Telecom considers offloading Yellow Pages

Telecom today confirmed earlier rumours it was investigating various options, including a sale or public listing, of its printed and on-line directory operation Yellow Pages Group.

Chief financial officer Marko Bogoievski said the company would undertake a scoping study to assess options around its Yellow Pages Group (YPG) which includes Yellow Pages, White Pages and other printed and on-line directories businesses managed by YPG.

"The review will examine potential alternatives including partial or full sale to trade or financial buyers, or a public listing," he said.

"All options, including retaining the business, will be canvassed."

Mr Bogoievski said significant changes were occurring in the on-line media and local search marketplace.

It was a good time to look at future alliances with global players and to re-examine options for Yellow Pages business, he said.

"We have made good progress negotiating new commercial arrangements with a global on-line and search player and expect to be well positioned in the integrated communications, messaging and search space in the future.

"If Telecom goes ahead with any sale of the business, we would expect to have a comprehensive set of ongoing commercial arrangements with YPG in order to facilitate continued strong growth of Telecom's online properties."

The unit expects to generate ebitda (earnings before interest, tax, depreciation and amortisation) in excess of $160 million for the year ending June 30, Mr Bogoievski said.

He said recent directory business sales by other telcos had directories businesses internationally suggested a sale could deliver "significant value to the group".

Telecom expected the scoping study to be completed by late October and intended to provide an update to the market at the Q1 results announcement in early November.

The directories business turned over $248m in the year to June.

Sydney-based ABN-Amro telecommunications analyst Ian Martin said its ebitda (earnings before interest, tax, depreciation and amortisation) would be about half that and a "good price" of 10 times earnings would see the business fetch $1.2 billion.

If Telecom was offered less than eight times earnings, or $1 billion, "they shouldn't sell it", he said.

Media companies Fairfax and APN top the list of prospective buyers, with Fairfax chief executive Joan Withers earlier saying the publisher would never rule out an opportunity without having a good assessment of it.

Telecom grew its directories revenue 8.3 per cent or $19m last year, thanks to an increase in the number and price of print advertisements in the Yellow Pages and growing revenues from on-line advertising.

- NZPA