The Successful Investor Hotline – Friday, October 11, 2013

Article Excerpt

MANITOBA TELECOM SERVICES INC., $29.00, Toronto symbol MBT, fell 11% this week after the federal government blocked its recent deal to sell its Allstream subsidiary to a private company controlled by an Egyptian billionaire. Allstream provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada, as well as government agencies. Ottawa felt that selling Allstream to a foreign investor could risk national security. Manitoba Telecom planned to contribute $130 million of the $405 million net proceeds from the sale to its underfunded employees’ pension fund. It would have also paid back $70 million of short-term loans it took out to fund recent pension contributions. If you disregard costs related to the sale, Manitoba Telecom now expects to earn $1.15 to $1.45 a share in 2013. Without Allstream, it probably would have earned around $1.75 a share. The stock trades at a high 22.3 times the midpoint of the new range. Manitoba Telecom also expects its 2013 cash flow, after capital…