NEW YORK (CNN/Money) - Qwest Communications International Inc. said Tuesday it is selling its phone book business for $7.05 billion as the troubled telecom company moves to cut its debt load.

The Denver-based provider of local phone service and fiber-optic networks is selling the QwestDex publishing unit to the private equity firms of Carlyle Group and Welsh Carson Anderson & Stowe.

The first stage of the two-step sale is expected to close in the fourth quarter and bring the company $2.75 billion for its operations in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. The second stage, which is to bring the company $4.3 billion, is expected to close some time next year and cover operations in Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming.

Qwest will continue to provide local phone service in all those states and will use the new directory company exclusively in those states.

It said it will use the proceeds of the sale to reduce debt. It had $20.4 billion of long-term borrowing on its balance sheet at the end of last quarter, along with $5.9 billion of short-term borrowing. It has also seen its debt downgraded to so-called "junk bond" status.

"The sale of QwestDex is a significant part of our plan to deleverage and strengthen our balance sheet and will allow us to focus on maximizing the profitability of our core operations," Qwest CEO Richard Notebaert said.

The company is facing probes by both the Securities and Exchange Commission and the Justice Department into its accounting practices. It also has been losing money, posting a net loss of $1.14 billion, or 68 cents a share, in the second quarter, as its loss excluding special items of $210 million, or 13 cents a share, was almost twice as large as analysts' forecasts. The company also lowered its future guidance at that time.

Shares of Qwest (Q: Research, Estimates) gained 56 cents in pre-market trading Tuesday on Island to $2.80, after climbing 31 cents, or 16 percent, to close Monday at $2.24.