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Verizon to Exit Phone-Book Business

The firm registers for a possible spinoff, but it says a sale is an option.

July 08, 2006|From Reuters

NEW YORK — Verizon Communications Inc. took the first step Friday toward shedding its phone directory business, a move that reflects its increasing focus on Internet and wireless communications.

Verizon said it registered a possible spinoff of its print and Internet Yellow Pages business with the Securities and Exchange Commission. Analysts estimate the business to be worth $13 billion to $17 billion.

The company said that it had not made a decision on whether to spin off the business and that a sale was also possible, but that it expected to completely dispose of it by the end of the year. The unit reported $3.45 billion in revenue last year.

Analysts said proceeds from any sale or spinoff could help Verizon as it seeks sole ownership of Verizon Wireless by buying out partner Vodafone Group's stake, as well as help finance a costly fiber-optic network and Web-based television service, FiOS TV.

"It would free up its balance sheet and help buy into Vodafone's stake," Stifel Nicolaus analyst Christopher King said.

Verizon said in December that it was reviewing the directory business, which generates a steady flow of cash but is facing challenges such as a rise in online directories from Internet search engines including Yahoo Inc.

Buyout firms such as Apax Partners and Carlyle Group have been viewed by analysts as likely bidders for the business because of its traditionally strong cash flows. Yahoo and Google Inc. also had been seen as potential buyers.

In 2004, Verizon agreed to sell its local phone-book and other operations in Hawaii to Carlyle for $1.65 billion and its SuperPages Canada to buyout firm Bain Capital for $1.54 billion.

Among other directory deals, Yellow Pages publisher R.H. Donnelley Corp. has bought Dex Media Inc. AT&T Inc. also has a directory business but has said it has no plans to sell it.

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