Outgoing Allstream president Dean Prevost probably headed homeward

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Outgoing Allstream president Dean Prevost is likely westward bound.

Manitoba Telecom Services Inc. surprised investors Tuesday by announcing that Mr. Prevost, a highly-respected telecom executive, would be leaving the company on Jan. 17 to "pursue other interests." And that change of scene may well include a move to Calgary.

"He felt that it was time to move to something else and spend more time with his family," Pierre Blouin, chief executive officer of MTS, said in a telephone interview on Tuesday. "I know we often say that, but I think he is really doing that. I think he's considering moving back to Calgary where he is from and his family is."

Mr. Prevost, who has spent 17 years at the company, began itching for a change after the federal government rejected Accelero Capital Inc.'s $520-million offer to purchase Allstream, MTS's business services division, due to unspecified national security concerns in October.

Accelero is an investment company controlled by Egyptian telecom tycoon Naguib Sawiris, the man who also bankrolled the launch of Wind Mobile Canada. Ottawa's decision to turn down the deal came as a shock to both Allstream and Accelero. Although executives remain in the dark about Ottawa's specific concerns, sources said federal officials raised questions about Mr. Sawiris's previous investments in North Korea, specifically in the Koryolink cellular network, during their review.

"After the transaction got rejected, he's been thinking about that [leaving the company]. We've been talking about it. And over the holidays, I guess, he's made up his mind and we came to an arrangement," added Mr. Blouin.

When asked if Mr. Prevost had received a new job offer in Calgary, he replied: "I am assuming not, but I don't know."

Michael Strople, Allstream's chief operating officer, will become president upon Mr. Prevost's departure. Analysts suggested that Mr. Prevost leaves "big shoes to fill."

"We believe Dean Prevost was highly regarded within the telecom industry and that his departure will be viewed as an incremental negative by the market," wrote Drew McReynolds, an analyst with RBC Dominion Securities Inc., in a note to clients.

"While details of Dean's departure are unknown at the moment, we do not believe his departure is indicative of renewed negative trends at Allstream (versus current expectations), or will be a prelude to a material change in strategy at Allstream (facilitating the transition). We believe Dean's departure and desire to pursue other interests is consistent with management's previous commentary that a sale of Allstream is not imminent."

Mr. Strople joined Allstream in 2005. He has previously worked as an industry consultant and held various roles at Nortel Networks.

Investors should expect no change in Allstream's business strategy, Mr. Blouin said, noting there are no plans to pursue another sale of the division at this time.

"Unless the government clarifies its ownership rules, it is very challenging to launch ourselves in a transaction. So for us, we are very focused on getting Allstream to perform like it was prior to announcement of the transaction. We're already making great progress," he added.

Allstream's network includes roughly 30,000 kilometres of fibre concentrated in major Canadian cities, allowing it to offer business customers high-speed data services along with voice-based products such as long distance.

"We're getting close to being 50 per cent of the business moving to IP [Internet protocol] – moving to products that are not going to be declining," added Mr. Blouin. "So, we're expecting better days for Allstream."