At the end of October 2009, Globalive and their WIND Mobile brand was denied by the CRTC to begin operations in Canada. Well this morning, the Canadian Federal Government overruled the CRTC ruling:
We have concluded through normal review that Globalive meets the Canadian ownership and control requirements
For. The. Win. I would love to see the Rogers/Telus/Bell boardroom meetings this morning!
Check out the National Post release below:
OTTAWA — Industry Minister Tony Clement said Friday the federal government would overrule the federal telecom regulator and allow Globalive Wireless Management Corp. to offer cellphone service in Canada.
“We have concluded through normal review that Globalive meets the Canadian ownership and control requirements,” Mr. Clement said in a press conference Friday morning.
The much-anticipated announcement comes six weeks after the Canadian Radio-television and Telecommunications Commission denied Globalive’s bid to be the country’s fourth-biggest wireless operator. The CRTC initially said Globalive’s corporate structure violated foreign-ownership rules, as Egypt’s Orascom Telecom Holding SAE held too much control through debt financing.
The decision is expected to be a blow to the big three wireless providers — Rogers Communications Inc., BCE Inc., and Telus Corp. — as they fought to keep Globalive out of the Canadian market.
Under the federal Telecommunications Act, the federal cabinet has the power to vary CRTC decisions. Mr. Clement said he is satisfied the debt financing provided by Orascom does not constitute foreign control and no changes would be required to the company’s organization. “We are satisfied that in this particular case [Globalive’s] board of directors cannot be controlled by the foreign investor.”
He said the decision is effective immediately, and was based on legal facts of the ownership structure â€“ and should not be interpreted as a signal of pending changes to the country’s rules governing foreign investment.
In recent days, the federal Conservative has come under attack from opposition politicians for layoffs in the mining sector courtesy of foreign-owned Vale Inco and Xstrata PLC.
“Let me emphasize â€“ this variance is specific to the facts of this case and is based on the application of Canadian ownership and control requirements to these particular facts. The government is not removing, reducing, bending or creating an exception to [foreign ownership rules] in the telecommunications and broadcasting industries.”
Canadian foreign-ownership legislation, as pertains to telecom, restricts the number of voting shares that can be held by non-Canadians, to 20% at the operating company level and 33.3% at the holding company level. Further, the CRTC must be satisfied that foreigners do not exercise “control in fact” over the company.
The Minister said Ottawa is satisfied with Globalive’s structure, as Canadians will own at least 80% of the voting shares and 66.66% of Globalive’s holding company. Further, the board is dominated by Canadians.
Even though he said this decision was based solely for legal reasons, Mr. Clement acknowledged Globalive’s entry should be a boon for consumers. “[This] will enhance competition for the benefit of consumers … by giving more choice at better prices and higher quality.”
His decision was issued roughly an hour before stock markets opened in North America. It also marks the second time that the Stephen Harper-led Conservative government rewrote a 2006 CRTC decision dealing with deregulation in the local-phone market.
As it happened, Industry Canada had initially approved Globalive’s application last March.
He said cabinet has the right to review CRTC decisions, and that differences of opinion between arms of government are not unusual. The cabinet signed off on the decision on Thursday.
“This is and should be a subjective test, so it is possible that two branches of government could reasonably come to two different conclusions,” Mr. Clement said, noting he consulted with provincial government prior to issuing his decision.
Prior to Mr. Clement’s announcement, potential rivals were already playing down Globalive’s potential entry. On Thursday, Rogers Communications Inc. chief executive Nadir Mohamed told Bloomberg News that Canada’s wireless market can’t sustain a fourth national mobile carrier.
“There’s no question in my mind that Canada cannot support more than three national facilities-based players,” Mr. Mohamed. “It’s inconceivable to me.”
I find Nadir’s comments particularly amusing. Is the collar getting a bit tight? 🙂
Alright Apple, wake up! There is a new iPhone carrier in town!
Update from Globalive’s press conference:
- Launch cities are Toronto and Calgary.
- The company is looking to launch within the next two weeks.