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Carlyle Group, Telstra and Kohlberg Kravis Roberts & Co are among at least nine companies bidding up to $2.2 billion for Telecom's Yellow Pages directories unit.
CCMP Capital Asia and Pacific Equity Partners have also lodged bids, said three people with knowledge of the sale who did not want to be identified.
Telecom hired Goldman Sachs JBWere in November to sell the unit to bolster returns after earnings growth stalled.
"The unit has a very good position in a market where there are high barriers to entry," said Atul Lele of White Funds Management in Sydney.
Directory companies worth more than $6 billion have changed hands in the past two years as buyout firms, including New York-based KKR, seek assets with dependable cash flow that can service the debt they use in leveraged takeovers.
KKR bought France Telecom SA's phonebook unit, PagesJaunes SA, for $4.3 billion in November.
Telecom's Yellow Pages is forecast to post sales of about $280 million in the year to June 30, the sources said.
Bidders who progress to the second round will be informed by the end of this week.
Bain Capital LLC, Providence Equity Partners, Texas Pacific Group, and CVC Capital Partners have also entered bids, the sources said.
Marko Bogoievski, Telecom's finance chief, told reporters last week that interest in the unit had been "incredible", but declined to comment on bidders.
Hayley Morris, a spokeswoman for Goldman Sachs JBWere in Sydney, did not return calls seeking comment.
Telecom has said it expects to complete the sale by June 30.
Sensis, the directories unit of Melbourne-based Telstra, is the strongest industry bidder for Yellow Pages, wrote Laurent Horrut, an analyst at JPMorgan Chase, in a November report.
Macquarie Bank, Australia's largest securities firm, decided not to bid, the sources said.
Telecom last week posted a $228 million second-quarter profit.
The company had a $665 million loss a year earlier after slashing the value of its unprofitable Australian division.
Yellow gold
* Nine companies are said to be interested in Telecom's Yellow Pages.
* The price could reach $2.2 billion.
* Telecom said interest so far had been "incredible".
- BLOOMBERG
