Yellow Pages could benefit from a TrueLocal acquisition.
TELSTRA is trying to lift its ailing directories arm Sensis through the acquisition of News Ltd-owned online directory TrueLocal for an undisclosed amount.
The telecom, which has one of the strongest balance sheets in the country, has been quietly building up a collection of emerging media and internet assets, although chief executive David Thodey has played down an expansion into a mainstream media asset.
The move on TrueLocal was aimed at complementing Telstra's Yellow Pages network.
"TrueLocal also has an extensive library of ratings and reviews which enables consumers to make more informed decisions when they search for a local business,'' Sensis managing director John Allan said.
He said TrueLocal was likely to drive more traffic to the Yellow Pages online network.
But industry analysts remain sceptical of the transaction and one analyst, who declined to be named, said Sensis already had the strongest local directory brand in the industry, with TrueLocal likely to add little.
''They will run it for few years and then shut it down,'' the analyst said.
Telstra has had a patchy performance with classifieds and directories acquisitions. Most notably, it paid more than $640 million mid-last decade for Trading Post but struggled to recoup the outlay. Last year Telstra moved to outsource the operations of Trading Post under a licensing deal.
News Ltd's decision to offload TrueLocal was made because it was no longer regarded a priority for the media company.
News' Australian chief financial officer, Stephen Rue, said the sale followed ''substantial investments'' being made in other areas such as Foxtel and Fox Sports.
There is growing market speculation about Telstra's intention in media after the telco consolidated all its media assets into a stand-alone unit. In doing so it recently appointed former Television New Zealand chief executive Rick Ellis to oversee disparate media operations, ranging from its 50 per cent stake in pay TV broadcaster Foxtel to its BigPond internet service provider and directories division Sensis.
Telstra has one of the largest war chests in corporate Australia, making it a significant player in the media market. It is expected to generate as much as $20 billion over the next decade as it shuts down its copper network as part of its lucrative national broadband network agreements.
Telstra's media unit has assets worth more than $5 billion and generates more than $2 billion a year in revenue.
The Truelocal transaction needs to be cleared by the Australia Competition and Consumer Commission and it had recently raised concerns about Telstra's acquisition of Adam Internet, an Adelaide-based internet services provider, and its sale of Trading Post to a competitor.
TrueLocal general manager Simon Carson and his management team will stay on.