Executive Summary
Yell Group (LON:YELL) is a UK-based directories business which was spun off from BT and now operates in the United Kingdom, the United States, Spain and South American (Chile, Argentina and Peru). Operating in the classified advertising market through printed, online and telephone-based media, Yell aims to be the best business information bridge to connect buyers and sellers. Yell has a portfolio of advertising products across a range of channels (including local guides, classified directories, online local search, search engines, mobile applications and operator services). Its brands in the United Kingdom are Yellow Pages, Business Pages, Yell.com and Yellow Pages 118 24 7, and in the United States are Yellow Book and Yellowbook.com.
Company History
1966 Yellow Pages first issued by Post Office Telecommunications
1984 - privatisation of BT; Yellow pages becomes a separate division
1999 - acquisition of Yellowbook, the US directory business
2001 - Yellow Pages sold to private equity group Apax Partners
2002 - acquisition of McLeod USA
2003 - flotation of Yell
2005 - acquisition of TransWestern Publishing, a US directories publisher
2006 - acquisition of a stake in Telefonica Publicidad y Informacion from the Spanish telecoms company Telefonica
Current Events
The company's high level of indebtedness makes a refinancing vital, and this is now being pursued. Any refinancing might lead to the requirement to issue further equity.
Business Model
The company is divided into three geographic divisions; Yell UK, Yellowbook (the US business) and Yell Publicidad (in Spain and Latin America). Each business has its main business the publishing of telephone directories both in print and online, which are distributed free and generate revenue through charges for advertising. In 2009, Yellowbook was the main contributor to revenues with 49% of total; Yell UK generated 29% of revenues, and Yell Publicidad 22%.
Yell UK
Yell UK's revenue fell 5% in 2009 from £ 732m to £ 692m. The decline was focused on print media, where revenue was down 11% - online was more robust, now contributing nearly a quarter of total revenues. Despite the revenue decline, adjusted EBITDA rose 2% to £ 267m, reflecting managed cost reductions. The EBITDA margin is 39%, up from 36% - much higher than for other local media such as newspapers [1] .
Within the UK, Yell is regulated owing to its dominance of the market. However its…
