Verizon announced plans by year’s end to shed its domestic yellow
pages business to concentrate on its Internet endeavors.
In an SEC
filing, the telecom said an independent subsidiary was formed to
handle its print and online directories.
Although the telecom said it won’t decide until the end of 2006
whether to spin-off or sell its Verizon Information Services (VIS)
operations, which includes SuperPages.com,
Verizon created a subsidiary in case it decides to shed the directory
unit.
Currently named Verizon Directories Disposition Corporation, the
spin-off would be publicly traded and headquartered in Dallas.
Employing 7,100, the planned subsidiary requires approval by Verizon
stockholders and the IRS. The federal agency needs to sign off on the
deal allowing Verizon to offer tax-free stock distribution, according
to a statement. Once the telecom gains approval, the new company
would be renamed.
Creating a separate company to handle the directory business
enables Verizon to “more readily focus on growth” in the sector,
according to spokesperson Bob Varettoni.
As more players enter the lucrative online advertising market,
Verizon has attempted to compete, including last year’s redesign
in the face of challenges from Yahoo, eBay and others.
While the Verizon spokesperson wouldn’t comment on how revenue
from the spin-off might be used, the company’s SEC filing did
indicate the new organization would assume Verizon’s debt, an
advantage as the telecom spends billions on its fiber networks.
The company first considered a possible spin-off in late 2005.
“We believe a divestiture would provide VIS with more flexibility
to maneuver in the fast-changing environment of content providers,”
Verizon Chairman and CEO Ivan Seidenberg said in a statement at the time.
This latest action follows reports earlier this year that the
telecom is focusing more on broadband Internet services.
In May, Verizon reportedly also began discussions to sell up to 5 million phone lines in seven states.
Although the directory market is in a great deal of flux, Jim
Townsend of Classified Intelligence, said the industry remains
extremely profitable.
Any revenue from splitting off the directory
business could be used to fund a buy-out of Vodafone’s stake in
Verizon Wireless.
And while AT&T remains in the directory business, Verizon is faced
with a question, according to Townsend: “Is that a business that
telecoms want to be in?”
