News
30/01/2007 - Telstra still in race for NZ Yellow Pages
TELSTRA is expected to battle private equity firms for Telecom New Zealand's directories business, with indicative bids due this week.
The most likely trade buyers, Fairfax Media and Seven Network, are believed to have dropped out of the race for Yellow Pages.
Babcock & Brown, Australia's second-largest investment bank, has told The Age it has no interest.
Apart from Telstra's Sensis division, that leaves the line-up of bidders dominated by private equity firms, which are expected to include Kohlberg Kravis Roberts, CVC Capital Partners, Blackstone Group, CCMP Capital, Carlyle Group and Pacific Equity Partners.
Indicative bids are due on Friday for the directories business, on which analysts have slapped a price tag of between $1.5 billion and $2 billion. Telecom NZ, which wants to complete the sale by June, also reports its first-half earnings on Friday.
Babcock & Brown had previously talked about setting up an investment fund to bid for global telecoms assets but has ruled out a bid for Yellow Pages.
Robert Topfer, the executive who oversaw Babcock's takeover of Irish telco Eircom last year, said the bank was more interested in network-based companies in Europe and Asia.
Yellow Pages "is not what I would describe as a low volatility asset. It's much more of a media asset," he said.
He said any buyer of Yellow Pages would be faced with difficulties in converting print revenue into online turnover.
Babcock bought 10 million shares representing a 0.5 per cent stake in Telecom last May but has since sought to douse speculation that it has plans to increase its holdings.
Macquarie Bank's listed cash-box, Macquarie Capital Alliance Group, had been viewed as a potential bidder because it led a consortium to buy Yellow Brick Road directories in Europe in 2005. However, it is not expected to bid for the NZ business.
Fairfax Media, owner of The Age, is also not expected to be among the bidders as it has already invested a significant amount in New Zealand, spending $NZ700 million ($A630 million) on internet business TradeMe last year.
Fairfax is believed to have held talks with Telecom NZ last year with a view to TradeMe buying the directories business, but baulked at the price.
Goldman Sachs JBWere is advising Telecom on the Yellow Pages sale after beating off Citigroup, which oversaw a scoping study of the business last year.
Private equity firms have been snapping up directories businesses as telcos in Europe and North America attempt to reduce debt.
Late last year KKR acquired a controlling stake in France Telecom's directories business Pages Jaunes.
"Directories have been a very happy hunting ground for private equity players," an investment banker said. "Yellow Pages is made for private equity because they can put much higher leverage into something like this."
http://www.theage.com.au/news/business/telstra-still-in-race-for-nz-yellow-pages/2007/01/28/1169919212127.html
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