Shares of Manitoba Telecom Services (TSX:MBT) have fallen more than seven per cent after Ottawa rejected the sale of its Allstream business to an Egyptian investment group.

The stock was down $2.43, or 7.51 per cent, at $29.93 in morning trading on the Toronto Stock Exchange.

Industry Minister James Moore rejected the deal Monday under the national security provisions of the Investment Canada Act.

Manitoba Telecom had signed an agreement to sell the business to Accelero Capital Holdings in a deal that valued the operations at $520 million.

Allstream, created after AT&T Canada restructured, offers telecommunications services mainly geared to large corporations and institutions.