Manitoba Tel Looks at Options
In announcing a broad “business review”, Manitoba Tel has conceded that its troubled Allstream division needs some serious attention, which could mean even more cost-cutting or scaling back operations or a sale, although the last option seems remote unless Allstream is literally given away. I hate to say I told you so but the decision to buy Allstream last year for $1.7-billion was a bad strategic move that made absolutely no sense at the time. If ex-CEO Bill Fraser was really intent on transforming MTS into a national player, he should have acquired Microcell before Rogers got its hand on the fourth-largest wireless carrier and quickly shrank the competitive landscape to three players. MTS may have been forced to over-pay for Microcell but at least it would have acquired a company operating in a fast-growing marketplace with a strong brand name, rather than a second-tier player in an ultra-competitive business. MTS would have also picked up Microcell's stake in Inukshuk, which has a license to launch a Wi-Max network across the country. Not only did MTS make this move, but it sold its stake in Inukshuk to Rogers, which means the possiblity of a third broadband service provider in many markets disappeared. If anything, MTS CEO Pierre Blouin may find himself into a no-win situation. No matter what he does to try to fix Allstream, there may not be a way to stop the Titantic from sinking.
February 1st, 2006 at 12:40 pm
Makes one wonder whether Rogers would be interested in a firesale purchase of Allstream.
In terms of scaling down, it might make sense for a deep overhaul of Allstream's product portfolio, but will that be enough to turn the business?
February 1st, 2006 at 2:01 pm
Allstream has only 3 problems: it can't deliver what it sells, it can't fix it when it breaks, and it can't bill for it either. It's been that way since George Harvey unleashed the sell anything to everybody mentality in '89/'90 and no one has fixed it since. Burn it down; no salvage value.
February 3rd, 2006 at 12:07 am
Allstream's biggest current problem is the loss of the Rogers' LD revenue. It's amazing that they would not realize this business would leave eventually and plan to cushion the blow. Now it's too late to do anything except clean out the company. I can’t see any takers even at firesale prices although Telus might be able to pick up some pieces.