Telecom New Zealand Considers Directories Sale

Telecom New Zealand has confirmed reports that it is considering selling its directory business, Telecom Directories Ltd. According to The Dominion Post, Telecom New Zealand's CFO has acknowledged the possibility of a directories sale and that the telecom would use the proceeds for a share buy-back. The sale has the potential to yield over 10 times earnings or more than NZ$1 billion (US$642 million).

TDL is the dominant directory publisher in New Zealand and holds roughly 100 percent market share. As the owner of the term Yellow Pages and the official publisher for Telecom New Zealand, it does not have strong direct competitors, but it has been feeling the heat of other intra-media competitors such as local television, direct mail, newspapers and the Internet. Nevertheless, TDL has experienced low to mid single-digit increases in revenues and maintains one of the world's highest advertiser penetration rates among directory publishers.

Potential buyers could include private equities, media companies like Fairfax or even its Australian neighbor, Sensis, which in recent years has been shopping around for acquisitions. If Telecom New Zealand decides to sell this profitable line of business, the buyer will need to continue TDL's investment into online as well as follow the publisher's lead in making innovations in its print product. In addition to adding color, new ad sizes and the like in recent years, the publisher has also recently begun to focus on vertical markets. That movement can be seen in its decision to buy a tourism directory, which was also announced in recent days.

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