Verizon Communications Inc., the second-biggest American telephone company, extended a midnight deadline for contract negotiations with two unions, averting a strike for now.

Talks will last at least through today because “a last-minute proposal was substantive enough to give people confidence to move forward,” an AFL-CIO spokesman for the unions, Rand Wilson, said. The two unions’ members have authorized a call for a strike if the leaders deem it necessary. The employees want to maintain health care and retiree benefits and to increase wages.

The contract affects about 65,000 employees, or 28% of Verizon’s workforce, in 13 states and the nation’s capital. A strike may hinder the New York-based company’s efforts to install high-speed fiber-optic Internet lines in 18 million homes by 2010. The unions have suggested that the company will have trouble accomplishing its goal if there’s a labor stoppage.

“We have trained managers and have other contingency plans,” a spokesman from Verizon, Eric Rabe, said on August 1. “For people needing new installations or repairs, there could be some delays.”

The unions represent technicians who install and repair phone and digital-subscriber lines, as well as service representatives who answer customers’ calls.

Verizon fell 4 cents to $34 on August 1 in New York Stock Exchange composite trading. The shares have lost 22% this year.

The biggest issue is whether workers should have to pay for health care, both sides said. Workers also want assurance of future job opportunities, health-care coverage for retirees, and wage increases. Spokesmen for the unions and the company declined to go into detail to avoid bargaining in public. Verizon and AT&T Inc. are vying for customers as subscriber growth slows, introducing new phones such as LG Electronics Inc.’s Voyager and Apple Inc.’s iPhone 3G.

Verizon is pouring $23 billion during the next seven years into its fiber-optic expansion plan, which is supposed to bring in new business and help ward off increased competition from cable providers.

Negotiations between Verizon and the Communications Workers of America and the International Brotherhood of Electrical Workers started last year. As talks drew closer to the contract’s expiration, workers held rallies at Verizon’s Manhattan headquarters and in Boston.

In 2003, the company avoided a strike that would have impaired service. Work went on without a contract for about a month.

An 18-day strike in 2000 affected 28 million customers and cost Verizon $40 million in sales. The company and a union representing about 37,000 workers agreed on a contract that stipulated a 12% wage increase over three years. Verizon had settled with about 50,000 workers earlier on the same terms.