
EV Multiple Upon Exit 6.2x
Enterprise Value 1,350.9
Debt 669.0
Cash 20.0
Equity Value (516.8) 701.9
Returns IRR 6.31%
Cash Multiple MOIC 1.36x

29. Considerations / Business Risks
29
Loss of
Access Lines
Region
Specific
Risks
Higher
Interest
Rates
Regulatory
Related
• 2013: 4.8% and 2014: 6.8% of access lines were
lost
• Losses were due to competition from cable
companies that provided bundled offerings and
wireless carriers
• Expected to continue to lose access lines
• Service territory spans 17 states, 85% of the 1.1
million access lines are in ME, NH, and VT,
which experienced a 7.2% decline in total
access line service, compared to 4.6% decline
for the remainder of the operations in 2014
• Demand is seasonal for certain areas
• Expecting an increase in interest rates over
long-term
• Risk that bonds are not able to be sold into
market based on investor appetite
• May require issuing bonds at a discount or that
debt may be unsold to market/buy-side
• Focus on Data and Internet services
• Built and launched high capacity Ethernet services
• Converting services from Asynchronous Transfer Mode
(ATM) and Frame Relay to Ethernet based products
• Provide attractive pricing features and appealing
bundle offers
• Install forestall seasonal disconnects or seasonal
suspends
• Add advanced products services that meet customer
needs for each specific region
• Provide flexible voice services for regional business
customers
• Refinancing risks due to increased interest rates,
mitigate through puts/calls or swaps
• Mitigate risk of unsold bonds by securing committed
financing from banks
• Higher fees expected if committed financing is
necessary
• FairPoint must abide by FCC regulations
• Regulations and technology change rapidly
• More regulation in internet and wireless sectors
• Compliance and administrative costs to comply
Risks Mitigations
• Minimize interstate communications tariffs
• Remaining current on legal changes
• Complying with regulation along with competitors

30. 30Source: CapIQ, Wells Fargo, Jefferies
Final Recommendation
Financial
Analysis
Credit
Worthiness
• Character:
• Weak revenues and historical performance, coupled with previous bankruptcy in 2011 raises
serious considerations
• Capacity:
• A heavily levered company with historical credit difficulties and poor cash flow generation
• Not capable of hosting large amounts of debt; can only hold 4.1x of debt in Term Loan B given
30% equity check necessary
• Conditions of industry:
• Declining industry, not many growth opportunities, steadily dropping revenues/customers
• Collateral:
• Large amounts of collateral could partially offset another potential bankruptcy, but credit
risks as well as declining revenue, EBITDA and levered FCF are serious investment negatives
• Discounted Cash Flow Analysis:
• Projecting $17.95 implied share price, below the current $18.31 share price
• Leveraged Buyout Analysis:
• Shows firm is only capable of 4.1x leverage and has difficulty with more expensive debt
• Tax benefit implications present challenge for evaluating true free cash flow
• Opportunities to expand or improve business are difficult, given heavy cuts to capital expenditures
and headcount, indicating downsizing of the firm
Final
Recommendation
• Our final recommendation would be to not proceed with the LBO transaction at the proposed
share price of $21.97 (representing a 20% premium over current price)
• Rapidly rising share price due to first positive quarter would also imply a more expensive
buyout price, assuming a 20-30% premium
• Future projections show decline in core parts of business, with heavy divestures and layoffs
• Equity check of roughly 30% only permits 4.1x leverage
• IRR of 6.31% also indicates unprofitability of buyout
• LBO is not recommended due to other company and industry risks, including overall decline and
downsizing making the business unattractive

31. APPENDIX
31

32. 32Source: CapIQ, Wells Fargo, Jefferies
Summary of Indicative Terms
For Illustrative Purposes
Borrower: FairPoint Communications
Facility: $1,050 million Term Loan B
Maturity: 7 years
Expected Corporate Ratings: B3 / B-
Expected Facility Ratings: B3 / B-
Indicative Pricing: L + 450
LIBOR Floor: 1.000%
Amortization: 1% per annum
Optional Redemption: 101% soft call protection for the first 6 months
Negative Covenants: Usual and customary
Underwriting Fee: 2.00%
Secured Debt

33. 115
33Source: FairPoint 10k
Debt Maturity Schedule
605
300
$0
$200
$400
$600
$800
$1,000
Senior Secured Notes, due 2019 (8.75% Fixed)
Term Loan, due 2019 (7.50% Weighted Average)
Revolving Credit Facility, 2018
6.4 6.4
6.4
1050
$0
$200
$400
$600
$800
$1,000
Senior Secured Notes (9.5% Fixed)
Term Loan B (L+450)
Revolving Credit Facility, 2018
($mm) ($mm)
Existing Debt Maturity Proforma LBO Debt Maturity
115

34. 34Source: FairPoint 10k
Historical Financials
(in thousands) 2010A 2011A 2012A 2013A 2014A 2015A
Revenue $1,070,986 $1,029,490 $973,694 $939,354 $901,396 $855,783
% growth -4% -5% -4% -4% -5%
Adj. EBITDA 277,941 265,030 290,574 253,344
% growth 5% -9% 15%
% margin 29% 28% 32% 30%
CapEx 197,800 176,100 145,066 128,298 119,489 113,408
% of revenue 17% 15% 14% 13% 13%
Cash Flow Summary
Adj. EBITDA 277,941 265,030 290,574 253,344
Pension contributions (17,850) (19,971) (28,266) (28,000)
Post-retirement healthcare payments (3,183) (3,470) (5,808) (6,000)
Less: CapEx (145,066) (128,298) (119,489) 113,408
Unlevered Free Cash Flow $211,002 ($141,300) $111,842 $113,291 $137,011 $105,936
Cumulative Free Cash Flow for Debt Repayment $211,002 $69,702 $181,544 $294,835 $431,846 $537,782
($150,000)
($100,000)
($50,000)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
2010A 2011A 2012A 2013A 2014A 2015A
Free Cash Flow (thousands)
$0
$250,000
$500,000
$750,000
$1,000,000
2012A 2013A 2014A 2015A
Revenue
EBITDA
EBITDA/Revenue (thousands)