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Income Trust? Ha!

You have to like the nerve of Manitoba Telecom Services CEO Bill Fraser. Just when you thought he was destined to head up a boring, cash-producing income trust telecom, he pulls the $1.7 billion acquisition of Allstream out of his hat. Surprise, surprise to all those folks happily counting on MTS becoming an income trust. Who would have thought Fraser had aspirations of grandeur and growth?
In addition to the folks – Enterprise Capital, Highfield Capital, etc. – pissed at Fraser for skewering their income trust plans, how do you think the fine folks at BCE feel? When BCE acquired a 20% stake in MTS in 1999, the idea was it would keep rivals – can you say Telus? – - from making a takeover run at MTS. I guess they didn't count on MTS doing the buying.
So what happens now? As much as Fraser and Allstream CEO John McLennan were bubbling about their deal, if BCE and Enterprise Capital join forces, all of a sudden you'll have shareholders holding 30% of MTS shares opposed to the deal. Add in a few more of “the disappointed” and MTS may be looking at an income trust after all. Perhaps MTS had an inkling this was a possibility given there is no break-up fee if the deal falls apart.
Keeps watching 'cause this thing ain't over!

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