MANITOBA TELECOM SERVICES INC. $34.01 - Toronto symbol MBT

MANITOBA TELECOM SERVICES INC. $34.01 (Toronto symbol MBT; Shares outstanding: 64.7 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 5.0%; www.mts.ca) gets 53% of its revenue from its MTS division, which mainly sells traditional and wireless telephone services to consumers in Manitoba. The remaining 47% comes from its Allstream division, which sells communication services to businesses across Canada. In the three months ended March 31, 2011, Manitoba Telecom’s revenue fell slightly, to $439.3 million from $442 million a year earlier. The MTS division’s revenue rose 3%. Allstream’s revenue fell 4.5%, mostly because it is closing less-profitable businesses. Earnings per share jumped 59.5%, to $0.67 from $0.42. The gains came from cost-saving measures, including layoffs. More important, its restructured Allstream division is showing improved results. Manitoba Tel has long been an attractive takeover target for a competitor, such as BCE or Telus. As well, the new Conservative majority government is open to the idea of allowing foreign ownership of telecommunications companies. That could spur takeover interest from foreign companies. Manitoba Telecom is a buy.