Telecom looks set to sell Yellow and White Pages

Telecom is looking at selling its Yellow and White Pages phone book business - a prospect that revived the company's flagging share prices yesterday.

Chief financial officer Marko Bogoievski said the company would undertake a scoping study on the options for its Yellow Pages Group, which includes Yellow Pages, White Pages and other printed and online directory businesses.

"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."

Telecom shares, which this month hit a 13-year low of $3.93 on concerns about heavier regulation, surged on the news.

By yesterday's close of trading they were up 11c to $4.21.

Mr Bogoievski said significant changes in the online media and local search marketplace made it a good time to look at alliances with global players.

Analysts picked Google, which is due to open a New Zealand office, and Microsoft as likely online partners for Telecom. Other possible buyers include media companies Fairfax and APN, publisher of the Weekend Herald and New Zealand Herald.

Mr Bogoievski said the unit was expected to generate earnings before interest, tax, depreciation and amortisation of more than $160 million for the year ending June 30.

He said recent directory business sales by other telecommunications companies 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 in early November.

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

Sydney-based ABN-Amro telecommunications analyst Ian Martin said if Telecom was offered less than eight times earnings, or $1 billion, "they shouldn't sell it".