Telus convinces CRTC to look into Globalive ownership

After failing to get Industry Canada to publicly review the ownership structure of Globalive Communications Corp.’s wireless arm, Telus Corp., has convinced the CRTC that it should look into the matter. But the commission will first decide whether the ownership and control review should be public or held behind closed doors. In a ruling last Friday, the CRTC invited parties to comment on the appropriateness of holding a multi-party public process to review Globalive Wireless Management Corp.’s compliance with the Canadian ownership and control requirements of the Telecommunications Act. Under current foreign ownership rules, foreign entities can’t hold more than 20% direct voting interest in a Canadian common carrier and have no more than 33% non-voting control. Combined direct and indirect ownership by a single foreign company can’t exceed 46.6%. In addition, 80% of board members must be Canadian. Michael Hennessy, VP of wireless, broadband and content policy at Telus, says a public review is required for transparency purposes because the industry needs to know how Orascom’s 65% ownership stake in Globalive Wireless meets foreign ownership rules. The regulator and the department have a duty to explain how Globalive Wireless meets the Canadian ownership test when it seems not to, he adds. “The principle reason is that if both CRTC and Industry Canada look only at the deal behind closed doors, when it has been publicly stated that Orascom has up to 65% of the equity, then there’s absolutely no certainty as what are the rules around foreign ownership,” he tells Report on Wireless. “If the rules are much more flexible than they were originally intended to be, which seems to be the case, then we should be all allowed to play by the same rules.” The ownership and control issue centres around a $500-million to $700-million investment from Orascom, a major player in the international wireless market, in Globalive Wireless. The Yak Communications owner plans to use the money to pay for its spectrum licences and deploy a wireless network covering many regions of the country, with the exception of Quebec. Globalive insists that it will remain in control. Hennessy says while it’s not necessarily the amount of the investment which raises significant questions, it’s that “he who owns the money tends to probably exercise significant control.” “It looks like there’s a prima facie case that Orascom could control the undertaking because whoever controls most of the money tends to have a significant influence on the operations of the business,” he says. “There are ways that these things have been discussed or addressed. It’s just at what point does the paper that says ‘Don’t worry, we’re not exercising control’ become worthless because the amount of equity one party holds is so significant relative to the structure of the company.” Telus filed a letter last month requesting an “an open and transparent process” to determine whether Globalive Wireless met ownership and control set out in section 16 of the Telecommunications Act. Shaw Communications Inc. filed a letter of support a couple of days later.

Telus convinces CRTC to look into Globalive ownership

News | 05/25/2009 8:02 pm EDT

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