Ottawa kills MTS deal

Article Excerpt

MANITOBA TELECOM SERVICES INC. $29 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 67.8 million; Market cap: $2.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 5.9%; TSINetwork Rating: Average; www.mts.ca) fell 10% after the federal government blocked its recent deal to sell its Allstream subsidiary to an Egyptian billionaire. Allstream provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada, as well as government agencies. Ottawa felt that selling Allstream to a foreign investor could risk national security. If you disregard costs related to the sale, Manitoba Telecom now expects to earn $1.15 to $1.45 a share in 2013. Without Allstream, it probably would have earned around $1.75 a share. The stock trades at a high 22.3 times the midpoint of the new range. The company also expects its 2013 cash flow, after capital expenditures, to fall to around $125 million from its earlier forecast of $180 million. That’s still enough to cover the $1.70-a-share…