WINNIPEG – Manitoba Telecom Services Inc. and its Board of Directors have announced a wide-ranging strategic review of its Allstream business division, a strong sign that it is positioning itself for a sale.
The company indicated in a news release Thursday that legislative changes by Ottawa that allow increased foreign investment in smaller telecommunications companies are a “positive development” that will “strengthen the Canadian economy.” As a result the company says it will “consider a full range of alternatives that could be undertaken to further enhance Allstream's growing competitiveness, which in turn could improve the long-term position of the company's stakeholders.”
"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," said Pierre Blouin, Chief Executive Officer. "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."
Analysts however have been actively speculating for months now that MTS has been looking to sell Allstream. MTS acquired Allstream in 2004 for $1.7 billion. Formerly AT&T Canada, it faced restrictive rules when it was operating in Canada. The purchase created a major new national challenger in an industry dominated by BCE Inc. and Telus Corp.
MTS Allstream noted that the strategic review process will occur over the course of the coming year, but that it will not disclose any developments until its Board “first approves a particular course of action, or otherwise determines that further disclosure is appropriate or required.” It added that “there is no assurance or expectation that any changes will be made as a result of this process.”
The company says it will obtain the assistance of external legal advisors during this exploratory process, as well as CIBC World Markets and Morgan Stanley as financial advisors. The Board of Directors is also forming a strategic committee to oversee the review.
