Phone book deal
UK company Yell Group PLC announced it plans to buy a majority stake of TPI, the telephone-directories arm of Spanish Telefonica SA. The deal is for $3.85 billion. TPI is the largest player in the Spanish telephone directories (both white and yellow) segment with a 90% market share and some 120 directories. It also has interests in Latin America (Brazil, Chile, Argentina, and Peru.
For Telefonica, the deal is probably the result of a need to raise cash after some recent telco acquisitions, especially that of UK cell phone company O2. Yell beat out equity groups Carlyle, Kohlberg Kravis Roberts, and Apax
This deal will extend Yell's growing clout in the yellow pages and directory business. The company, spun off from BT Group, already owns the British Yellow Pages (100 directories) and is the #1 independent directory publisher in the US. In 2005, it bought the U.S. unit of California-based TransWestern Holdings LP for $1.6 billion. That purchase supplemented the Yellow Book USA franchise (acquired in 1999), giving it a strong presence in California and Texas. The company now publishes 540 directories in 42 states.
Yell already knows the advantages of dominating a national market. In fact, it is already under investigation by British competition authorities for using its oligopoly power in the UK to set ad prices for the yellow pages. It is alleged that Yell Group has colluded with rival Thomson Local Directories (between them they have 90% of the UK market) to set ad prices.
Other directory services may soon be on the block. Verizon has indicated it will spin or sell off its directory services. SBC (now AT&T) sold off some of its directory operations to Yell rival R.H. Donnelly Corp in 2004. Donnelly bought smaller US rival Dex Media earlier this year. This is another area where dedicated specialists are pushing out smaller firms and departmental operations.
12:50:57 PM 
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