MTS Announces Layoffs

WINNIPEG, MB -- MTS Allstream Inc. ("MTS Allstream") today announced a Voluntary Reduction Program for its Manitoba operations in 2006. The company has targeted up to 325 reductions in the workforce through this initiative, which represents an element of MTS Allstream's ongoing Transition Phase II cost reduction program (TP2).

Announced in November of 2005, the TP2 program was designed to improve MTS Allstream's cost structure and position the Company to grow profitably in the rapidly changing telecommunications industry. The objective of the program was to achieve a minimum of $100 million in annualized expense savings over 2006 and 2007.

The company estimates that these staffing reductions through this voluntary program will result in annualized savings of approximately $22 million. Costs associated with this initiative, which is an element of TP2, will be recorded as a one-time charge to income of approximately $20 - $25 million or $0.19 to $0.24 per share in the fourth quarter of 2006. The costs associated with today's voluntary program had originally been forecast to occur early in 2007. The total estimated cost of the TP2 program remains unchanged and continues to be expected to be approximately $100 million. There are no changes to the company's 2006 financial outlook for its continuing operations as a result of today's announcement.

"Our business environment is one of ever-increasing competition in all market segments," said MTS Allstream CEO Pierre Blouin. "Our TP2 program has been very successful so far, and the voluntary program we are announcing today is an important part of our ongoing efforts to improve our cost structure and evolve our business in response to the challenges of today's telecommunications marketplace."

"Our current business realities require a workforce and cost structure that ensure our business remains competitive," said Kelvin Shepherd, President Consumer Markets, MTS Allstream. "Our voluntary programs have a good record of success."

MTS Allstream Inc.