NEW YORK (CNN/Money) - Kohlberg Kravis Roberts & Co. has entered exclusive talks to acquire BCE Inc.'s telephone-directories business for as much as $1.9 billion, a newspaper reported Tuesday.

Though talks over the Canadian directories operations are continuing, negotiations are at an early stage and a deal could still fall through, the Wall Street Journal reported. If an agreement is reached, KKR will have beaten several other leveraged-buyout (LBO) firms competing for control of the business, including Hicks Muse Tate & Furst Inc. and Blackstone Group.

Officials at KKR, a New York-based leveraged buyout firm, and BCE (BCE: Research, Estimates), a Montreal-based telecommunications holding company, declined comment to the Journal.

Shares of BCE added 18 cents at $18.34 Monday.

In July, BCE said it was considering the sale of its directories business or selling the rights to future revenue from the business. BCE needs about $4 billion to repurchase a 20 percent interest in its Bell Canada unit, which the company originally sold to SBC Communications Inc. (SBC: Research, Estimates) three years ago for $3.2 billion. SBC exercised an option under that agreement that forces BCE to buy back the minority stake, according to the report.

With the buyback, BCE would gain full control of Bell Canada, the country's largest telecommunications carrier, and allow BCE to focus more on its core telecom business. Michael Sabia, BCE's newly appointed chief executive, has said he wants to reverse a costly diversification strategy that moved BCE into such areas as global networks, television and media, including the Globe and Mail, Canada's national newspaper, and the CTV television network.

Some believe BCE could sell the media assets as it refocuses, the paper reported. BCE recently took a $5.2 billion write-down related mainly to its acquisition of carrier Teleglobe Inc., which filed for court protection from creditors earlier this year, the Journal reported.

BCE said the directories business generates about $191 million a year in earnings before interest, taxes, depreciation and amortization (EBITDA). A $1.9 billion purchase price would be about 10 times EBITDA, at the higher end of other directories' deals in the past two years, according to the report.

With their steady cash flow and high margins, directories businesses have become a hot sector for buyout firms lately as a number of telecommunications firms have been forced to sell these units to ease heavy debt burdens.

Last month, Carlyle Group and Welsh Carson Anderson & Stowe agreed to acquire Qwest Communications International Inc.'s (Q: Research, Estimates) directories business for $7.05 billion, making it the largest LBO in more than a decade, the Journal reported.

This would be the first directories business for KKR, best known for its battle for control of RJR Nabisco (RJR: Research, Estimates) in the late 1980s. The buyout firm has had recent success investing in Canada such as its 1999 acquisition of Shoppers Drug Mart, Canada's largest drugstore chain.

Analysts told the Journal that selling the directories business would offset the cost of BCE's Bell Canada buyback, but that the company would be parting with a valuable, cash-producing business and possibly diluting the company's earnings, according to the report.