Telstra may sell Sensis for $3bn

Telco giant may strike deal with US private equity firm this week: report.

Telstra Corporation (TLS) may sell its Sensis directories business for as much as $3 billion to a US private equity firm as it seeks to cut all involvement in traditional media operations, according to The Australian Financial Review.

The report suggested Telstra was in advanced talks with an unnamed US firm to sell its online and print directories business as early as this week. It has since been revealed that Platinum Equity Partners may be the suitor.

The sale of Sensis would make it the first time that the Yellow and White Pages were made by a foreign company.

Reports in Fairfax media on Monday suggest the $3 billion figure may be optimistic, however, with the telco potentially receiving as little as $1 billion.

Previous Telstra chief executives Ziggy Switkowski and Sol Trujillo declined to float or sell the business despite its declining revenues in the face of an increasingly digital media landscape over the last decade. The company reportedly weighed an ASX spin-off of the group in 2005 and 2006 that would have seen it valued at over $10 billion.

Profit has since been on the decline, with earnings before interest, tax and amortisation for the division falling by 22% in the most recent financial year. That left earnings below where they were a decade ago.

The news of the Sensis sale comes just a month after Telstra offloaded Hong Kong mobile service provider CSL for $US2.4 billion ($A2.65 billion), providing the group with ample ammunition for acquisitions.

However, Perpetual Investments head of equities Matt Williams told the AFR a higher dividend or share buyback may be the more likely outcome for the surplus cash generated by the divestments.

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