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The MTS building in downtown Winnipeg in this file photo.Joe Bryksa/The Canadian Press

Manitoba Telecom Services Inc. has hired advisers and wants to speak with potential buyers of its Allstream business in the second half of the year.

The company has been working to turn the asset around since new CEO Jay Forbes took over earlier this year, slashing jobs and capital expenditures at the national enterprise IP services division.

"With restructuring largely complete and Allstream positioned to be free cash flow positive for 2015 and beyond, management has shifted focus to manage a fully planned exit of this business, one that will maximize value while promoting deal certainty," MTS said in a statement Thursday.

It added that it "has a clear understanding of the approval process and requirements," and is working on a list of possible buyers it plans to "engage with in the second half of this year."

Mr. Forbes said on a conference call that the company has already received "strong interest from both strategic and financial buyers," suggesting some players that might not have considered the asset the last time it was for sale might be looking at it now.

MTS previously struck a deal to sell Allstream to Egyptian firm Accelero Capital Inc. for $520-million in 2013, but the federal government blocked the deal citing unspecified national security concerns.

The company has hired TD Securities and CIBC World Markets to advise on the sale, said chief corporate and strategy officer Paul Beauregard.

"Management is intent on repositioning Allstream for an eventual sale, which we believe could receive increased interest from buyers as the business becomes sustainably cash flow positive," Desjardins Capital Markets analyst Maher Yaghi said in a research note Thursday.

Macquarie Capital Markets' Greg MacDonald was less optimistic, suggesting the company could have a hard time finding a buyer because of competition concerns that may limit the Canadian pool of potential suitors. "Our thesis on [MTS] is that any sale will be more challenging and yield a lower price than the market believes."

The company said Thursday that as of June 30, 242 employees had left Allstream and a further 263 have received working notice and will leave within the next 14 months. It expects the staff reductions to result in annualized savings of $36-million by the end of the year and is targeting $50-million in annual savings over time.

MTS, whose primary business is its full-service retail and enterprise telecommunications operation in Manitoba, also announced its second-quarter earnings Thursday. It reported revenue of $398-million, in line with analyst expectations.

Profit dropped 64 per cent to $10.4-million or 13 cents a share, which the company said was primarily because of restructuring costs as well as an increased depreciation and amortization expense it booked to reflect the early end of some three-year wireless contracts due to the national wireless code, which came into full effect on June 3.

Revenue at the MTS division was up, but earnings before interest, taxes, depreciation and amortization (EBITDA) dipped.

"We believe the better top-line performance was supported by price increases in Internet and TV and increasing data usage in wireless," said Barclays Capital analyst Phillip Huang. "However, subs were weaker than expected," he added, noting that the company added 1,000 Internet customers and lost 2,000 television subscribers. It also lost 3,000 wireless users in the quarter as it continues to face competition from the three national carriers for market share.

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