Telstra, Fairfax deal "confusing": Budde

If Telstra sells its White Pages and Yellow Pages directories to Fairfax, the deal will throw the telco's future into further confusion, says consultant Paul Budde.

Telstra and John Fairfax Holdings are believed to be in discussions regarding the sale of the directories, worth an estimated $400 million.

Budde said Telstra should retain the directories as they would form an integral part of the company's core business if it was to become a "smart" content provider.

"On one side you've got the dot-com, and on the other there are the traditional networks. These are two totally different businesses. It's going to be very confusing for Telstra to operate in both of these markets and to stay focused on what exactly Telstra is," he said.

Budde said Telstra would not benefit from a percentage shareholding in Fairfax in exchange for the directories, as this was "not the way of the new world".

"In a merged operation between John Fairfax and Telstra, Fairfax could look after the content and Telstra could run the network. The combination would be extremely powerful. But just having a 5 or 10 per cent shareholding in John Fairfax . . . this has not proven to work in the past," he said.

Fairfax issued a statement to the ASX this morning confirming it was in discussion with "a number of parties including Telstra", but the media company would not comment on the speculated sale.

"It is endemic in this industry that all major players talk to all other players," said a Fairfax spokesperson.

Telstra would not comment.

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Byron Kaye

PC World

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