Key Points:

Telecom has sold its yellow pages directories business for $2.24 billion.

The buyer is a private equity consortium consisting of CCMP Capital and Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan.

Telecom is not saying what it will do with the proceeds of the sale until its third quarter profit announcement on May 3.

Investors are waiting to find out whether it will return capital to shareholders or use the money for investment.

There was a trading halt placed on Telecom shares ahead of today's announcement.

Final bids for the yellow pages business went in last week and the speculation was that four parties were on the shortlist.

Telecom chairman Wayne Boyd said "this transaction represents a significant outcome for Telecom shareholders".

The board was satisfied that the transaction fairly reflected the underlying value of the business.

Telecom expects the deal to be completed by the end of April. The transaction is subject to Overseas Investment Office approval and normal closing conditions.

Telecom said after settlement it would then be in a position to outline its capital management plans in relation to the cash sale proceeds.

Telecom was advised by Goldman Sachs JBWere.

Telecom shares were up 2c at 470 when they resumed trading.

Last week The Australian newspaper reported that the short listed groups included Australia's Seven Network and its private equity partner Kohlberg Kravis Roberts.

Private equity player CVC, which co-owns PBL Media with James Packer's Publishing and Broadcasting, was another.

The two others to have made the final cut were the winning CCMP consortium and a consortium of Bain Capital and Australian private equity group Private Equity Partners.

The process was being run by Telecom finance chief Marko Bogoievski, who was the leading internal candidate to replace chief executive Theresa Gattung when she leaves in mid-year, The Australian said.

Yellow Pages Group publishes the print directories Yellow Pages, White Pages, and Local Directories(TM), as well as online directories equivalents.

Some analysts have been critical of the sale, saying the company was selling a profitable business.

Yellow Pages Group prints more than 6 million directories each year and it has more than 600 employees. It has an annual revenues of $250 million.

This is not the first time investments have been made in New Zealand by the money managers for Ontario teachers' super funds. They have also invested in forest assets in the past.