“Unexpected” departure of Dean Prevost from Allstream might not bode well for MTS shares, according to industry analyst.

Dean Prevost, president of Toronto-based business communications provider Allstream, is leaving his post effective January 17. He will be replaced by Michael Strople, current chief operating officer of the company.

The announcement made by Manitoba Telecom Services Inc., the mother company of Allstream, did not provide any specific reason for Prevost’s departure other than to say he was leaving “in order to pursue other interests.”

The announcement also follows the recent departure of Chris Peirce, MTS Allstream’s chief corporate officer.

The announcement has been called “unexpected” by at least one industry analyst who also said that the development does not bode well for MTS especially following the aborted $520 million sale of Allstream to Accelero Capital Holdings which was turned down by the Harper government last year.

Allstream is losing a very capable and highly respected leader, according to Dvai Ghose, managing director of investment firm Canaccord Genuity of Toronto.

“Allstream’s performance has suffered through its sale process and losing Prevost at this time seems far from ideal,” Ghose said.

“I am proud of how my colleagues, and our entire Allstream team, have been able to develop and execute a more focused strategy, delivering superior service to our customers in Canada’s business community and value for our shareholders,” Prevost said in a statement. “In stepping away from the company, I am confident that it is in good hands with Mike and his team whom, I have been working closely.”

“Dean has been a driving force behind Allstream’s evolution to become a leader in the Canadian business telecommunications market,” said Pierre Blouin, chief executive officer. “He successfully designed and oversaw a number of important strategic and organizational initiatives that have positioned the company to thrive in the years ahead.”

He also said he is confident that Strople will be able to take Allstream “forward in its next phase of success and growth.”

Strople has been with Allstream since 2005. In his current role as COO, with responsibility of operations, sales, marketing and technology, he worked closely with Prevost and the broader MTS Allstream executive team. Strople was a key contributor to the development of Allstream’s strategy to focus on driving growth in high margin, on-net, IP-based services and expand into the mid-market.

“We view this (development) as a potential negative for MTS shares,” said Ghose said today.

“Despite Allstream’s challenges, Dean Prevost is highly respected by the investment community and we have always found him to be a solid, straight shooter,” he said.

On the other hand, Ghose said, Strople is “not well known to investors.”

Allstream was affected negatively by the aborted sale to Accelero, he said.

MTS wanted to sell Allstream so it could concentrate on providing wired and wireless services in its home province.

Last May Accelero Capital Holdings, which was founded by Egyptian telecom mogul Naguib Sawiris, offered $520 million plus the assumption of debt for Allstream. By itself, the deal would have met the investment rules, which allow a foreign company to buy all of a Canadian carrier with less than 10 per cent of the market. However, the deal had to pass the Investment Canada Act’s national security provisions.

The Harper government, last October, turned down Accelero’s bid to buy the Allstream apparently because Allstream is Ottawa’s data services carrier.

“We believe that MTS would have asked Prevost to stay to oversee a second sale process, as he seems to have been an integral part of Allstream, Ghose said. “ We assume that Accelero would have kept Prevost if they had acquired Allstream and that any future acquirer would also want to keep Prevost. “

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