Wind Mobile's foreign debt not an issue, court told
There are no limits to the amount of foreign debt financing that a Canadian telecommunications company can raise, a lawyer for the federal government argued Wednesday at a hearing on whether the parent company of Wind Mobile passes as Canadian.
The Federal Court of Appeal is hearing the case after a lower court ruled that the government should not have overruled a CRTC decision that Globalive was not Canadian enough — and allowed the company to operate.
Robert MacKinnon, a lawyer for the Attorney General, said there are no restrictions on foreign debt financing for telecom companies.
"That's because this is a very capital-intensive industry," he said.
MacKinnon told the three judges hearing the case that the federal government was well within its powers to overrule the CRTC decision, which cited the fact that the vast majority of Globalive's debt is held by Orascom, an Egyptian company, as a key reason for ruling the company was not Canadian enough.
Thomas Heintzman, who represented Globalive at the hearing, said for the appeal court not to overrule the lower court, it would have to find that the cabinet acted in bad faith in making its decision.
"This court would have to find the decision of the governor-in-council was a sham," Heintzman told the court.
"That's the bottom line in this case."
The challenge was launched by rival wireless company Public Mobile, who took issue with how the telecom ownership rules were applied to Wind Mobile.
Cabinet overstepped authority
The lower court ruled that cabinet overstepped its authority when it approved a decision by Industry Minister Tony Clement to overrule the CRTC and allow the company to go ahead.
Lawyers for Public Mobile said that Parliament has set out a "master recipe" that the government must use to determine Canadian control and cannot vary that to advance policy goals such as to create more competition.
"The governor-in-council was not entitled to take that recipe and rewrite it," said John Laskin, a lawyer representing the company.
Laskin noted that a debtholder can exert control on a company.
"There is no room for a decision-maker to interpret their way out of what Parliament has prescribed," he said.
The CRTC raised concerns that the Egyptian company had undue control over the Canadian company because it holds a vast majority of the company's debt.
In addition to the debt, Orascom holds a 65 per cent equity stake in Globalive, but it does not hold voting control. It also holds only a minority of the seats on the company's board.
The federal government has indicated that it plans to allow greater foreign ownership in the telecom sector, but so far has not made changes.