Sudden Wind change: court overrules Globalive ownership decision

7 Feb 2011

Canada’s Federal Court on Friday overturned a 2009 decision by the government to allow the ownership structure of cellco Globalive Wireless (Wind Mobile) to remain unchanged – a ruling that permitted the Egyptian-backed company to launch mobile services in December that year. The Globe & Mail writes that the surprise overturning of the cabinet decision gives Globalive 45 days to comply with foreign ownership laws. Globalive chairman Anthony Lacavera stated that he will fight to prove his company is in compliance with the ‘control in fact’ section of Canadian telecoms ownership rules, and not ‘overly influenced’ by its financial backer, Orascom Telecom, owned by Egyptian billionaire Naguib Sawiris. The report continues that the court action is unlikely to result in a shutdown of Wind’s 3G operations, as according to legal experts the firm can employ legal stalling tactics, including seeking an extension of the stay. It may also appeal the decision to the Federal Court of Appeal, and if that fails, the Supreme Court of Canada, a process which could take months.

According to TeleGeography’s GlobalComms Database, Globalive Wireless was established by Canada’s Globalive Communications. Egyptian group Orascom Telecom owns 65% of equity in Globalive Wireless, but its voting share is limited to no more than one-third by foreign ownership rules. Telecoms regulator the CRTC ruled in October 2009 that Globalive did not meet ownership and control requirements under the Telecommunications Act, but this judgement was overridden by Minister of Industry Tony Clement in December 2009, permitting the cellco to launch immediately with no ownership changes. The ministry stressed that this was a one-off ruling not affecting existing laws. If the federal government does decide to lift the country’s ownership restrictions, as a state-appointed review panel recommended in June 2008, Orascom has said it intends to take overall control of the cellco.

To comply with the original decision of the CRTC, Wind must submit a new financing structure to satisfy the regulator’s concerns centring on the fact that the vast majority of Globalive’s debt is held by Orascom. The plan would require the cellco to find new, Canadian investors. Wind Mobile reportedly has between 200,000 and 250,000 subscribers, up from 140,000 at end-September 2010.

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