AT&T (NYSE: T) is selling its Yellow Pages business to the private equity firm Cerberus Capital for $950 million and a minority stake in the new entity that will run the business.

The Dallas company says it wants to focus on its core wireless, IP and cloud-based businesses. The transaction will have a minimal effect on its earnings this year.

Cerberus is paying AT&T Inc. $750 million in cash and a $200 million note, plus a 47 percent stake in YP Holdings LLC.

Assets sold according to AT&T include:

  • Approximately 1,200 The Real Yellow Pages print directory titles reaching about 150 million homes and businesses in 22 states;
  • YP.com, a top 40 website according to a leading global digital measurement firm;
  • The YPSM Local Ad Network, which includes more than 300 mobile and online publisher websites nationwide providing digital reach to more than 71 million monthly unique visitors; and
  • The YPmobile app, which allows users to search local businesses from their mobile devices.
  • The assets generated revenue of $3.3 billion last year.

Revenue from the Yellow Pages business has shrunk 30 percent in two years, as consumers turn to the Web instead of phone books.

Phone books were once a cash cow, generating reliable profits as businesses paid for ads that were right under consumer’s finger tips as they were looking for local stores and services. Even with the steep revenue decline, AT&T’s Yellow Pages unit has been profitable before impairment charges for the last three years.

AT&T, the country’s largest phone company, is following in the footsteps of Verizon Communications Inc., the second-largest, in cutting its exposure in the phone book business. Verizon spun off its directories business to shareholders in 2006, only to see it file for bankruptcy three years later.

The sale affects 8,400 employees, and is expected to close mid-year. AT&T said it expects it to have a minimal effect on this year’s earnings.

“This transaction makes strategic sense for both AT&T and Advertising Solutions,” said José Gutiérrez, president and CEO of AT&T Advertising Solutions. “It enables AT&T to focus on its core strategy of leadership in wireless, IP, cloud- and application-based services. At the same time, it gives our advertising customers, partners and developers continued access to strong advertising and search innovation and performance.”

The deal excludes the recently formed AT&T AdWorks, which sells advertising offerings across online, mobile and TV.