PagesJaunes Groupe SA

7 Ave. de la Cristallerie
Sevres,
France
Telephone: 33 01 46 23 30 00
Fax: 33 01 46 23 32 86
Web site: http://www.pagesjaunes.fr

Public Subsidiary of France Telecom
Incorporated: 1946 as Office d'Annonces
Employees: 4,762
Sales: EUR 1.06 billion ($1.24 billion) (2005)
Stock Exchanges: Euronext Paris
Ticker Symbol: PAJ.PA
NAIC: 323119 Other Commercial Printing; 541810 Advertising Agencies

PagesJaunes Groupe SA is France's leading publisher of printed and online telephone directories, as well as the country's leading business web site developer. The company controls the French yellow pages, and is also responsible for printing its white pages, formerly known as the Pages Blanches but now rebranded as L'Annuaire in coordination with its parent company, France Telecom. Both L'Annuaire and the Pages Jaunes are present in print, online, and via France's Minitel system. Each year the company publishes more than 356 editions of its directories, with a total circulation of nearly 68 million. The company's directories represent one of the most widely used advertising platforms in France, with average monthly consultations of some 169 million. Formerly part of internet access provider Wanadoo, also a France Telecom subsidiary, PagesJaunes maintains an active web site development wing, targeting the business market. At the beginning of 2006, PagesJaunes was responsible for more than 26,000 business web sites. The company also controls the Mappy online map and itinerary service, as well as Wanadoo Data, which markets business-oriented databases and services. PagesJaunes has made some inroads in its attempt to expand outside of France: the company controls PagesJaunes Liban, where it publishes Lebanon's official telephone directory; Eurodirectory SA, which publishes the telephone directory for the Luxembourg market; and QDQ, which publishes an alternative yellow pages for the Spanish market. PagesJaunes also publishes the Kompass business directories in Belgium, Luxembourg, and Spain. PagesJaunes Groupe is listed on the Euronext Paris stock exchange. France Telecom controls 54 percent of the company. In 2005, PagesJaunes generated revenues of EUR 1.06 billion ($1.24 billion).

GROWING WITH THE FRENCH TELEPHONE IN THE 20TH CENTURY

The first telephone exchange in France was built in 1883 by the private company SGT (Société Générale du Telephones), under license from the French government. By the end of the decade, the country already counted some 15,000 telephones, and by the beginning of World War I, that number had already topped 300,000. While the penetration of the country's telephone system remained proportionally modest, and particularly limited to the major metropolitan areas, the growing numbers of subscribers presented the need to develop a directory service. While early directories featured simply names, the development of automated switching systems in the late 1890s, and the rapidly growing subscriber numbers, produced the need for full-fledged directories featuring names, numbers, and addresses. The first directories began to appear in the 1890s, and in the late 1890s, the French government formed a new organization, called the Service national des annuaires téléhoniques, or Snat.

By then, many directory publishers had already begun to publish separate directories or directory sections for residential customers and commercial customers. In larger markets, independent business-to-business directories also became popular. By tradition, the commercial directories were printed on yellow paper. Legend had that the first "yellow page" directory appeared in 1883, when a directory printer ran out of white paper and used yellow paper instead. Later research established that black type was easier for customers to read against the yellow paper. Before long, the yellow page format had been adopted by directory publishers throughout the world.

In addition to their utility, the directories, which were provided for free in France, also became a highly prized advertising medium. Since the directories were distributed to nearly every household and business with a telephone, they boasted significantly deep advertising penetration rates. By selling space, including a business's listing itself, in the yellow page directory, publishers were able to generate significant revenues. In France, these revenues helped offset the cost of printing and distributing the telephone directories.

In 1946, the French government decided to separate the telephone directories' publishing and printing wing from its advertising side. In that year, the sale of advertising space in the yellow pages was turned over to the Office d'Annonces (ODA), which was placed under control of the government-owned Havas advertising group. The Snat and the ODA remained separate throughout the following decades before being joined in the 1990s. While the Snat, attached to the French PTT (which later became France Telecom), held the monopoly on directory printing and publishing, the ODA gained the monopoly on editing (including advertising sales) and diffusion of the directories.

ODA's early revenues were modest, reaching the equivalent of just EUR 1.6 million at the middle of the 1950s. Yet the French government became determined not only to modernize the country's telephone system, which had suffered a great deal of damage during World War II, but also to extend it to every part of the country. With the PTT legally obligated to extend its reach to as much as 100 percent coverage of the population, the growth of the telephone network was accompanied by the growth in Snat's directory publishing activities. By the mid-1980s, the PTT had connected 96 percent of the population. In turn, ODA's revenues grew strongly, and by the early 2000s directory advertising revenues neared EUR 850 million.

A significant factor in ODA's growth in the 1980s, however, came through the development of the Minitel system. Developed by the PTT and launched in 1982, the Minitel was the world's first modem-based consumer online service. From the start, the Minitel featured the country's telephone directories, generating revenues both from advertisers as well as from consumers, who paid fees to access the directories. As a result, the Minitel represented a major source of revenues not only for ODA but also for the future France Telecom, which acquired a 45 percent stake in the ODA. Havas's stake was reduced to 45 percent, while the remainder was held by the Société des Investissments.

The Snat and the ODA's positions were challenged in the late 1980s, however, when the French government passed legislation ending the company's respective monopolies on directory publishing and advertising sales. Indeed, the ODA soon found itself faced with competition, notably from Communication Media Service (CMS), a company established by a former ODA director. CMS succeeded in producing a number of directories, yet never rose to become a serious rival to ODA's domination of the French market. Nonetheless, the appearance of competition led the French government to weigh the possibility of launching ODA as a public company in the early 1990s.

COMPANY PERSPECTIVES

Innovation—a daily challenge. PagesJaunes has come up with new solutions to meet the needs of developing technologies. The Group is already France's leading business website developer, with a portfolio of 25,600 sites.

PUBLIC COMPANY

The success of the Minitel service gave France Telecom less incentive to invest in the newly developing internet access market. Yet as internet usage began to grow in France, the telephone monopoly recognized a new opportunity for placing its directory services online. In 1996, France Telecom founded its own internet access service, Wanadoo, which then became responsible for the implementation and access to the new online version of the PagesJaunes.

ODA's ownership had made a number of changes in the 1990s, with Havas taking 100 percent control toward the end of the decade. In 1998, however, Havas transferred its shares in ODA to a France Telecom subsidiary, Cogecom. By 2000, France Telecom decided to merge ODA with most of Snat, forming a single company, then named PagesJaunes. Ownership of this company was then transferred to Wanadoo. The transfer in ownership played an important role in Wanadoo's successful initial public offering (IPO) that year. Indeed, throughout most of the 1990s, and into the 2000s, PagesJaunes represented some two-thirds of Wanadoo's total operations. As part of the restructuring, PagesJaunes also took over responsibility for the editing and advertising sales of L'Annuaire, the renamed Pages Blanches, as well as the Minitel service PagesJaunes 3611. These operations, however, remained under the ownership of France Telecom.

In the meantime, PagesJaunes had begun expanding its own directory portfolio. In 1999, PagesJaunes acquired the French, Spanish, and Belgian franchises for the Kompass directories. Founded in Switzerland in the 1940s, Kompass had established itself as one of the world's leading business directory groups, notably through establishing international franchise partnerships.

PagesJaunes continued seeking opportunities for its international expansion. The company targeted Spain at the end of 2000, buying up that country's second largest online and print directory publisher, Indice Multimedia. That business was subsequently renamed QDQ Media, and the name of its core directory adopted the new brand QDQ, LQ Guia Util. In 2001, Wanadoo entered the Lebanese internet market; PagesJaunes followed later, producing a yellow pages for that market. PagesJaunes also entered Luxembourg, teaming up with Italian counterpart SEAT Pagine Gialle to buy up Eurodirectory, which controlled 49 percent of Editus Luxembourg, the publisher of that country's telephone directories.

Expansion into foreign markets, however, brought PagesJaunes head-to-head with those markets' dominant players, which, like PagesJaunes, tended to be offshoots of the region's former telecommunications monopolies. This meant the company's hopes of penetrating new markets in a meaningful way were limited; however, the company continued to enjoy the fruits of its own dominant status in France. That country continued to represent nearly 80 percent of the company's sales into the mid-2000s.

In the meantime, Wanadoo's internet access business, spurred by the development of ADSL technologies, had been growing rapidly. By 2003, PagesJaunes represented just 10 percent of Wanadoo's total sales. Nonetheless, PagesJaunes was enjoying its own brisk growth rate, with revenues rising by more than 50 percent per year.

In 2004, France Telecom, which had remained Wanadoo's majority shareholder, decided to buy back full control of the company. In an agreement with Wanadoo's minority shareholders, France Telecom announced it would then float the PagesJaunes directory business as a separate company. To sweeten the directory publisher's IPO, Wanadoo also transferred its Kompass franchise and its business-to-business database service wing, Wanadoo Data, to PagesJaunes.

KEY DATES

1896:

Snat is formed to publish telephone directories in France.

1946:

Advertising sales in telephone directories are placed under control of ODA, a Havas subsidiary.

1982:

Minitel telephone directory service is launched.

1987:

New legislation ends telephone directory monopoly in France.

1996:

Pagesjaunes.fr online directory begins operating through France Telecom subsidiary Wanadoo.

1998:

France Telecom acquires control of ODA.

1999:

Wanadoo acquires Kompass franchises in Spain, the Benelux countries, and France.

2000:

ODA and Snat merge as PagesJaunes, which becomes Wanadoo subsidiary; PagesJaunes acquires Indice Multimedia in Spain.

2004:

Wanadoo transfers ownership of Kompass franchise and Wanadoo Data to PagesJaunes, which goes public; PagesJaunes acquires full control of Eurodirectory in Luxembourg.

2005:

PagesJaunes acquires e-sama through Wanadoo Data.

2006:

France Telecom transfers ownership of L'Annuaire to PagesJaunes.

PagesJaunes's IPO came in July 2004, when France Telecom placed 36.9 percent of its shares on the Euronext Paris Stock Exchange. The public offering raised more than EUR 1.4 billion ($1.7 billion). The newly public company then moved to strengthen its own shareholdings, notably through buying out partner SEAT Pagine Gialle in order to take full control of Eurodirectory.

At the beginning of 2005, in a new move to expand its range of services, PagesJaunes acquired e-sama, a specialist in database hosting and customer relationship management services. The new subsidiary was placed under Wanadoo Data, boosting its relationship marketing offering. At that time, France Telecom, which had recently acquired Equant, announced its intention to sell more of its shares in PagesJaunes. The secondary offering, made in February 2005, raised an additional EUR 440 million, while reducing France Telecom's stake in the directory group to 54 percent. At that time, France Telecom acknowledged its intention ultimately to reduce its holding in Pages Jaunes to just over 50 percent.

In January 2006, France Telecom transferred ownership of L'Annuaire to Pages Jaunes. The company in the meantime continued developing the services offering of its PagesJaunes internet operation, which was rapidly becoming the company's most important business. The company added a number of features, such as embedded voice and video applications, and, at the beginning of 2006, formed a partnership with eStara, a specialist in internet-based telephony applications, to add "click-to-call" services. In February of that year, the company announced new partnerships with Institut Géographique National and Allociné to add content to the pagesjaunes.fr site. By then, PagesJaunes's online site had become one of the most widely visited web sites in France.

PRINCIPAL SUBSIDIARIES

Edicom SA; Editus (Luxembourg); E-Sama; Eurodirectory SA (Luxembourg); Kompass Belgium; Kompass France; Mappy SA; PagesJaunes Liban; PagesJaunes Outre-Mer; PagesJaunes SA; QDQ Media; Wanadoo Data SA.

PRINCIPAL COMPETITORS

Edward Thompson (Printers) Ltd.; News Corporation Ltd.; Bertelsmann AG; Daily Mail and General Trust PLC; Caverswall Holdings Ltd.; Giesecke and Devrient GmbH; The Polestar Group Ltd.; Yell Group PLC.

FURTHER READING

"Eurodirectory Now Fully Owned by PagesJaunes," RDSL Europe, October 15, 2004.

"France Telecom Sells Pages Jaunes for EU440m," Euroweek, February 11, 2005, p. 26.

Négréanu, Gérard, "ÓDA: une truffe en bourse," L'Expansion, May 6, 1993.

Neville, Laurence, "PagesJaunes Targets Transparency," Corporate Finance, February 2005, p. 24.

"Pages Jaunes fait du web qui rapporte," L'Expansion, November 8, 2001.

"PagesJaunes Increases Revenues 12.6% in 3Q, Buys Directories," Yellow Pages & Directories Report, November 12, 2004.

Reece, Damian, "France Telecom Unveils Plans to Float Directories Business," Independent, June 23, 2004, p. 38.

Tieman, Ross, "France Telecom Plans Directory IPO," Daily Deal, June 23, 2004.

―――――, "PagesJaunes Makes Flat Debut," Daily Deal, July 9, 2004.

"Votre vieil annuaire est une mine d'or," L'Expansion, March 15, 2001.

"Wanadoo Directories Surpasses Targets, Expands in Middle East," Yellow Pages & Directory Report, February 14, 2001.