B2B business Allstream is back on the block, with regional Canadian operator Manitoba Telecom Services (MTS Allstream) (TSE:MBT) set to meet suitors in the second half of the year.
MTS Allstream has hired advisers and is “constructing its…
B2B business Allstream is back on the block, with regional Canadian operator Manitoba Telecom Services (MTS Allstream) (TSE:MBT) set to meet suitors in the second half of the year.
MTS Allstream has hired advisers and is “constructing its information repositories for prospective buyers”, it said.
Having restructured Allstream, which is now cash positive, management said it would focus on maximising “value while promoting deal certainty,” the Winnipeg-based company said in a report on its results for Q2 2015.
A sale of Allstream has been on the cards for some time now. A strategic review in 2013 prompted a C$520m (US$497m) takeover offer by Egyptian telecoms tycoon Naguib Sawiris, but the government blocked it citing national security concerns.
Barclays analyst Phillip Huang said the current sales process seems to be progressing well, noting that management has identified four potential buyers.
“Management is currently preparing the data room and will engage the potential buyers with emphasis on deal certainty (having learned from its 2013 unsuccessful sale to [Sawiris’] Accelero.”
Management has said there has been strong interest from strategic and financial buyers, Huang said. He believes a strategic player is more likely to buy the business given its economic challenges, such as minimal cash flow and the need to boost investment.
MTS Allstream has made progress with its new strategies for both Allstream and its other operating unit MTS.
Regarding Allstream, MTS Allstream CEO Jay Forbes, who was appointed last November, said: “In this last quarter, Allstream has been able to deliver double-digit IP revenue growth, a 6.5% increase in EBITDA before restructuring costs and C$8.7m in free cash flow, all the while maintaining the level of customer service that has historically set it apart from its competitors.
“We enter the second half of the year, with a solid, stable operating platform that is beginning to deliver the financial results we all believed Allstream was capable of delivering.”
