UPDATE 2-Canada blocks network sale to Egypt's Sawiris, citing security

Mon Oct 7, 2013 9:41pm EDT
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By Euan Rocha and Jeffrey Hodgson

TORONTO Oct 7 (Reuters) - The Canadian government said on Monday it blocked a bid from a company controlled by Egyptian telecom tycoon Naguib Sawiris to buy a fiber optic network, citing national security concerns.

The surprise move by the country's Conservative government was made with little explanation and comes as many question its appetite for foreign investment in sectors ranging from telecommunications to oil sands.

Manitoba Telecom Services Inc (MTS) had announced in May it would sell its Allstream fiber optic network for C$520 million to Accelero Capital Holdings, which is controlled by the Egyptian telecom magnate.

But MTS said late on Monday the federal government blocked the deal, citing "unspecified national security concerns."

The government also rejected MTS and Accelero's offer to take necessary actions to address those concerns, the company said in a statement on Monday.

Canadian Industry Minister James Moore confirmed in a brief statement that the deal was blocked under the national security provisions of the Investment Canada Act.

The statement did not provide any specific details on the government's concerns, but it noted that MTS Allstream operates a national fiber optic network that provides critical telecom services to businesses and governments, including the Canadian government.   Continued...