Accelero proposed far-reaching, comprehensive and binding undertakings to the Canadian government, including a commitment to invest USD 300 million over three years to pursue Allstream's capital plans. The government rejected the deal on national security concerns, and also rejected an offer from MTS and Accelero to take whatever actions were necessary to address government concerns.
As a result of the fall-out, the Allstream division will once again be reported as part of MTS Allstream consolidated results. The operator is now guiding for 2013 EBITDA at CAD 540-570 million instead of CAD 590-630, earnings per share at CAD 1.15-1.45 instead of CAD 1.75-2.15, and free cash flow at CAD 110-140 million instead of CAD 160-200 million. Revenues are seen unchanged at CAD 1.63-1.73 billion and capex unchanged at 17-19 percent of revenues.
Results will be impacted by a one-off cost of CAD 35 million connected to the lost transaction. Excluding the impact of the additional transaction and restructuring costs, results were otherwise expected to be near the lower end of the original guidance ranges. The MTS subsidiary, which has not been impacted, continues to generate increased cash flow and is performing in line with expectations.
