A move by New Zealand Post to hire a number of former high level Yellow Pages sales staff has fuelled speculation the state-owned business may be poised to launch a rival directories business to the Yellow Pages.

The Business Herald understands NZ Post has recruited Greg Murphy to be its director of sales as well as as three other national and regional sales managers.

Murphy was formerly Yellow Pages Group national sales manager of digital media and worked for the company between June 2003 and November 2009.

Murphy did not return calls to his mobile yesterday.

A former Yellow staff member, who did not wish to be named, said he had heard of at least three others who had been recruited and another 10 who had been contacted about moving to NZ Post.

"They are going aggressively after key sales and marketing staff."

The source said he had heard NZ Post was planning an online proposition as well as a print directories business.

A spokesman for NZ Post said the business was working on a range of projects at the moment but did not have any comment to make on the speculation.

NZ Post is thought to be in the process of revamping its business model under chief executive Brian Roche - a former senior partner in accountancy firm PricewaterhouseCoopers who joined the SOE in October last year.

The business has faced increasing pressure to find new revenue streams as mail volumes have dropped off in the face of growing usage of electronic mail.

In August, NZ Post said its year to June 30 operating net profit after tax was expected to be $72 million, $5 million down on the year before.

Its profits were only break-even because of declining mail volumes, tight margins in the banking sector and a series of one-off items.

A move to set up a rival business to Yellow Pages Group couldn't come at a worse time for the directories firm.

The debt-laden company was pulled off the market last week after its bankers and shareholders decided their value expectations were unlikely to be met in the current market.

Yellow Pages Group was bought by Hong Kong-based Unitas Capital and Canada's Ontario Teachers' Pension Plan for $2.24 billion in March 2007 in New Zealand's largest leveraged buy-out deal.

It was funded to the tune of $1.7 billion by a consortium of 28 bankers and debtors.

Market commentators had put the value of the company at between $900 million and $1.05 billion prior to the sales process, but last week said the offers could be as low as $450 million to $600 million.

The bankers are now working through a restructuring of the business which is expected to take eight to 12 weeks.

Yellow Pages' year to June 30 results are due to be filed and are expected to show a drop in operating profits from the prior period with earnings before interest, tax, depreciation and amortisation thought to be $154.5 million, down on $166.3 million last year.

The company is thought to have been hit hard by declines in its print revenues although its performance online is expected to show double-digit revenue growth.