Last week's decision by Industry Canada to spike the $520-million sale of MTS's Allstream division to the Paris- and Cairo-based private equity firm Accelero Capital has put MTS on its heels, but the real damage may come to Canada's reputation in the global investment community.
MTS, the provincial telco, continues to maintain a dominant market position in Manitoba's wireless, television distribution and legacy home-phone business. But the corporation's ability to continue to maintain the financial flexibility to do all that and continue to pay a handsome stock dividend -- as well as finance its pension-solvency deficiencies -- is going to take a little more finesse now it still has Allstream on the books.
Neither company executives nor equity analysts believe the company can go right back into the market to sell Allstream, a national fibre-optics network that provides voice and data services to large businesses across the country.
MTS chief executive officer Pierre Blouin is putting on a brave face about the company's intent to forge ahead with growing Allstream's fibre-optics network and continuing to sign up more customers to its profitable Internet-protocol business.
The Canadian government was one of Allstream's customers, and Accelero officials confirmed that even a pledge to pass that business to a competitor was not enough to assuage the government's "national security" concerns with the deal.
There's been lots of heavy lifting by MTS in the past few years to shed parts of Allstream's business that were not so profitable, but there's plenty more work left to do.
Regardless of the challenging position in which the federal decision has left MTS, the real consequence might be the aftershocks in terms of Canada's credibility as an attractive destination for foreign capital.
After all, Naguib Sawiris, the chairman of Accelero, is a billionaire investor who has interests all over the world and is probably listened to by other well-heeled foreign investors.
And right now, Sawiris has nothing good to say about Canada.
In an interview this past weekend with the state-owned Al-Ahram, Egypt's largest news organization and the Middle East's oldest newspaper, Sawiris let it be known how he feels.
"I'm finished with Canada," he is quoted in the English-language version of the paper. "(I'm not going to invest) even a single penny (in Canada)."
He was one of the prime backers of Wind Mobile and many believed his acquisition of Allstream was part of a larger strategy to build a Canadian wireless platform.
In the Al-Ahram article, Sawiris said: "The world is big and my money can go anywhere. I regret that we wanted to invest in Canada."
A week before the surprising news that the Allstream deal was rejected, his company was investing millions of dollars in beachfront tourism hotels on the Caribbean island of Grenada.
Sawiris is the non-executive chairman of Accelero and the chairman of Orascom Telecom, Media and Technology, a division of the family-owned real estate development company Orascom Group that includes one of the largest resort developers in the Middle East.
In the article, Sawiris said the only issue he could think of that might concern Canada is Orascom Telecom, Media and Technology has a 75 per cent stake in Koryolink, North Korea's only 3G cellular operator, which launched its service in 2008.
But he said that issue was discussed with Canadian regulators and he was not given any indication it would be a deal-breaker.
As a country that prides itself on a liberal-minded attitude to free-market enterprise and a fair-minded refuge for people from all over the world, the decision was a shocker to many and undoubtedly will downgrade the Canadian brand among Sawiris's peers.
And as the ninth-richest man in Africa (his brother, Nassef, is seventh on the list), Sawiris likely travels in some rarefied company.
Sawiris has recently returned to Egypt and has said he is keen to invest in that country after the overthrow of Mohammed Morsi's Muslim Brotherhood-backed government.
The only hope is that maybe that will distract Sawiris from much more bad-mouthing of Canada.