British Telecom is selling its Yell directories division to London-headquartered Apax Capital Partners and Hicks, Muse, Tate & Furst of Dallas, Texas.

Yell encompasses UK classified ad directories business Yellow Pages, its US equivalent Yellow Book, telephone information service Talking Pages and online directory

The division is being sold for £2.1 billion, the proceeds being used to reduce BT’s £28bn debt. However, the agreed price is around half that demanded by BT just six months ago and £700,000 less than a previous bid made by Apax and Hicks.

This plunge in the asking price follows a decision made ten days ago by trade watchdogs that Yell’s ad rates from 2002 to 2006 can rise only at a level six points below inflation, compared to the current two points. The ruling could lead to ad rate cuts by Yell with a concomitant fall in profits of up to 10% should UK inflation continue at its present levels.

Other bidders included media group Carlton Communications and a partnership of Texas Pacific and investment firm Kohlberg Kravis Roberts.

News source: BBC Online Business News (UK)