MTS Storefront

MTS Offloads Allstream To Zayo For $465 Million

January 15, 2016 - Written By Cory McNutt

It appears that the two-year long struggle for Manitoba Telecom Services, Inc. (MTS) to sell off Allstream, Inc. to the Zayo Group Canada, Inc. is now a completed deal.  MTS announced today that an all cash transaction of $465 million was complete with the Zayo Group – “a leading supplier of communications infrastructure and network-neutral colocation and connectivity.”  Jay Forbes, President and CEO of MTS said, “We are pleased to successfully conclude this transaction and fully deliver on our commitment to complete the turnaround and planned exit from Allstream, with the value of the business fully realized.  The closing of this transaction represents an important milestone in delivering on the commitments we have made to our shareholders.  With this exit from Allstream, MTS is in an improved position to continue our transformation to become a true, customer-first organization, leveraging our tremendous assets and unique position to deliver strong results in a competitive market.”

Following a thorough review of MTS’ business, Forbes has been working on expanding MTS services in an attempt to generate more income and proceed with a multi-year transformation program.  Forbes added, “As I said when the sale of Allstream was announced, MTS has a new team, a new strategy and a new future.  Our transformation program has generated strong momentum that we are carrying into 2016.  Our previously announced refresh of the MTS brand is one of several transformation program initiatives and will roll out into the market shortly.”  This deal should net about $420 million for MTS, which is $15 million more than their previous 2013 attempt to sell Allstream.  In this case, when the Canadian Government stepped in and blocked the earlier sale over national security concerns, they did MTS a favor.

MTS says that they will use some of the money to help with the debt they acquired when purchasing wireless spectrum in 2015 as well as funding its pension.  Forbes claims that the details of the sale will be covered when they release their fourth quarter financial earnings on February 4, 2016.  MTS has benefited from past government regulations that were designed to help the smaller regional carriers battle off the Big Three – Rogers, Telus and Bell – and this latest move should help them focus on their wireless mobile business and customers.