France Telecom hangs 'for sale' sign over Yellow Pages

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The Independent Online

France Telecom has decided to sell its majority stake in the French equivalent of Yellow Pages to focus on its core internet and telecoms businesses that include Orange.

The sale of PageJaunes could raise up to €3.4bn (£2.35bn), and will attract the attention of private equity companies and directory rivals such as Yell.

France Telecom owns Orange, one of the UK's largest mobile phone companies with 15 million subscribers across the country. Last week, it rebranded its internet unit Wanadoo under the Orange banner, and unveiled a plan to offer free broadband to UK mobile phone customers who spend more than £30 a month.

As a result of such efforts, Orange's parent company has decided the directories business is no longer a core operation. It will sell all or part of its 54 per cent stake in PageJaunes. The French telecoms company floated PageJaunes in July 2004, and sold a further 8 per cent stake in 2005 for €440.5m. The remaining stake is valued at around €3.5bn at the current share price.

PageJaunes has operations in France, Belgium, Luxembourg, Spain and Lebanon. In April, it reported a 6.8 per cent rise in first-quarter sales to €209.4m and reiterated its guidance for revenue growth of 8.5 per cent in the full year.

The UK directories business Yell Group, which was sold by BT in 2001 before being re-listed in 2003, is considered a potential buyer, although the timing of the sale may prove an issue. A Yell spokesman declined to comment when asked if Yell would consider an acquisition of PageJaunes.

Yell has been very acquisitive in the US. In April, it agreed to pay €3.1bn for the directories business TPI to gain exposure to the Spanish and Latin American markets. The expensive acquisition has left Yell with little financial flexibility to make further large acquisitions, and the price it paid caused some consternation among investors. Sources close to Yell said a move for PageJaunes at this stage is highly unlikely as the company has to focus on integrating TPI over the rest of the year.

Analysts also questioned whether PageJaunes would be as attractive to Yell as it is a more developed business than TPI, offering less opportunity to improve margins.