Winnipeg Free Press - PRINT EDITION

MTS boss touts Allstream fibre network

But says talk of putting division up for sale currently premature

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PIERRE Blouin sounds a little like a pitchman these days, extolling the virtues of his company's coast-to-coast fibre network.

The CEO of Manitoba Telecom Services Inc. likes to point out his Allstream division owns a national network that cost $4 billion to build about 20 years ago -- something that would be prohibitively expensive to replicate today.

His comments Thursday were in anticipation of the lifting of foreign-ownership restrictions for certain telcos in Canada expected to come into effect this summer or early fall.

"We have been very public in saying the change in foreign-investment restrictions will be positive for a company our size," Blouin said at the company's annual general meeting at the Winnipeg Art Gallery.

Such foreign-ownership restrictions would not be lifted for MTS's Manitoba operation and when asked during an analysts' call if the company was setting the stage for potential buyers to examine Allstream's books, Blouin said that was premature.

But in an interview he said, "I still believe Allstream is not a well-understood asset. Although some analysts are particularly negative about Allstream, I think we have done a great job finding the right strategy for this asset."

During the first quarter, the Allstream division recorded a 1.7 per cent increase in EBITDA, its sixth consecutive quarter of year-over-year growth.

"No one sees the value," he said. "AT&T (Canada) invested $4 billion to build a network from Newfoundland to Victoria. It was all written off when it went bankrupt," he said of the asset Allstream subsequently purchased.

But the network gives the company the ability to offer the latest, most robust telecommunications services to businesses in urban centres across the country.

"If you wanted to build that today, you would have to dig up the whole country," he said. "That would be very expensive, very difficult to do."

MTS shares are up 23.4 per cent since Ottawa announced a plan in November to allow more foreign ownership in telcos with less than 10 per cent of the market (not including those also regulated by the Broadcast Act).

The company's shares were up $1.03 to $35.04 Thursday, just shy of its 52-week high, after reporting a sharp jump in first-quarter profits.

The Winnipeg-based telecommunications company posted net earnings of $53.1 million, or 80 cents a share, up from $43.4 million, or 67 cents, in the same 2011 period.

Revenue slid to $435.1 million from $439.3 million.

MTS Allstream operates two divisions with some 5,500 employees.

In Manitoba, MTS is the leading full-service telecommunications provider for residential and business customers, including wireless technology, broadband services, IPTV, voice services, home security and an extensive range of business offerings.

Nationally, Allstream provides IP communications and is the only national provider that focuses exclusively on the business telecommunications market.

The MTS segment's operating revenues rose 2.7 per cent to $243.7 million.

Wireless revenues rose 6.9 per cent, driven largely by a 45.1 per cent spike in wireless data revenues.

Blouin attributed this to strong demand for smartphones. At the end of the first quarter, nearly half of all postpaid wireless subscribers had data plans, versus just under a third a year earlier. -- with files from The Canadian Press

Republished from the Winnipeg Free Press print edition May 11, 2012 B4

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