Telstra bidding for Telecom's directories

By NZPA

Wednesday 22nd November 2006

Australian rival Telstra is understood to be bidding for Telecom's Yellow Pages unit through US investment bank Bear Stearns, according to a report in today's Australian newspaper.

It quoted Citigroup analysts Tim Smeallie and Phil Campbell as saying Telstra bidding for the New Zealand directories and an undersea cable consortium could put pressure on Telestra'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 unit, which is tipped to fetch up to $2.2 billion, or in conjunction with a private equity group.

Any bid for the New Zealand 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.

Major international private equity funds such as United States firms Kohlberg Kravis Roberts & Co and the Blackstone Group may join the bidding, along with Telstra.

The Yellow Pages group consists of the printed Yellow Pages, White Pages, and their on-line equivalents, Local Directories, New Zealand Retirement Guide and New Zealand Tourism Online.

It has about 600 staff and earned $160m in the June year before interest, tax, depreciation and amortisation.

Telecom wants to complete any sale by next June.

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