Tighter focus will benefit Manitoba Tel

Article Excerpt

MANITOBA TELECOM SERVICES INC. $33 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 67.7 million; Market cap: $2.2 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.2%; TSINetwork Rating: Average; www.mts.ca) recently agreed to sell its Allstream subsidiary to Accelero Capital Holdings, a private firm controlled by Egyptian billionaire Naguib Sawiris. In 2004, the company paid $1.6 billion for Allstream, which provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada. The sale price is $520 million. If you disregard various closing costs, Manitoba Telecom will receive $405 million. The company expects to close the deal by the end of 2013. Manitoba Telecom will use the cash to contribute $130 million to its underfunded employees’ pension fund. It will also pay back $70 million of short-term loans it took out to fund recent pension contributions. As well, Manitoba Telecom will continue to fund the Allstream pension plans and will contribute $40 million to them when the…