MTS Allstream Announces 2008 Financial and Operating Outlook



    - Expects Solid Growth in Revenues, EPS and EBITDA -

    This news release contains forward-looking statements. For a description
    of the related risk factors and assumptions, please see the section
    entitled "Forward-Looking Statements Disclaimer" later in this news
    release.

    
    2008 Outlook:
    -  Overall growth of 1% to 3% for revenue and EBITDA
    -  Strong EPS growth expected in 2008
    -  Continuing double-digit increases in growth services
    -  Enterprise Solutions division to grow revenue and EBITDA by 1% to 3%
    -  Consumer Markets division expected to continue to outperform with
       industry-leading margins
    

    WINNIPEG, Dec. 7 /CNW/ - Manitoba Telecom Services Inc. ("MTS" or the
"Company") (TSX: MBT) said today that it expects to deliver solid increases in
revenue, earnings per share (EPS), and EBITDA(1) in 2008.
    "MTS has a very positive outlook for 2008 and beyond. For the first time
since 2004, MTS expects to achieve overall revenue growth for the Company and
each of our divisions, making 2008 the year we set MTS on a new growth
trajectory. The key will be our continued superior execution on a set of
simple and effective strategies built around our customer focus, growth
products, track record of innovation, and ongoing commitment to operational
excellence," said Pierre Blouin, Chief Executive Officer.
    "Clearly, our strategy is working. In 2007 we have twice increased our
earnings per share target, and we are positioned to achieve the upper end of
our 2007 guidance range for EBITDA and free cash flow(2). We continue to see
opportunities for additional growth and greater profitability in 2008 and
beyond. For 2008, we expect to achieve overall growth rates of 1% to 3% for
both revenue and EBITDA, with even stronger gains in EPS as a result of the
Company's improved operating performance."
    MTS said it expects EPS to grow strongly in 2008 and be within the range
of $2.95 to $3.15, based primarily on improved operating performance.
    Blouin added, "Growth is expected to accelerate throughout 2008 and will
come from a number of sources. We expect our five major growth services to
continue growing at double digit rates, and have forecast growth services to
represent approximately 45% of total revenue in 2008, compared with 39% in the
first three quarters of 2007. Consumers and business customers are
increasingly choosing MTS across the full spectrum of our services. Our new
mid-market and small business initiatives have been well received in the
market and are delivering higher than expected margins. And we remain
committed to continued discipline on cost management with an additional
$20 million to $30 million cost savings in 2008. We have delivered on our
promises for seven consecutive quarters and we fully expect to do so again in
2008."
    MTS's major growth products include wireless, high-speed Internet,
digital television, converged Internet protocol ("IP") and unified
communications.

    Outlook

    
    -  Continuing Operations(3)(4)

    -------------------------------------------------------------------------
                           2007                   2008           Up/Down
    -------------------------------------------------------------------------
    Revenues       $1.875 B to $1.925 B   $1.920 B to $1.980 B      Up
    -------------------------------------------------------------------------
    EBITDA         $625 M to $655 M       $660 M to $680 M          Up
    -------------------------------------------------------------------------
    EPS            $2.65 to $2.85         $2.95 to $3.15            Up
    -------------------------------------------------------------------------
    Free Cash
     Flow          $240 M to $270 M       $250 M to $280 M          Up
    -------------------------------------------------------------------------
    Capital        14% to 15%             14% to 15%
     Expenditures  of revenues            of revenues
    -------------------------------------------------------------------------
    

    MTS expects to see its most significant improvements in its Enterprise
Solutions division, which operates nationally under the Allstream brand. The
Company expects both revenues and EBITDA for this division to grow by 1% to 3%
in 2008. Enterprise Solutions expects continuing growth in its key growth
services of converged IP and unified communications. The business is also
benefiting from the success of its initiative to serve mid-market business
customers, launched in the first quarter of 2007. As of the end of the third
quarter, 2007, the program has contributed new contracted sales of
$23 million, which brings the value of the division's new contracts to more
than $200 million.
    For its Consumer Markets division, MTS has achieved industry-leading
performance in its residential customer base on the strength of the superior
customer value proposition provided by its bundle strategies. MTS expects this
trend to continue in 2008. The Company's ability to retain and win back
customers will be further enhanced by the Canadian Radio-television and
Telecommunications Commission's decision to grant forbearance in specific
Manitoba markets.
    MTS expects higher EBITDA in 2008 to be driven by increased revenues and
additional operating efficiencies. In the first nine months of 2007, the
Company achieved cost savings of $33 million on an annualized basis, in line
with its targeted savings for 2007. For 2008, MTS targets additional cost
savings of $20 to $30 million.
    Benefiting from significant past investments in its network
infrastructure and a strong balance sheet, the Company expects to maintain
capital expenditures at 14% to 15% of revenues while also achieving moderate
growth in free cash flow.
    MTS noted it continues to have unused and available tax deductions that
will shelter the Company from paying cash taxes until 2014.

    Live Audio Webcast

    The public and media are invited to join today's Conference Call via live
audio Webcast on MTS Allstream's Web site (www.mtsallstream.com) beginning at
10:45 a.m. Eastern time on December 7, 2007. The Webcast can be accessed by
visiting the Investors Section of the MTS Allstream Web site. Following the
event, the Webcast and presentations will be archived on the Web site. Please
note that media participants are invited to participate on the call on a
"listen only" basis.

    About MTS Allstream

    MTS Allstream Inc. is a wholly owned subsidiary of Manitoba Telecom
Services Inc., and is one of Canada's leading national communication solutions
providers, delivering innovative products and services through the Enterprise
Solutions and Consumer Markets divisions. The Enterprise Solutions division,
which operates under the Allstream brand nationally and under the MTS brand in
Manitoba, is a leading competitor in the national business and wholesale
markets. This division offers customers a portfolio of solutions tailored to
the needs of medium and large businesses looking for success in a world of
rapidly evolving technology - Internet protocol-based communications, unified
communications, voice and data connectivity services. The Consumer Markets
division leads every telecommunications market segment in Manitoba, delivering
a full suite of next generation wireless, high-speed Internet and data,
digital television and wireline voice services under the MTS brand, as well as
small business services across Canada under the Allstream brand, and security
and alarm monitoring services through AAA Alarm Systems Ltd., an affiliate of
MTS Allstream which also operates in other western provinces. MTS Allstream's
extensive national broadband fibre optic network spans more than
24,300 kilometres, and provides international connections through strategic
alliances and interconnection agreements with other international service
providers. Manitoba Telecom Services Inc.'s common shares are listed on The
Toronto Stock Exchange (trading symbol: MBT). For more information, please
visit: www.mtsallstream.com.

    Forward-Looking Statements Disclaimer

    This news release includes forward-looking statements and information
(collectively, the "statements") about our corporate direction, business
opportunities, financial objectives, and future financial results and
performance that are subject to risks, uncertainties and assumptions. As a
consequence, actual results in the future may differ materially from any
conclusion, forecast or projection in such forward-looking statements.
Forward-looking statements reflect our expectations as at December 7, 2007.
Examples of statements that constitute forward-looking information may be
identified by words such as "believe", "expect", "project", "anticipate",
"could", "target", "forecast", "intend", "plan", "outlook", "see", "set",
"pending", and other similar terms. Factors that could cause anticipated
opportunities and actual results to differ materially from those expected, and
the material factors or assumptions that were applied in drawing a conclusion
or making a forecast or projection set out in such forward-looking statements,
include, but are not limited to, the items identified under "Material
Assumptions", below. We disclaim any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Additional information relating to our Company,
including our Annual Information Form, is available on SEDAR at www.sedar.com.
This news release and the financial information contained herein have been
reviewed by the Audit Committee of our Board.
    Factors that could cause actual results to differ materially include, but
are not limited to, the intensity of competitive activity from both
traditional and new competitors (competitive conditions); the ability to
retain major customers (customer relationships); decisions by the federal
regulator that affect our ability to compete effectively or to enter into new
business opportunities (developments in federal regulation); general economic
and market conditions and the level of consumer confidence and spending, and
the demand for, and prices of, our products and services (market conditions
and economic fluctuations); the ability to manage labour relations effectively
(collective agreements); the ability to anticipate, and respond to, changes in
technology (technology); and other risk factors listed from time to time in
our comprehensive public disclosure documents, including our 2006 Annual
Report and in other filings with the Canadian securities regulatory
authorities. Unless otherwise stated, all amounts are expressed in Canadian
dollars.
    For further information, refer to the "Risks and Uncertainties" sections
in our 2006 annual MD&A and our interim MD&As for the first, second and third
quarters of 2007.

    Material Assumptions

    A number of assumptions were made by the Company in preparing its Outlook
and making certain other forward looking statements, including but not limited
to the following:

    Economic Assumptions

    The general economic activity in the national and regional markets in
which the Company operates influences our performance. Consistent with the
Manitoba Department of Finance Survey of forecasts, which includes the
Conference Board of Canada, MTS Allstream has assumed a national growth rate
of approximately 3% for gross domestic product.

    Market Assumptions

    As competition in the overall marketplace continues, the broad market
segment trends that have taken shape in recent years will also persist in
2008. Growth in service areas such as Internet, digital television, and
IP-based next generation services, including unified communications,
specifically for business customers, is expected to continue at similar levels
in 2008. The company is assuming that there will not be any material changes
to the continued growth of wireless services in 2008 notwithstanding
anticipated changes to relationships and market dynamics. The competitive
pressure experienced in traditional legacy services, which include data
connectivity, local and long distance services will continue in similar trends
as it did in 2007. Likewise, we anticipate that customer demand will continue
to migrate to next generation services. To face the continued strong
competition in the enterprise markets, MTS Allstream has been refining its
market focus, creating innovative IP solutions, reducing its cost structure
and investing selectively in high-margin opportunities. Competition from the
incumbent cable operator is expected to continue in the Manitoba residential
market, the Company is confident that it has prudently prepared its operations
and strategies to counter these threats. Through MTS Allstream's broadband
network initiative and its residential service offerings, which include local
and long distance, wireless, Internet, digital television and alarm services,
the Company believes it is well-positioned to compete successfully.
    In addition, investors should read the forward looking statements
disclaimer above, for the various factors, including economic, competitive,
regulatory and Company specific, that could cause actual future financial and
operating results to differ materially from the forward looking information in
this news release.

    
    -------------------------------------------------------------------------
    (1) EBITDA is defined as earnings before interest, taxes, amortization,
        other income and discontinued operations. It should not be construed
        as an alternative to operating income or to cash flows from
        operations as a measure of liquidity.
    (2) Free cash flow is defined as cash flow from operating activities,
        less capital expenditures, and excluding changes in working capital.
        It is the amount of discretionary cash flow we have for purchasing
        additional assets beyond our annual capital expenditure program,
        paying dividends, buying back shares, or retiring debt.
    (3) Continuing operations for 2007 include synergies but exclude
        restructuring costs, certain tax recoveries, the retroactive
        adjustment related to Telecom Decision CRTC 2007-10, the impact of
        changes in income tax rates on our tax asset, solvency funding to our
        pension plans, and a reduction or tax asset valuation allowance and
        other adjustment. Continuing operations for 2008 include synergies
        and excludes solvency funding to MTS pension plans. MTS provides
        information on continuing operations in order to assist investors in
        understanding the underlying financial performance.
    (4) The 2008 outlook excludes any potential wireless expansion strategy
        outside of Manitoba.
    

    %SEDAR: 00003357E




For further information:

For further information: Investor contact: Ian Chadsey, Vice-President
Investor Relations, (204) 941-8283, investor.relations@mtsallstream.com; Media
contact: Greg Burch, Manager Corporate Communications, (416) 345-3576 or (204)
941-8576, media.relations@mtsallstream.com

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