Verizon puts directory spinoff plan in motion

Verizon Communications Inc. (NYSE:VZ - news) on Friday said it planned to dispose of its phone directories business by the end of the year, reflecting its increasing focus on Internet and wireless communications.

Verizon said it registered a possible spinoff of the directories business, which reported $3.45 billion in revenue last year, with the U.S. Securities and Exchange Commission on Friday.

But the company said it had not yet made a decision on whether to spin off the business and that a sale was also possible.

Verizon had said last December that it was reviewing the directories business.

A spinoff would create a new, publicly traded company with management independent of Verizon, with headquarters in Dallas and 7,100 employees, Verizon said.

The Wall Street Journal estimated the deal to be worth $13 billion, although the company could not confirm this.

If the move is approved and completed, Verizon shareholders are expected to automatically receive shares of the directories business, currently named Verizon Directories Disposition Corp., through a tax-free distribution, Verizon said.

The company also said it expects to recommend to its board that Verizon maintain its annual dividend at the current level of $1.62 per share even after the proposed spinoff.

Rival telecoms giant AT&T Inc. (NYSE:T - news) has said it has no plans to get rid of its directories business.

Copyright © 2006 Reuters Limited.