KEY POINTS:
Telstra is bidding for Telecom's Yellow Pages through US investment bank Bear Stearns, yesterday's The Australian newspaper said.
It quoted Citigroup analysts as saying bidding for the directories and an undersea cable consortium could put pressure on Telstra's future dividend payouts.
It was unclear whether the reference to the undersea cable was to Southern Cross, which provides high-speed international bandwidth from Australia, New Zealand and Hawaii. Telecom owns a major share in Southern Cross.
The report said Telstra could bid alone for the directories, tipped to fetch up to $2.2 billion, or with a private equity group.
Any bid for the NZ unit is likely to come via Telstra's advertising and directories business, Sensis.
Internet company Yahoo is seen as the front runner as it is expected to replace Microsoft MSN as Telecom's partner on its internet service, Xtra.
The Yellow Pages group has about 600 staff and earned $160 million in the June year before interest, tax, depreciation and amortisation.
