Verizon

(VZ) - Get Report

agreed to sell its Hawaiian phone business to a private equity group for $1.65 billion.

The deal with Washington's Carlyle Group comes as Verizon moves to shift its focus from the eroding local telco business to its fast-growing U.S. wireless operation. The pact will bring Verizon a chunk of cash just as the company pushes to whittle down its sizable debt load.

Along with the local wireline operations, Carlyle will also pick up Verizon's long distance, online and directory businesses in Hawaii. In 2003, those businesses had sales of $610 million, operating income of $58 million and depreciation expenses of $111 million, Verizon said.

"Verizon's agreement with The Carlyle Group complements our respective strategies, providing a fair value for these businesses as Verizon continues to focus assets in strategic markets," said Vice Chairman Lawrence Babbio Jr. "The agreement also provides for the fair and equitable treatment of Verizon employees in Hawaii, who have performed outstanding work for our customers and who will continue to be dedicated stewards for customer service in the future."

About 1,700 Verizon Hawaii workers are included in the transaction. The pact is expected to close in 2005.

The Carlyle Group has said that all day-to-day operations will continue to be managed by personnel in Hawaii. A new name for Verizon Hawaii will be announced at a later date.

On Friday, Verizon fell 3 cents to $35.77.