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Winnipeg Free Press - PRINT EDITION
Report says MTS seeking foreign buyer for Allstream
ANALYSTS say a U.S. buyer for the business division of Manitoba Telecom Services Inc. would make sense, but the telecom company refused to comment on a report that it's putting Allstream up for sale to foreign buyers.
A report in the Globe and Mail said MTS (TSX:MBT) is trying to find a buyer for Allstream and has hired investment bank Morgan Stanley to find foreign suitors, particularly in the United States, after failing to find a Canadian buyer.
MTS wouldn't comment on a possible sale on Monday and that its Allstream division is making inroads in the growing market for Internet Protocol services to businesses.
"With a clear strategy, strong traction in the growing market for IP services and six consecutive quarters of year-over-year EBITDA growth, Allstream is the strongest it has been in years," MTS said in a statement.
"We routinely talk to lots of companies -- most of whom are our customers -- about ways to grow and strengthen Allstream. We do not comment on rumour or speculation."
The Allstream division provides Internet Protocol services such as voice and data to businesses in Canada and parts of the U.S. and has said such services will lead growth in the division.
Macquarie Research analyst Greg MacDonald said a U.S. wireless carrier such as AT&T or Verizon could see an opportunity in the federal government's plans to reduce foreign-ownership restrictions on small telecom companies. But MacDonald said there's no guarantee a U.S. wireless carrier would jump at the opportunity now because "they've had an interest in the asset in the past and... their interests are now in other areas."
Analysts have routinely asked MTS if it would sell Allstream, which has been restructuring over the past several years. Allstream competes with Bell (TSX:BCE) and Telus (TSX:T) for business customers.
Manitoba Telecom Services acquired Allstream, formerly AT&T Canada -- which faced restrictive rules when it was operating in Canada -- for $1.7 billion.
The federal government plans to eliminate restrictions on foreign ownership for telecom companies with a 10 per cent market share or less.
The Globe and Mail report said some analysts have estimated a sale price of between $800 million to $900 million, while others said most potential buyers would value it at $400 million or less.
-- The Canadian Press
Republished from the Winnipeg Free Press print edition June 19, 2012 B5
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