Industry Canada says it will review a CRTC decision preventing Globalive from setting up shop as Canada's fourth national cellphone company.
Industry Minister Tony Clement said Friday he will investigate the ruling to see whether it is consistent with the government's efforts to bring more competition to the cellphone market.
On Thursday, the Canadian Radio-television and Telecommunications Commission said Globalive, which had hoped to launch service under the Wind brand in several Canadian cities in the next few weeks, did not meet Canadian ownership and control rules. The Toronto-based company has received almost all its funding from Naguib Sawiris, the billionaire head of Egypt's Orascom, which disqualifies it from operating in Canada, the telecom regulator said.
Clement, who is also responsible for consumer affairs, said the government believes in competition and new cellphone companies will benefit wireless users. The government held an auction of public airwaves last year and reserved a portion of licenses for new entrants after recognizing that Canadians were suffering from high prices and poor services.
"We are examining the CRTC decision very closely, and certainly we are still very much in favour of more competition in the telecom space for Canadian consumers," Clement told Bloomberg News. "That’s why we opened up these contracts to other new entrants."
Globalive chief executive Anthony Lacavera said Friday he was "greatly disappointed" with the CRTC's decision, but it was not the end of the line for his company. "Neither I nor Mr. Sawiris have ever given up on anything," he said.
Lacavera would not say whether Globalive will challenge the ruling in court or appeal to the federal cabinet.
In its decision, the CRTC prescribed a number of changes that Globalive could make to its corporate structure to bring it more in line with Canadian laws. However, its debt of more than $600 million — almost all of which is held by Orascom — was the key stumbling block, the regulator said. Globalive had argued that it would have liked to have secured financing from other sources, but the global credit crunch prevented it from doing so for much of the past year.
Under federal rules, foreign ownership of telecommunications firms is limited to 20 per cent of the voting shares of an operating company and one-third for a holding company.
Lacavera said he believes Globalive could pass CRTC muster if it can find other financiers to take some of the debt off Orascom's hands, and he was in New York on Friday trying to find takers. The regulator did not give any guidance on how much debt would need to change hands, however.
"It's frustrating because it's too ambiguous," Lacavera said.