Feb. 13 (Bloomberg) -- Manitoba Telecom Services rose to the highest in eight months after being upgraded by RBC Capital Markets and amid speculation that the carrier may be a takeover target under a possible relaxation of foreign-ownership rules.
Drew McReynolds, an RBC analyst, lifted his price target to C$35 ($35) and upgraded his rating to “outperform” from “sector perform,” citing improved profitability at the Winnipeg-based company. The elimination of restrictions for non- Canadian businesses to invest in local carriers would increase the potential of a deal for Manitoba Telecom, McReynolds said, adding he didn’t pin his upgrade on that possibility.
Prime Minister Stephen Harper said in March 2010 he wanted to open Canada’s phone industry to more foreign investment to stimulate innovation and competition. Harper’s government may release plans for holding an auction on new wireless spectrum and changes to foreign ownership in the next few weeks.
“The elimination of restrictions for telecom companies with 10 percent or less market share may increase the strategic opportunities for the company,” Toronto-based McReynolds wrote in a note to investors.
Manitoba Telecom climbed 5.1 percent to C$33.69 at the close in Toronto, the highest since June 3. The stock has advanced 14 percent this year, eclipsing BCE Inc., Rogers Communications Inc. and Telus Corp., Canada’s three largest carriers, which have all fallen this year.
--Editors: Cecile Daurat, Niamh Ring
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