I retired from personal blogging in July 2008.
But you can find me over at http://blog.xero.com.
I know that Telecom will sell Yellow Pages. I just wanted to have a post recorded that said that this one of the most irresponsible strategies I’ve heard out of Telecom.
The future potential of all carriers is monetizing services over the pipes. Though to date Carriers have generally not been successful at doing much more than voice, the foundation of all value added services are Directories.
Often this is called Directory Driven Commerce. For members of the network to transact, we need to know about the network members. The Directory is fundamental. Directory Assistance and Yellow Pages are examples of Directory Enabled applications.
If you could divest directories, get the cash, and the status quo remained you might be tempted. But Telecom is effectively selling it’s customers to a competitor. Those same customers provide the base for all sorts of rich applications in the future. The net present value of those customers is massive and that is why the sale numbers look massive.
So what happens post the sale. Telecom has a huge balance sheet, does a bit of infrastructure spend and then returns a heap of cash to shareholders. Telecom has a strong competitor and value erodes. Folks we just sold our national communications carrier. Again.
It is a damning indictment of current Telecom management. Instead using their talents to create services and improve vital infrastructure for New Zealand business this sounds like giving up.
More insidious is that this act is the final shot of an outgoing CEO. This is too important for Telecom as a company and New Zealand businesses. It should be put on hold until the new management team is in place and they have had a chance to build their own strategy, which may include leveraging the significant competitive advantage they have from a current profitable Directories Business and no real competitor.
When the smoke clears after the sale, the existing management gets their big bonus and splits to their next big job or the beach, I predict we’ll be saying … “Wow, that was really stupid”.
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Think it beats the AAPT purchase in that respect?
[...] Last year I had some close dealings with a holder of some massive directory properties. These guys had this glint in their eyes when ever they talked about their directories. In the context of their portfolio and it’s other constituents this was a real education. It showed me how valuable these companies are. These are super valuable assets that provide long-term strategic advantage. I’m glad that Rod has spoken out about how foolish the sale of the NZ Yellow Pages is. [...]
The combination of the sale of the Yellow Pages sale, the loss of the MSN partnership (replaced with Ya-Who?), the transparency of accounting that is now required (no more free Xtra Broadband ads on their portal) and the Ferrit debacle have moved, in just one year, Telecom from being a major potential online player to one which is of no concern to anybody. Note all of this is self-inflicted - the govt action has not caused any of this damage. Clowns.
TDL is in the middle of a massive re-write of their online directory presence too. Why would you bother if you were going to sell it ?
Bad Business Can Be Good Business…
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I guess that the devil is in the detail. How much might they get - and do you think the current market price for the directory business doesn’t reflect its real value? Are they selling YP with a perpetual license to their customer database, or will this be a negotiable open agreement (and for how long will Telecom be *able* to legally pass customer data to a third-party who will cold-call those customers?)
There is an argument that selling advertising space is a different business to operating a wholesale/retail telecoms network and hence Telecom would be better off without it?
[...] divest the solid Directories business is puzzling. Let’s see what the analysts say tonight. Trackback uri | Name:(required) Email address (required, will not be published): URL (optional): Comment: [...]
Your post yesterday reminds me to post a question here I’ve been mulling over on the whole directories business…
Do you think the Yellow Pages is destined to have its lunch eaten by Google Maps and/or the other map based services (Wises, Smaps etc)?
I think so because maps are a much better paradigm for searching for local businesses, and if YP doesn’t innovate on the search front then their gonna see that business siphoned off quickly. Looks like it is already happening in the US where Google maps offers an extremely compelling way to search for local businesses…here’s local pizza places in my old Houston neighbourhood:
http://maps.google.com/maps?f=l&hl=en&q=pizza&near=77030&ie=UTF8&z=14&ll=29.70371,-95.406218&spn=0.055914,0.114155&om=1
Fast forward to the next generation of new cars which all have web based navigation as standard…nice.
And it’s compelling for local businesses aswell who get much more visibility into the effectiveness of their advertising etc.
BTW, I know yellowpages.co.nz have maps, but they are just hopeless and they still havn’t integrated the directory with them.