Industry Canada rejects Allstream acquisition by Accelero

Wireless antenna

The Canadian government does not appear to be fond of telecom mergers. Following its rejection of the TELUS-Mobilicity acquisition in early June, it has now denied a second deal involving a wireless carrier. Last May, MTS (Manitoba Telecom Services) agreed to sell its business services unit, Allstream to Accelero Capital Holdings for CA$520 million. Industry Canada yesterday announced that it had rejected the proposed acquisition over “national security provisions.”

According to Industry Minister James Moore:

“The Government of Canada has concluded its review of Accelero Capital Holdings’ proposed acquisition of the Allstream division of Manitoba Telecom Services Inc. (MTS) under the national security provisions of the Investment Canada Act. The result of this review is that the transaction will not proceed.

“MTS Allstream operates a national fibre optic network that provides critical telecommunications services to businesses and governments, including the Government of Canada.”

MTS responded by saying that it was “extremely surprised and disappointed by this decision.”

“We pursued this transaction, with Accelero as our partner, in direct response to the Federal Government’s stated policy objectives of increasing foreign investment and driving greater competition in Canada’s telecommunications sector, so this result is very difficult to understand or accept,” said MTS Allstream CEO, Pierre Blouin.

Accelero Capital is headed up by Naguib Sawiris who was previously involved in the launch of WIND Mobile in Canada.

The Canadian government may have loosened by foreign ownership rules in the telecom sector in recent years but it has certainly not flung the doors wide open.

Sources : Industry Canada // MTS