US-based Platinum Equity picks up a 70% stake of Sensis from Telstra for a rock-bottom $454 million, with the entire business valued at less than its print revenue for 2013. PMP's print contract for Yellow and White pages directories is under threat as Malcom Turnbull, Communications Minister, puts the directory service up for review.
The mapping and directory business ultimately clocked in at a meagre $649 million, less than even half the more conservative estimates rumoured prior to the announcement, and a meteoric fall from its peak in 2005 when the business was said to be worth around $12 billion. Prior to the announcement Arnhem Investment Management partner, Theo Maas, speculated to the Financial Review that could fetch an optimistic $3 billion. The surprisingly low valuation was nonetheless on par recent directory transactions globally, according to Telstra, with CEO David Thodey running the line that, “It is what it is.”
Nine years on and with revenues in annual double-digit decline, Sensis still managed to turn over $778 million in 2013 from its print portfolio alone. And yet despite showing stronger margins than its digital offering, which drew in only $415 million in 2013, print could be one step closer to the chopping block.
David Thodey confirmed Telstra’s ongoing commitment to publishing the White Pages directory, which it is required to do by law, as well as the Yellow Pages, for the foreseeable future.
“We have spent the last two years enhancing our print directories with a rich set of digital directory offerings. Sensis is now the leading digital marketing services and directories business in Australia,” said Thodey.
However, with digital outstripping print in terms of growth it remains to be seen how the new partnership will impact the business.
According to Nicole McKechnie, Telstra director of external affairs, at the moment it’s business as usual, adding that, “Platinum Equity are a new partner for Sensis, so of course they’ll be having a look at the business.”
For the time being Telstra insists that there is still a place for print in the business, especially in regional areas, and that the “tail is longer than most people expect.”
Malcolm Turnbull, Communications Minister, has weighed in on the contentious issue, however, commenting that he will be reviewing the regulations stipulating the publication and distribution of print copies of the White Pages directory.
According to Turnbull, “In the internet age, producing these massive phone books is really at odds with the way in which most people access telephone numbers, so we’re looking at that carefully together with a lot of other regulations.”
PMP currently holds the Sensis print contract, which it is understood it will continue under the new ownership, and expires in 2016.