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The Kelsey Report® Advisory

Dex IPO to Shine New Light on Directories
Charles Laughlin,Neal Polachek , 5/21/2004

SUMMARY: Dex Media filed a registration statement on May 14 for an initial public offering (IPO) to raise up to US$1.5 billion, most of which will be used to pay down the company's debt. Dex Media will become the second U.S.-based pure-play public Yellow Pages company, along with R.H. Donnelley. Dex has not yet established a price for the offering. However, TKG estimates the deal will be valued at between 10 and 12 times earnings before interest, taxes, depreciation and amortization (EBITDA), which would mean a valuation of roughly US$9 billion to US$11 billion.

Dex Media, which combines Dex Media East and Dex Media West, finished 2003 with revenues of US$1.6 billion and EBITDA of US$907 million, an EBITDA margin of 55.6 percent. The Dex IPO should re-ignite investor interest in the directory space, particularly among institutional investors, which will have two U.S. directory pure plays from which to choose once Dex is listed. A strong Dex valuation could also prompt the major U.S. local telecommunications companies to take another look at selling or taking their directory divisions public.

Copyright � 2005 The Kelsey Group. All Rights Reserved.
This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could result in termination of the client relationship, fines and other civil or criminal penalties under Federal law. The Kelsey Group disclaims all warranties regarding the accuracy of the information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information.

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