Winnipeg Free Press - ONLINE EDITION

MTS’s silence on Allstream hits stock

  • Print
MTS CEO Pierre Blouin

MIKE APORIUS / WINNIPEG FREE PRESS ARCHIVES Enlarge Image

MTS CEO Pierre Blouin Photo Store

There’s no getting around it for MTS — the 1,000-pound elephant in the room is the company’s on-going efforts to sell its national telecommunications division, Allstream.

At the company’s annual meeting in Winnipeg Thursday, CEO Pierre Blouin reiterated the party line, "We will not be providing any update until there is something definitive to say."

That’s unfortunate for shareholders who continue to watch MTS shares head south, near 52-week lows, while shares of competitors such as Bell and Telus approach 52-week highs.

All three companies released first-quarter results in the last couple of days with MTS failing to hit analysts’ targets, sending its shares down 32 cents on Wednesday and another 30 cents on Thursday to close at $32.16.

In an investor report on Thursday, Greg MacDonald, analyst for Macquarie Capital Markets, said, "Without an asset sale, we think the stock has $3- to $4 downside while a take-out probably provides $6- to $8 upside."

MTS announced a "strategic review" of Allstream in September, which is corporate finance-speak for "looking for a buyer."

Even though Allstream — the leader in IP communications and the only national provider that focuses exclusively on the business telecommunications market — reported its 10th consecutive increase in EBITDA (earnings before interest, taxes, depreciation and amortization) and its first positive cash flow in years, its revenues dipped by 14 per cent.

The division was put into play after the CRTC loosened foreign-ownership restrictions for some telecommunications companies, allowing MTS to look outside of Canada for buyers.

Blouin said the strategic review could take as much as a year. There is plenty of talk saying a deal is imminent — and the price has been coming down — but there is no information to announce.

And while MTS continues to produce increases in its growth lines from its market-leading Manitoba operations such as mobility, TV and Internet, MTS took a hit in the first quarter from wholesale mobility revenue when competitors, who previously paid MTS a fee to use its network, migrated their customers to their own networks.

Dvai Ghose, an analyst with Canaccord Genuity, says the theme for MTS’s first-quarter results was "weakening trends" and lowered his target price on the shares from $30 to $29.

"The first-quarter results were weaker than expected and highlight some worrying trends," Ghose said.

For him they include lack of revenue and EBITDA growth in MTS’s incumbent division.

martin.cash@freepress.mb.ca

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Police: Three or four infants' bodies found in storage locker

View more like this

Photo Store Gallery

  • A Canada goose makes takes flight on Wilkes Ave Friday afternoon- See Bryksa’s 30 Day goose a day challenge- Day 09- May 11, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • A goose comes in for a landing Thursday morning through heavy fog on near Hyw 59 just north of Winnipeg - Day 17 Of Joe Bryksa’s 30 day goose challenge - May 24, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Are you still on the Bombers' and Jets' bandwagons?

View Results

View Related Story

Ads by Google