After losing thousands of customers and tens of millions of dollars in the past two years, Hawaiian Telcom has hired a local management team to revive the 125-year-old phone company.

The state's largest phone company yesterday named Hawaiian Electric Co. executive Eric Yeaman as its new chief executive officer, succeeding New York turnaround expert Stephen Cooper.

The company also named former First Hawaiian Bank chief executive officer Walter Dods to a $1-a-year post as nonexecutive chairman of the board.

The 40-year-old Yeaman will take over a company that has struggled since Washington, D.C.-based Carlyle Group acquired Verizon Hawaii for $1.65 billion in 2005.

Yeaman, who will assume his new duties in mid-June, said the challenges faced by Hawaiian Telcom aren't insurmountable.

"This company has been serving this community over 100 years. It's part of the fabric" of the community, Yeaman said. "I want to see it continue, I want to see it grow. I want to see this company be the success that it can be."

Since January, Yeaman has served as senior executive vice president and chief operating officer at HECO, where he is responsible for day-to-day operations at the electric utility.

Prior to that, the Kona native was treasurer and chief financial officer of HECO's parent company, Hawaiian Electric Industries Inc.

Yeaman, who is part-Hawaiian, served as chief operating officer at Kamehameha Schools from 2000 to 2003. He helped implement many of the management reforms put in place at the school in the wake of the late 1990s trust scandal.

Yeaman declined to disclose his compensation, but he's likely to receive a big pay raise. Last year, he earned $632,235 as HECO's No. 2 executive.

Hawaiian Telcom paid former CEO Michael Ruley $875,692 last year. Cooper and his New York-based firm Kroll Zolfo Cooper, earned $600,000 a month after they were hired in February to replace Ruley.

Dods, 66, replaces Daniel Akerson, who is a managing director at Carlyle.

Dods will be joined on the board by Yeaman and Alan Oshima, who stepped down as the company's general counsel.

MOVED TO HELP

Dods, one of several local investors that took part in Carlyle's 2005 buyout, said he initially resisted calls to take a more active approach in the management of the local phone company.

But Dods said he had a change of heart after seeing the recent shutdowns at Aloha Airlines, Molokai Ranch and NCL America.

While the situation at Hawaiian Telcom is not as dire, he said the loss of a longtime, iconic business such as Aloha "touched a nerve."

"Aloha has been around a long time," said Dods, who retired as First Hawaiian's CEO in 2005 but remains chairman of the bank until the end of this year. "When you lose an institution like that, it's unsettling."

Since the 2005 takeover, Hawaiian Telcom has lost more than $200 million. The company reported a $117.3 million net profit last year largely because of the $435 million sale of its profitable directories publishing business.

Minus the sale of the phone book unit, Hawaiian Telcom had an operating loss of $19.4 million last year.

The local phone company has lost customers due to heated competition from wireless companies and other providers.

When Carlyle took over the local telephone company in 2005, it had more than 645,000 access lines. Today, it has about 560,000 residential and business lines.

FUTURE PLANS

Dods and Yeaman said the hope is to revive the company by building on its vast customer base and by providing expanded products such as high-speed Internet services.

"There are lot of people in this town who will try to skim away business at the high end, take away your top cell-phone customers here and there. That's fine. Competition is fine," Dods said.

"But a lot of these people aren't going to put telephones in Nanakuli or Makawao. ... This is an important institution, so that's why I decided to make a commitment to do what I could to bring back good local management and make it a special place."