UPDATE 1-KKR, CVC lodge bids for Telecom NZ unit - sources

(Releads with sources, detail)

By Michael Smith

SYDNEY, March 23 (Reuters) - Private equity giants Kohlberg Kravis Roberts & Co [KKR.UL] and CVC Asia Pacific [CVC.UL] are among four groups in the final stage of bidding for Telecom Corp. of New Zealand's (TEL.NZ) directories business, sources familiar with the situation said Friday.

CCMP Capital Advisors and a partnership of Bain Capital and Pacific Equity Partners had also submitted final bids for the Yellow Pages business, the sources told Reuters.

KKR was bidding as part of its joint venture with Australian broadcaster Seven Network Holdings Ltd (SEV.AX), one source said.

Analysts expect Telecom NZ's Yellow Pages business to fetch between NZ$2 billion to NZ$2.5 billion ($1.4 billion and $1.8 billion), giving it a valuation of 12.5 to 15.5 times expected 2007 operating earnings.

New Zealand and Australian newspaper reports said a decision could be made as early as Friday, but one of the sources said this was highly unlikely as any deal still needed financial and board approvals.

A successful bid from Seven and KKR would be their first deal since forming a A$4 billion ($3.2 billion) TV, magazines and online joint venture last year.

Seven was not bidding for a majority stake in New Zealand radio and TV group CanWest MediaWorks Ltd MWL.NZ, one source said, rejecting local newspaper reports.

Australia's Telstra Corp. Ltd. (TLS.AX) dropped out of bidding for the Yellow Pages business last month.

Sources said on March 2 that KKR, CVC, CCMP and the Bain group were on the shortlist of bids. A source said at the time that CCMP was seen as having an outside chance.

Directories businesses are prime turf for private equity because of their healthy cash flows.

Last year, KKR and Goldman Sachs (GS.N) paid 3.3 billion euros ($4.4 billion) for 54 percent of France's Yellow Pages unit, PagesJaunes (PAJ.PA), valuing the deal at about 15.3 times earnings.

KKR, CVC, and Bain are also members of another consortium taking a look at Australian retailer Coles Group Ltd. CGJ.AX which has put itself up for sale last week, sources have said.

Telecom NZ shares were steady at NZ$4.73 at 2347 GMT, while Seven was up 1.1 percent to A$11.04. ($1=A$1.24, NZ$1.41, 0.75 euros) (Additional reporting by Victoria Thieberger)