MTS to buy Allstream for $1.7-billion

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ChapiChapo - 19 Mar 2004 04:13 GMT

Wonder what the impact will be on the Allstream-NR
Communications-Inukshuk joint venture ?

MTS to buy Allstream for $1.7-billion
http://www.globeandmail.com/servlet/story/RTGAM.20040318.wmanall0318/BNStory/Bus
iness/?query=allstream

Manitoba Telecom Services Inc. has agreed to buy Toronto-based
Allstream Inc. for $1.7-billion in cash and shares, creating a "strong
player" in a telecom industry now dominated by two companies, BCE Inc.
and Telus Corp.

-snip-

BCE, which owns 21.7 per cent of MTS, said Thursday the Allstream
acquisition is a "significant change in the strategic direction" of
MTS. BCE said the implications of the decision were "highly complex"
and added that in light of the proposed deal with Allstream versus the
previous option of converting to an income trust, BCE would "consider
its alternatives."

-snip-

Glen Campbell of Merrill Lynch said the acquisition could fail if
Telus makes a competing bid for Allstream, or if MTS shareholders vote
overwhelmingly in favour of converting MTS to an income trust, despite
management's preference to proceed with the Allstream deal.

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JF Mezei - 19 Mar 2004 03:55 GMT

> MTS to buy Allstream for $1.7-billion
> http://www.globeandmail.com/servlet/story/RTGAM.20040318.wmanall0318/BNStory/Bus
iness/?query=allstream

This is most weird.

Allstream was AT&T Canada was Unitel was CNCP Telecom, the formerly only
competitor to telcos for data telecom.

> BCE, which owns 21.7 per cent of MTS, said Thursday the Allstream
> acquisition is a "significant change in the strategic direction" of
> MTS. ... BCE would "consider
> its alternatives."

What was telling in the article was that MTS had actually fought to prevent
outright takeover from Bell. I had always assumed that the smaller telcos had
decided to side with Bell in the Telus-Bell fight.

Will MTS become another Telus and turn its back on Bell and compete head to
head ? At least AT&T doesn'T have a wireless network, so MTS won't compete
against Bell head to head.

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AndrewH - 19 Mar 2004 06:41 GMT

What is very interesting is that MTS does not have a wireless network
outside Manitoba, and allstream is now working with Microcell on the DB
Internet and Inukshuk.

Is the next step MTS involvement in Microcell. MTS really probably only
has 2 options, stay small and stick to Manitoba with the provincial
support, or go National and compete with Bell, Telus and Rogers.

I am sure they are feeling the heat as Rogers Bell and Telus move into
manitoba.

Andrew

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JF Mezei - 19 Mar 2004 08:05 GMT

> What is very interesting is that MTS does not have a wireless network
> outside Manitoba, and allstream is now working with Microcell on the DB
> Internet and Inukshuk.

I don't really think that this would have been such a big deciding factor.
Inukshuk is small peanuts, and I am not sure of the details in Allstream's
involvement with Microcell's Inukshuk. As I recall, Inukshuk is 100% onwed by Microcell.

And Inukshuk is desperate enough to justify its continued existance that it
would deal with *anyone* to setup coverage in an area.

The big question is whether Inukshuk has a "monopoly" on wireless internet
with its bandwidth, or whether any region could setup their own local wireless
srevice (with funds from provincial govt's "high speed to rural areas"
programmes) or whether they would be forced to pay Inukshuk for a local service.

> has 2 options, stay small and stick to Manitoba with the provincial
> support, or go National and compete with Bell, Telus and Rogers.

It depends on how much they are paying for AT&T Canada/Allstream. If Allstream
is worth peanuts due to its recent bankrupcy, then perhaps they are just
buying Allstream for its assets (fibre across the country).

On the other hand, MTS knows that it is stays a small fish, it will either be
purchased by Bell/Telus, or Telus/Bell will setup shop in Manitoba and kill
MTS. Neither Bell nor Telus have any real claims of being "nationwide"
(ironically, that was CNCP's claim to fame, as well as Cantel back when it was
Cantel vs a gazillion separate phone companies).

So by buying the descendant of CNCP, MTS would get nationwide presence at a
very low cost when you compare what Bell and Telus must do to duplicate each
other's networks and they still don't have presence everywhere.

It would be most interesting to be a fly on a board room wall at MTS to find
out the *REAL* reasons for this move.

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