Bellingen, Wollongong, Shellharbour and Kiama councils are among the 35 local governments which own an equal share in Southern Phone.

The telco's board recommended councils accept an all-cash offer of $27.5 million, which it said i\was a return of $785,714 on each shareholder's investment of $2.

Southern Phone managing director David Joss said the acquisition would deliver benefits to councils.

"Our company has grown to become one of the most successful providers of fixed line, mobile and internet communications services across regional Australia," he said.

"Our unique local government ownership structure has created a community focused business that has achieved great success.

"However, with the advent of the NBN the need for achieving a greater share of the market has significantly increased and the timing is now right for a new shareholding structure."

Shellharbour City Council received a dividend of $41,277 last year.

That council's general manager Carey McIntyre yesterday said elected councillors would determine Shellharbour's position.

"Council has been advised that Southern Phone's board unanimously recommends to accept the AGL offer," Mr McIntyre said.

"Council will obtain further details of the AGL offer and will engage in discussion with Southern Phone's managing director over the next few days.

"The elected councillors will then, at the appropriate time determine council's position.

"Council notes the Southern Phone's media release [stating] that AGL is committed to maintaining the Southern Phone brand, existing business operations and the Southern Phone team."

Bellingen Shire Council has not made any comment at this stage.

Since 2008 Southern Phone has delivered more than $15.8 million in dividends and grants for the benefit of regional communities, the company's website says.

Former Wollongong City Council general manager Rod Oxley is on the Southern Phone board.

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