European Yellow Pages Case

Revenues and EBITDA contraction over 2008-2015

What happened in this high margin recurring revenue business?

Over 2008-2015 Total Revenues went down by 27% under a scissors effect:

- Non internet revenues divided by 3; and Internet revenues increased by 25% only over the period.

- Not enough to fully compensate for the fall of printed revenues.

- EBITDA margin went down by 15% (from 44.8% to 31%).

- Mobile revenues grew rapidly and account for more than 34% of total revenues in 2014 (vs 11% in 2011).


What were the key operating risks in 2008?

 Losing comparative advantage as customers shift to online and mobile publishing, using Google, Yahoo…

  Not transforming the business fast enough to compensate yearly print revenue decline (minus 15% p.a) by online and mobile revenues (+9% p.a.).  

The high-speed transition is vital for the survival of these companies.

Pre-2008 analysis of European “Yellow Pages” businesses: natural monopolies?

- EBITDA margin was at a high 42-45% in 2008. - From 2005 onwards key players were acquired by Top Tier Buy Out funds. - high brand awareness.
- minimum scale is needed to acquire an audience/user base sufficiently large. - the recruitment, training and motivation of a large sales force is time and cash consuming. - significant investment are required to obtain up-to-date SME databases. - long-term customer relationships are essential.

Where did the disruption come from?

Disruptive factors came with internet search engines: Yahoo, Google, Bingo...

Financial difficulties started with the increased penetration of internet search engines. Pages Jaunes, Yell, SEAT and Truvo lost ground and could not anticipate a sharp decline of their revenues.