Canadian telco Manitoba Telecom Services (MTS) has launched a wide-ranging strategic review of its business communications unit Allstream.
In a statement MTS said the decision comes in light of the relaxation of foreign investment laws in…
Canadian telco Manitoba Telecom Services (MTS) has launched a wide-ranging strategic review of its business communications unit Allstream.
In a statement MTS said the decision comes in light of the relaxation of foreign investment laws in Canada.
Before the amendment to the Telecommunications Act was passed, non-Canadians had been prohibited from owning more than 20% of voting shares in telcos. They had also been limited to indirect control of 46.7%, which could work out as a ceiling of 33.3% in a combination of voting and non-voting stock.
The amendment means that there is no limit to the amount of foreign investment telcos with less than 10% market share by revenue can receive.
The announcement of the strategic review is not a surprise – in August MTS’ CEO Pierre Blouin had already indicated that the company was assessing how to capitalise on the change in the law.
MTS confirmed that CIBC World Markets and Morgan Stanley would be providing it with financial advice, as previously suggested.
“With a clear strategy, strong traction in the growing market for IP services, and seven consecutive quarters of year-over-year EBITDA growth, Allstream is the strongest it has been in years,” said Blouin in the statement. “For this reason, it is important to understand that this process is wide-ranging and does not assume that any significant change is necessary or desirable.”
MTS Allstream has two units. Allstream is a telco and ISP serving business customers. It operates a substantial fibre-network which Blouin described in May as a “unique asset”. MTS operates in Manitoba offering fixed and wireless services along with internet and TV.
Earlier this month another smaller Canadian operator, TeraGo, made a similar announcement to MTS, appointing Houlihan Lokey and Canaccord Genuity for a strategic review of the company in light of changes to the country’s foreign investment regulation.
