The value in directories

7

It continues to amaze me that there are still telcos in this world that are still looking to sell their directory business.  Yes, if you take a look at the recent purchase price of directory firms, it is easy to see why telcos are so enticed to sell.  Just look at what some firms have sold for in recent years.

Acquirer/Target/Amount (Euros billion)

  • KKK and Goldman Sachs / PagesJaunes / 5.6
  • RH Donnelley / DexMedia / 7.9
  • TPI / Yell / 3.3
  • BC Partners / SEAT  5.6
  • Carlyle and WCA&S / QwestDex / 7.2
  • RH Donnelley / Sprint / 2.3
  • Bain Capital / SuperPages Canada / 1.3
  • KKR / Bell Canada Directories / 1.9
  • Apax and Hicks Muse / BT Yell / 3.5
  • Macquarie / Yellow Brick Road / 2.7
  • Apax and Cinven / VNU World Directories / 2.1

But there is a reason why both private equity and print firms are jumping at the opportunity to acquire these assets.  These directory assets certainly generate a healthy and constant revenue stream.  But more importantly, there are indirect assets (customers, brand) that are most crucial.  Specifically, for telcos, outside of their basic infrastructure (which depreciates and constantly needs upgrades), their brand and customers are their core assets.  Why would you ever give that up, particularly if you are a fixed line carrier.  It is hard to believe that a short-term cash infusion will, in the long term, provide the necessary foundation for growth if you sell your customer base and brand away.

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7 Comments

  1. sal

    March 2, 2007 @ 7:14 pm

    1

    I agree – the problem is that telcos are so ‘bottom-line’ at the moment. Its strategically difficult for them to look long term, when then need cash to buildout their infrastructure.

  2. Rod Drury > Recent Directory Business Sales

    March 2, 2007 @ 11:52 pm

    2

    […] Sunny reports (reposted for convenience)… It continues to amaze me that there are still telcos in this world that are still looking to sell their directory business. Yes, if you take a look at the recent purchase price of directory firms, it is easy to see why telcos are so enticed to sell. Just look at what some firms have sold for in recent years. […]

  3. Hamish MacEwan

    March 3, 2007 @ 1:31 am

    3

    Is the legend for the table in the correct order?

    It looks more like:

    Acquirer/Target/Amount (Euros billion)

  4. sunnyahn

    March 3, 2007 @ 9:09 am

    4

    Thank Harnish for those eagle eyes. correction made.

  5. Sunny Ahn’s WebLog » Blog Archive » Another directory service business sold

    April 2, 2007 @ 2:26 pm

    5

    […] As expected, Telecom New Zealand sold its yellow page directory business to Canadian investors for USD $1.59 billion last week.  The investors were a private equity consortium of CCMP Capital and Teachers’ Private Capital, the investment arm of the Ontario Teachers’ Pension Plan of Canada.  As stated before, the tremendous need for cash has many telcos looks to sell off cash rich divisions.  I continue to think that such a strategy in the long run is very short-sighted. […]

  6. John86

    October 22, 2009 @ 5:25 pm

    6

    For most of our generation, the management and ownership have turned us off from the organization. ,

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