This bug was fixed in the package cloud-init - 0.7.8-49-g9e904bb-
0ubuntu1~16.04.2

---------------
cloud-init (0.7.8-49-g9e904bb-0ubuntu1~16.04.2) xenial-proposed; urgency=medium

  * cherry-pick 18203bf: disk_setup: Use sectors as unit when formatting
    MBR disks with sfdisk. (LP: #1460715)
  * cherry-pick 6e92c5f: net/cmdline: Consider ip= or ip6= on command
    line not only ip= (LP: #1639930)
  * cherry-pick 8c6878a: tests: fix assumptions that expected no eth0 in
    system. (LP: #1644043)
  * cherry-pick 2d2ec70: OpenStack: extend physical types to include
    hyperv, hw_veb, vhost_user. (LP: #1642679)

 -- Scott Moser <[email protected]>  Thu, 01 Dec 2016 16:57:39 -0500

** Changed in: cloud-init (Ubuntu Xenial)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/1460715

Title:
  MBR disk setup fails because sfdisk no longer accepts M as a valid
  unit

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