Konrad von Finckenstein, chairman of Canadian telecoms regulator the CRTC, expressed concerns yesterday over what he called the ‘complex and novel’ corporate set-up at Globalive Wireless, during a hearing into the ownership structure of the Egyptian-backed mobile start-up. His comments came despite Anthony Lacavera, chairman of Globalive, telling the Quebec review panel that he had made ‘key’ ownership changes to ensure explicit complicity with legislation governing foreign ownership, which states that Canadian nationals must control telecoms operators. In particular, Lacavera said that the cellco’s part-owner Orascom Telecom would cancel a call option on additional shares in Globalive whilst he would void a corresponding put option. Further, the chairman promised to assuage concerns that foreign interests were pulling all the strings at Globalive, by making himself chairman of the company’s two main holding investment vehicles, in which Orascom also holds stakes and executive board positions.
The start-up’s ownership structure was approved by Industry Canada following the ministry’s July 2008 3G wireless frequency auction in which Globalive won 30 spectrum concessions covering all provinces except Quebec, and it was formally licensed in March 2009. The CAD442 million (USD416 million) price-tag for its licences was covered by loans from Orascom, which also pledged CAD60 million to cover initial launch costs and total investment of up to CAD750 million over four years. Globalive has contracted Nokia Siemens Networks (NSN) and Alcatel-Lucent to roll out a 3G/3.5G mobile network with a future evolution path to LTE, and expects to launch its first services in Toronto and Calgary by the end of this year, under the ‘Wind’ brand name.
According to TeleGeography’s GlobalComms database, foreign investment in Canadian facilities-based telecoms companies is permitted up to a cumulative total of 46.70% of voting shares, based on 20% direct investment and 33.33% indirect investment. Globalive Wireless was established by Canadian long-distance reseller Globalive Communications before Orascom Telecom reportedly took 65% of the start-up’s equity. However, Anthony Lacavera has said he is confident of gaining the CRTC’s approval as the ownership structure is such that the Egyptians only hold one-third of voting rights, whilst most of the board members are Canadian. In a closed hearing today (24 September), Globalive will attempt to convince the regulator by sharing unpublicised details of its financial arrangements with Orascom and its head Naguib Sawiris.
Mr Sawiris also appeared at the hearing yesterday via satellite link to assure the watchdog that Orascom had no ambition to take control of Globalive, and intended to sell part of its stake to Canadians once financial markets improve, whilst also claiming that the Egyptian firm was acting as debt financer simply out of necessity. However, CRTC chairman von Finckenstein remained puzzled as to why Sawiris had insisted on a clause to retain at least 51% of equity in Globalive Wireless in the event of new investors coming on board. The CRTC, which launched the review at the request of incumbent national mobile operators Rogers, Bell and Telus, is expected to make a ruling within 30 days.