Manitoba Telecom Services MBT Cautious 2010 Outlook

admin — Mon, 08 Feb 2010 20:33:53 +0000

Manitoba Telecom Services (MBT): $32.71 – Cautious 2010 Outlook
Underperform, Average Risk, Price Target: $31.00 (prev. $33.00)
Adjusting for the sale of MTS’ IT consulting business, fourth quarter results were a touch on the weak side, but close to expectations. Consolidated EBITDA of $146MM (-7.6% yr/yr) were lower than the $152MM expected. MTS’ 2010 guidance was below RBC CM’s expectations, as a result the firm revised down its EBITDA, EPS, free cash flow forecasts. Based on RBC CM’s EBITDA forecasts, ongoing pension funding, and higher capex spending for Allstream Wireless and the Manitoba HSPA network, the company is expected to generate negative FCF until 2013E, including -$55MM in 2010E and -$33MM in 2011E. RBC CM believes, MTS could continue supporting the dividend and >100% payout ratio for the next few years if the board so chooses. A dividend cut would therefore be at the company’s discretion.

Manitoba Telecom MBT Rating Lowered To Underperform

admin — Thu, 21 Jan 2010 16:42:36 +0000

Manitoba Telecom (MBT): $35.17 – Rating Lowered To Underperform
Underperform (prev: Sector Perform), Average Risk, Price Target: $33.00
Dividend Secure, but Allstream Will Remain a Drag, and Valuation Above Target.MBT shares have an attractive yield, but given the combination of sluggish business markets and the recent share price run, MBT shares now trade above the $33 target price.
MBT’s 8% dividend is among the highest common equity yields in the S&P/TSX and RBC CM believes there is limited risk of a dividend cut. With the recent uptick in MBT shares, the stock now trades in line with peers (5.3x 2010E EV/EBITDA vs. peers at 4.8-5.5x). RBE CM believes MBT shares warrant a modest discount given: (1) its slower growth profile; (2) larger exposure to the enterprise segment, which is facing meaningful pressure from the economy; and (3) limited cash flow flexibility – negative
cash flow in 2010 (especially if MBT loses the appeal on the $100MM court-mandated pension liability) with only a modest recovery in 2011.

TSX Commentary » Manitoba Telecom

Manitoba Telecom Services MBT Cautious 2010 Outlook

Manitoba Telecom MBT Rating Lowered To Underperform