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Manitoba Tel is trying to shake off a gloomy narrative.

But as it does so, the Winnipeg-based telecom provider has to deal with several unfortunate realities, none of which are management's fault. It's stuck with a mix of telecom services overly reliant on eroding legacy landline services, and enterprise customers, which it says pulled back on spending throughout the recession. And it's facing intense competition from Shaw Communications Inc. , which has been extremely aggressive in MTS's territory.

But the company is still trying: It is finishing the construction of a next-generation wireless network and setting out on a $125-million, multi-year plan to build a fibre-to-the-home network that will see fibre-optic cable laid to more Manitobans' doors and allow MTS's Internet-based TV (IPTV) service in more communities. On Friday, the company slashed its dividend by 35 per cent in order to do so.

These were all necessary moves, analysts say, but there is still a lot of uncertainty - not to mention negativity - swirling around this stock. Because Shaw doesn't look like its about to stop being aggressive, some analysts doubt the harsh dividend cut is deep enough; and a potentially lucrative sale of MTS Allstream, the company's enterprise division, will have to wait until Canada's politicians agree on changes to the sector's current foreign ownership restrictions.

The company's second quarter results, reported on Friday, were in line with or beat analysts already low expectations, but Pierre Blouin, MTS's chief executive officer, admitted that they were "frankly, below our own expectations."

In an interview, Mr. Blouin said sustainability was at the "forefront" of the decision to cut the dividend to $1.70, Shaw's pricing was "irrational" and "unsustainable" since it was likely coming in below costs, and that new investments would help extend MTS's ability to offer multiple services across more of Manitoba.

"We're expanding our footprint outside of Winnipeg," Mr. Blouin said. "By putting fibre in, we will be in a position to create growth by delivering television service and broadband in cities that we couldn't in the past."

But analysts remain skeptical of the company's announcements, some on several fronts. Canaccord Genuity analyst Dvai Ghose said experiences in the United States, with Verizon Communications Inc. and AT&T Inc., have shown fibre deployments rarely stem the erosion of legacy landline business, which, at MTS and others, is deteriorating fast.

"For some reason, people are buying into this story that their cash flows will improve next year, I'm not quite sure why," Mr. Ghose said. "Quite frankly, it's just got way too much legacy exposure."

The fate of MTS's Allstream division is another big question mark - and potentially a very positive one. Greg MacDonald of National Bank Financial Inc. says that anything beyond the status quo, up to and including a sale, could be a "catalyst for the stock." Mr. Blouin says the division has much more value to American companies.

"If foreign ownership is lifted, we'll give Allstream an opportunity to get closer to some of these companies that have a lot of customers in Canada," he said. "We were close to AT&T - owned by AT&T - at one point. AT&T left because they couldn't get close enough, and influence the company enough, to serve their customers in Canada. We'll see, in the future, if that can benefit Allstream."