Globalive bombshell: CRTC disqualifies ownership structure

30 Oct 2009

Yesterday the Canadian Radio-television and Telecommunications Commission (CRTC) determined that start-up cellco Globalive Wireless does not meet the Canadian ownership requirements set out in the country’s Telecommunications Act. Under the legislation, a telecoms company is only eligible to operate in Canada if it is not owned and controlled, in law and in fact, by non-Canadians. During an investigation begun last month, including a public hearing, the CRTC said it examined the influence of the newcomer’s Egyptian backer Orascom Telecom Holding (Orascom) over Globalive’s business decisions and day-to-day operations. Despite the fact that Globalive made significant structural changes to reduce its dependence on Orascom, the Commission said that there were other factors that, taken together, led it to conclude that Globalive does not meet the statutory test. The regulator found it ‘particularly important’ that Orascom owns 65.1% of the equity in the cellco, has entered into a strategic technical arrangement with Globalive, controls and holds the ‘Wind’ brand under which Globalive will operate, and holds the overwhelming majority of the outstanding debt. The CRTC added that its investigation focused on the set up and operations of Globalive in the context of a company rolling out a national wireless network, and said that its decision identified the areas that need to be addressed in order for Globalive to meet the Telecommunications Act’s Canadian ownership requirements.

Canada, Freedom Mobile, Global Telecom Holding (GTH, formerly OTH)