MONTREAL - Manitoba Telecom Services Inc. (TSX:MBT), after seeing its fourth-quarter earnings take a major hit, said Thursday it intends to make its MTS Allstream business unit more competitive with a targeted expansion of its fibre network and new wireless product offerings.
CEO Pierre Blouin said up to $15 million will be set aside to expand Allstream's IP fibre network in specific areas and in markets where it has a proven track record to make it more competitive.
"So our plan for 2010 is to continue to strengthen Allstream and strategically invest in its fibre network to improve profitability and support future growth," Blouin told analysts.
"These investments are not done with the philosophy of build it and they will come. They are highly focused."
The Winnipeg-based telecom company said Thursday that fourth-quarter profit was almost halved to $6.7 million.
Diluted earnings per share in the quarter were 10 cents, down from 21 cents in the same quarter in 2008, the company said.
During the recession, companies cut back on some communications services, which affected the corporate business of many of Canada's telecom and wireless operators.
Allstream, the former AT&T Canada, was hurt in the long-distance and legacy data services, Blouin said. The unit has about 3,000 employees.
He said a wireless product offering later this year will help Allstream build on its wireline strengths by offering a bundle of wireless applications and wireline products for its business customers.
"While not expected to be a large play, our planned wireless offerings represent a niche opportunity, delivering growth while enhancing Allstream's ability to expand and defend its existing wireline revenue base."
He noted his company won't have to build any wireless infrastructure because of its arrangement with Rogers Communications Inc. (TSX:RCI.B).
MTS is building an advanced wireless network with Rogers and will get access to the national Rogers network as a roaming partner.
The total investment in Allstream wireless would be about $25 million, including customer acquisition costs, over about three years, Blouin said.
"We're basically adding a product line to Allstream to complement its product offering, not launching a new business."
While Allstream didn't deliver expected results, Blouin said that high-speed Internet, TV services and converged IP services fared well in 2009, collectively growing five per cent.
The telecom company also made cost reductions resulting in $58.4 million in annualized savings, he added.
In other financial results for the telecom company, revenue for the quarter was $452 million, down from $463 in the same period a year ago.
The company announced a dividend for the first quarter of 2010 of 65 cents per share.
Shares in Manitoba Telecom Services closed down 22 cents at $32.71 on Thursday on the Toronto Stock Exchange.