Verizon May Sell or Spin Off Directory Unit to Raise Cash

Verizon Communications Inc. may sell or spin off its phone book and online directory business to raise cash as it nears completion of its purchase of MCI Inc. and invests billions in rewiring its telephone network to deliver cable TV and speedier Internet access.

The company, laden with long-term debts of $34.4 billion, disclosed late Sunday that it was reviewing alternatives for Verizon Information Services. The unit provides sales, publishing and other services for 1,750 directory books, including 1,200 Verizon-branded publications with a circulation of 121 million copies.

Although Verizon did not say how much the unit might be worth, published reports said the business could be valued at more than $17 billion. The company said the unit, which operates from Texas and employs 7,300 people, had operating revenue of $3.6 billion in 2004. Analysts estimated the unit would show an operating profit of $1.8 billion for 2005.

“With the MCI merger expected to close shortly, this is the right time for us to optimize our business mix and unlock value,” Verizon Chief Executive Ivan Seidenberg said in a statement.

Some analysts questioned the wisdom of giving up the strong, profitable cash flows from directories despite Verizon’s need to bolster its finances as it replaces its copper phone lines with speedy fiber optic cables and invests in its fast-growing Verizon Wireless venture. The company also faces a substantial investment upgrading and integrating with MCI’s national network to compete in the lucrative corporate services market.

A directory sale or spinoff would contrast with the investment in print and online directories demonstrated by two Bell rivals.

Last week, AT&T; Corp. and BellSouth Corp. launched their new YellowPages.com joint venture after agreeing to merge their online directory business a year ago, undeterred by the rising threat of Google Inc. and other online portals eyeing local searches as a major new source of ad revenue.