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MTS plans a review of Allstream

By: Staff Writer

Friday, Sep. 14, 2012 at 8:48 AM | Comments: 0

MANITOBA Telecom Services Inc. said Thursday it is launching a strategic review of its Allstream division, opening the possibility the business could be sold.

The company said recent changes by Ottawa to allow increased foreign investment in smaller telecommunications companies have created a "logical opportunity to consider a full range of alternatives that could be undertaken to further enhance Allstream's growing competitiveness."

"With a clear strategy, strong traction in the growing market for IP services, and seven consecutive quarters of year-over-year EBITDA growth, Allstream is the strongest it has been in years," chief executive Pierre Blouin said.

"For this reason, it is important to understand that this process is wide-ranging and does not assume that any significant change is necessary or desirable."

Strategic reviews by companies are often a prelude to a sale or other transaction.

MTS Allstream, which said the review will occur in the course of the coming year, has hired CIBC World Markets and Morgan Stanley as financial advisers for the process.

Analysts have suggested in the past that a U.S. company such as AT&T or Verizon may make sense as potential buyers.

Manitoba Telecom Services acquired Allstream, formerly AT&T Canada (which faced restrictive rules when it was operating in Canada) for $1.7 billion.

The Allstream division provides Internet Protocol services such as voice and data to businesses in Canada and parts of the United States and has said growth in the division will be led by such services. Allstream competes with Bell and Telus for business customers.

Winnipeg-based MTS Allstream earned a second-quarter profit of $44.5 million, or 67 cents per share, down from $49.8 million, or 76 cents per share, in the same period last year.

Revenue for the three months ended June 30 came in at $431.6 million, down from $443.7 million year over year.

-- The Canadian Press

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