The sale of MTS’s Allstream national business telecommunications division to Egyptian-based Accelero Capital Holdings has been rejected by Industry Canada citing unspecified national security concerns.
The sale announced in May had valued the Allstream division at $520 million.
MTS CEO Pierre Blouin said the news late Monday afternoon came as a complete surprise to the company.
Blouin said, "We have been collaborating with the government for 136 days. I am sure the review is not about MTS and Allstream and more about Accelero. We have been very open with the government."
Accelero’s principal Naguib Sawiris has already been active in Canada, investing about $1 billion in his financial backing of Wind Mobile Canada.
The original deal with Accelero was only made possible after Industry Canada loosened its foreign investment criteria for certain smaller Canadian telecommunications companies.
Blouin said it was in light of those changes that MTS launched a strategic review to see if it could find a buyer for Allstream.
Although this was the first such review the government undertook with the new regulations, Blouin said it seemed to be right in line with the new government policy.
"We pursued the review in a very collaborative way and to come at the end today and be basically informed that the government was rejecting the transaction based on national security concerns without outlining what are those concerns or giving us an opportunity to correct them is quite a surprise," Blouin said.
The transaction did not impact MTS’s Manitoba operations and the rejection of the sale will also not impact the company’s operations here.