WINNIPEG – After wrapping up the sale of its Toronto-based Allstream unit last month, MTS president and CEO Jay Forbes announced plans to use the sale proceeds to buy back $200 million worth of shares.
“As we report our year-end results today, we are also announcing our plan for the use of proceeds from the sale of Allstream, one based on the evaluation of a number of capital allocation options we committed to consider when the sale was announced," Forbes said Thursday in a statement.
"The planned use of proceeds will return value to shareholders, strengthen our balance sheet and improve our strategic position. It underscores the momentum we have built through 2015 and take forward into 2016. Our new team is in place. Our new strategy is in place. Our new future is taking shape, and we are excited."
The company said that it realized gross proceeds of $465 million on the sale of Allstream to Zayo, and expects to realize net proceeds estimated at approximately $420 million after closing costs.
For the fourth quarter ended December 31, 2015, MTS saw operating revenues grow 0.4% to $252.1 million from $251.0 million year-over-year, while EBITDA before restructuring and operations costs increased 1.9% from $113.4 million last year to $115.6 million. The company reported a $3.4 million loss from continuing operations, versus $23.4 million in Q4 2014, which it attributed as mainly due to restructuring and transformation costs.
Free cash flow increased 70.6% from $19.7 million to $33.6 million in the quarter, mainly as a result of the company’s recent efforts to improve both the intensity and effectiveness of its capital investment decision-making and increased EBITDA, partially offset by increased deferred wireless costs.
For 2015, MTS said its $8.1 million increase in revenues was primarily a result of higher revenues from wireless data, information solutions, Internet and IPTV, partly offset by lower wireless voice, local access and long distance revenues. EBITDA before restructuring and transformation costs was down $2.8 million from 2014 due to increased pension expense and higher cost of goods sold and labour costs, partially offset by increased revenues. Income from continuing operations was down $56.5 million, largely the result of 2015 restructuring and transformation costs and increased depreciation and amortization expense, and free cash flow grew 7% to $140.7 million.
"I am very pleased with the free cash flow improvement of almost $10 million, particularly given the many challenges we faced this year, not the least of which was the double cohort impact on our wireless cost of acquisition”, added Forbes. “This increase reflects the success of the strategic path we set forth in May 2015. Our plans are delivering early and encouraging results."
Looking ahead, MTS said its financial guidance for 2016 includes a 0% to 2% increase in operating revenues, an 18% increase in capital intensity, and free cash flow that is 10% to 15% higher than 2105.
