UPDATE 2-FairPoint Q1 earnings fall on increased competition

(Adds analyst's comment, share movement)

May 16 (Reuters) - Rural telecommunications provider FairPoint Communications Inc (FRP.N) reported a 33 percent drop in quarterly profit on increased competition, sending its shares down as much as 8 percent.

FairPoint, which has acquired 35 telephone companies over the years, recently completed its merger with Verizon Communications Inc's unit Northern New England Spinco Inc.

The company said Spinco access line losses were higher in the first quarter mainly due to competitors' marketing and promotional activity around the time of the merger completion.

"We believe new assets are in worse shape than we anticipated as competition pressured access lines," Standard & Poor's Equity Research analyst Todd Rosenbluth said in a note.

He maintained his "hold" rating on the stock.

FairPoint's first-quarter net income fell to $9.5 million, or 18 cents a share, from $14.4 million, or 27 cents a share, a year ago.

Revenue fell 5 percent to $282.4 million.

Excluding items, the company earned 7 cents a share, compared with one analyst's estimate of 12 cents a share, according to Reuters Estimates.

Revenue from Legacy FairPoint business was $68 million, compared with analysts' average estimate of $67.85 million.

Shares of the company fell 55 cents to $9.23 in midday trade on the New York Stock Exchange.

Before Friday's losses, the company's stock has lost half of its value since Sept. 24, when it touched a 52-week high of $19.82. (Reporting by Purwa Naveen Raman in Bangalore; Editing by Anil D'Silva, Vinu Pilakkott)