MANITOBA TELECOM SERVICES INC. $27 - Toronto symbol MBT

MANITOBA TELECOM SERVICES INC. $27 (Toronto symbol MBT; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 78.5 million; Market cap: $2.1 billion; Priceto- sales ratio: 1.2; Dividend yield: 4.8%; TSINetwork Rating: Average; www.mtsallstream.com) recently completed a strategic review of its operations. As a result, it now plans to cut 25% of the workforce at its Allstream division, which sells telephone, Internet and other communication services to businesses across Canada.

In addition, the company will cut Allstream’s capital spending by 20% to 30% in 2015. Manitoba Telecom expects these moves to save it $50 million annually by the end of 2016.

In addition, it will contribute $120 million to its underfunded employees’ pension plan, eliminating the need for additional payments over the next two years. The company has also cut its dividend by 23.5%. The new annual rate of $1.30 yields 4.8%.

These moves will free up cash Manitoba Telecom can use to expand its faster-growing wireless and Internet businesses. Shrinking Allstream will also make the division more appealing to a potential buyer.

Manitoba Telecom is still a hold.

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