MTS to Focus On Continued Transformation, Free Cash Flow Improvements
TORONTO and WINNIPEG, Jan. 15, 2016 /CNW/ - Manitoba Telecom Services Inc. (TSX:MBT) ("MTS" or "the Company") today announced it has completed the sale of Allstream Inc. ("Allstream") to Zayo Group Canada Inc., a wholly-owned subsidiary of Zayo Group, LLC, a leading provider of communications infrastructure and network-neutral colocation and connectivity, in an all-cash transaction for $465 million.
"We are pleased to successfully conclude this transaction and fully deliver on our commitment to complete the turnaround and planned exit from Allstream, with the value of the business fully realized," said Jay Forbes, President and CEO. "The closing of this transaction represents an important milestone in delivering on the commitments we have made to our shareholders. With this exit from Allstream, MTS is in an improved position to continue our transformation to become a true, customer-first organization, leveraging our tremendous assets and unique position to deliver strong results in a competitive market."
Forbes noted the transformation of MTS is already well underway, with early initiatives focused on funding the journey expected to generate more than half of the $100 million in annual free cash flow improvements following a thorough review of the MTS business throughout 2015 and the launch of a comprehensive multi-year transformation program.
"As I said when the sale of Allstream was announced, MTS has a new team, a new strategy and a new future," added Forbes. "Our transformation program has generated strong momentum that we are carrying into 2016. Our previously announced refresh of the MTS brand is one of several transformation program initiatives and will roll out into the market shortly."
After closing costs, MTS expects to realize net proceeds of approximately $420 million, approximately $15 million more than the anticipated net proceeds of the previously attempted sale of Allstream. The Company is finalizing the evaluation of its available capital allocation options, including the retirement of debt incurred to fund its pension funding pre-payment and spectrum acquisitions completed in 2015. Specific details on use of proceeds will be provided on February 4, 2016 in conjunction with the release of the Company's 2015 fourth-quarter and annual results.
MTS (TSX:MBT) is Manitoba's leading communications and information solutions company, connecting people and places with wireless, high-speed Internet, TV, home phone and security services. MTS also offers a full suite of business solutions, including information technology, data storage and cloud computing through EPIC Information Solutions and MTS Data Centres. Founded more than a century ago and deeply rooted in the community, MTS provides grants, scholarships, sponsorships and volunteer support to youth-serving organizations across the province through MTS Future First. For more on MTS' products and services, visit mts.ca.
Forward-looking Statements Disclaimer
This news release includes forward-looking statements and information (collectively, the "statements") about the sale of Allstream, use of proceeds, the competitive state of Canadian telecommunication markets and the Company's future financial results and its ability to generate free cash flow in the future, all of which are subject to risks, uncertainties and assumptions. As a consequence, actual results in the future may differ materially from any expectation, conclusion, forecast or projection in such forward-looking statements. Therefore, forward-looking statements should be considered carefully and undue reliance should not be placed on them. Examples of statements that constitute forward-looking information may be identified by words such as "believe", "expect", "project", "should", "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 include, but are not limited to, matters identified in the "Material assumptions" section and the "Risks and uncertainties" section of the Company's 2014 Annual Management's Discussion & Analysis which is available on sedar.com.
Please note that forward-looking statements reflect Management's expectations as at the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE Manitoba Telecom Services Inc.
For further information: Manitoba Telecom Services Inc.: Media: Melanie McKague, Corporate Communications, 204-958-3230, [email protected]; Investors: Brenda McInnes, Investor Relations, 204-941-6205, [email protected]