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Manitoba Tel says business division poised for growth

A telecom worker lays fibre-optic cable


Manitoba Telecom Services Inc. said Thursday that it expects strong growth in the coming years led by its Internet-protocol network services for businesses.

Chief executive officer Pierre Blouin said that by rolling out Internet Protocol services at a reasonable cost, its business division Allstream should be able to sustain "double-digit" growth.

"This is not a stretch as the Canadian IP business market is expected to grow by 10 to 15 per cent over the same period," Mr. Blouin said after the telecom company reported a higher fourth quarter profit of $8.1-million.

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Allstream's IP services now represent 27 per cent of the division's total revenue. Its revenue grew 9.7 per cent or $5-million in the quarter, he told analysts on a conference call to discuss the financial results.

Manitoba Telecom has IP connectivity to deliver voice and data requirements for businesses located across the country. It also offers IP TV to its residential customers.

Mr. Blouin said that over the course of the next few years an average of 40 to 50 multi-tenant buildings will be connected every quarter to its IP network.

RBC Capital Markets analyst Jonathan Allen said Allstream's increased IP revenue is a "positive step in the right direction."

But Allstream has said it expects a slow recovery and doesn't expect positive growth until 2012, Mr. Allen said in a recent research note.

Manitoba Telecom owns the province's dominant phone, wireless and Internet company as well as the MTS Allstream, a national telecom services provider to businesses.

In its financial results, the Winnipeg-based telecom company reported its overall fourth-quarter profit was up from the last three months of 2009, when it booked a $2.3-million loss from discontinued operations.

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Profit and comprehensive income for the three months ended Dec. 31, 2010, totalled $8.1-million or 12 cents per share, compared with $6.7-million or 10 cents in the fourth quarter of 2009.

In contrast, the more closely watched results from continuing operations were 48 cents per share in earnings and $444.5-million in revenue, down from 59 cents per share and $453.8-million respectively.

The revenue was slightly below a consensus analysts' estimate of $445-million compiled by Thomson Reuters. Earnings per share from continuing operations were estimated at 48 cents with a low of 43 cents to a high of 65 cents.

Mr. Blouin also said he supports "relaxing" foreign ownership rules for Canadian telecom companies.

"I think that the recent decision regarding Globalive demonstrates that it is now time for the federal government to clarify the rules for everyone, to open up ownership restrictions and to provide Canadians with the resulting competition."

A recent Federal Court ruling quashed Industry Minister Tony Clement's decision in 2009 to overrule the CRTC and its assessment that Globalive, largely financed by Egyptian telecom Orascom, wasn't Canadian owned and controlled.

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Mr. Clement is currently reviewing the court decision.

MTS Allstream has announced it will cut costs by up to $35-million in 2011, but job losses aren't expected to be part of the efforts to trim expenses.

The company's MTS division, which provides Internet-Protocol TV, Internet and mobile phone services, will launch an advanced wireless network at the end of March. The network was jointly built with Rogers Communications Inc.

MTS has said it has 55 per cent of the wireless market share in Manitoba and is competing against Rogers and Telus Corp. In the TV market, it has been going head-to-head against Shaw Communications Inc., its biggest competitor.

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