NEW YORK (CNN/Money) - When Qwest Communications International announced Tuesday that it had sold its yellow pages business, QwestDex, for $7 billion, there was probably a lot of head scratching in homes across the country. Phone books? $7 billion?

But while stacks of free phone books arrive on millions of doorsteps every year, the advertising messages that fill the pages are anything but free. And that means that the large directory services units run by companies like Alltel, Sprint, and the Baby Bells can fetch valuations in the billions.

"As a consumer who gets it for free at your house, I can understand the feeling that this was an expensive deal," said Craig Shere, an analyst at Standard & Poors. "But small business owners probably think it should have gone for a lot more considering the way [directory companies] rape them on the ad rates."

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The yellow pages business, unlike the white pages business, is unregulated. But that doesn't mean that the big players are besieged by competition. Qwest is one of a handful of companies that has the level of access to names, phone numbers, addresses, and billing records that comes with running a local phone company.

"That information is a huge asset to companies that are trying to sell advertising services to every business in the phone book," said David Barden of Banc of America Securities. "It's possible for someone to come in and visit all the local stores in the strip mall. But advertisers want to go to a directory with everyone in it. That's why the directory business has been linked to all of the phone companies."

And while the future of the directory business may be online, for now, even online directory companies are forced to lean on the phone companies for access to their listings.

"The biggest competitor to directory services is the online services," said Muayyad Al-Chalabi, director of executive strategic partnerships at RHK, a telecommunications consulting firm. "The question is are they cannibalizing the printed yellow pages. So far, it doesn't really look like it."

QwestDex, which operates 313 directories in 14 states, took in $1.6 billion in revenue in 2001. That means that the $7 billion deal with private equity firms, the Carlyle Group and Welsh, Carson, Anderson & Stowe, represents a valuation multiple of 4.4 times sales. That figure is inline with the multiple Broadwing, which operates Cincinnati Bell, received when it sold its directory business in March.

Qwest's motivation for the deal is clear: The company needs to bite into its mushrooming debt in order to stave off bankruptcy. But why private financiers like the Carlyle Group, whose board members include former President George Bush and former Secretary of State James Baker, would want to own a yellow pages business is another question that may be eliciting head scratching today.

Shere says the answer is simple. The big directories are safe, relatively insulated from competition, and reliable revenue generators. As the ad money flows in, the Carlyle Group and Welsh, Carson et al. can begin to pay off the deal and possibly prepare to take the company public.

"The fact is that it produces very consistent cash flows," he said. "That's why the finance guys like it. You don't have to be a rocket scientist to figure it out."