AT&T in talks to sell Yellow Pages business to Cerberus Capital for $1.5 bn: report

US phone company AT&T is in talks with private equity firm Cerberus Capital Management for selling a majority stake in its Yellow Pages business in a deal that would value the telephone directory business at $1.5 billion, Bloomberg yesterday reported, citing two people familiar with the matter.

Under the deal that is likely to be reached later this month, AT&T would retain a substantial minority stake in the business.

Dallas-based AT&T, which has hired Citigroup and Bank of America as advisors to the deal, has held talks with several buyout firms, including TPG Capital, but the Texas-based private equity firm has lost interest in recent days, according to the report.

Post collapse of its $39-billion deal to buy rival T-Mobile USA, AT&T's CEO Randall Stephenson said in January that the company will take a hard look with regard to its directories business since it had been declining for years. ''It is one of these areas that we're going to have to decide, do we keep it or do we restructure it as we move forward?"

Revenues from its Yellow Pages business has taken a hit due to competition from online directories from internet search engines including Google  and Yahoo, where customers tend to go online to find local business phone numbers.

But the business still generated revenues of $781 million in the last three months of 2011, although sales declined in every quarter since the beginning of 2010.

AT&T's Yellow Pages business with more than 1,250 titles published in 22 states, is the largest in the world by revenue where the company recorded sales of $3.29 billion in 2011.