Hey there, time traveller!
This article was published 24/5/2013 (1246 days ago), so information in it may no longer be current.
BILL Fraser was CEO of MTS in 2004 when the decision was made to pay $1.7 billion for Allstream to create a platform for growth for the Manitoba company.
"The hoped-for results never really did materialize," said Fraser, who left MTS in 2005 and is currently chairman of the board of Manitoba Hydro.
"Personally, I find it disappointing to see the announcement (on Friday)," he said. "There are so few national companies headquartered in Manitoba."
Allstream, which was called AT&T Canada when MTS bought it, is a telecommunications provider with approximately 30,000 kilometres of fibre network coverage serving more than 50,000 businesses.
Allstream is the successor enterprise to the 100-year-old CNCP communications network.
Ironically, its greatest value turns out to be the inability of successive operators to turn a profit. When MTS bought Allstream in 2004, it had $3 billion worth of tax-loss carry-forwards.
Wayne Demkey, MTS chief financial officer, said the Winnipeg company retains those "tax assets" with the sale of Allstream and it means MTS will still not have to pay taxes at least until 2019.
It's because of the value of those tax losses that the nine-year ownership of Allstream will be a wash when it comes to MTS's bottom line, even though it paid $1.7 billion in 2004 and will sell it for $405 million.
"That's not exactly how you want to go down in history," said Iain Grant of the SeaBoard Group.
Fraser, who was succeeded by Pierre Blouin as the CEO of MTS, believes this deal might be Blouin's swan song.
While Blouin said on Friday the sale of Allstream will let the company concentrate on its Manitoba business, Fraser doesn't think there's much there. "Unless you expand the scope of business, which really has not been happening, it's next to impossible to have substantive growth."
Fraser said with Blouin based in Montreal and the business's Manitoba operations run by local executives, it may mean a change in the corner office is imminent.