A new entrant in the Canadian wireless industry is pushing for clarification on a crucial point that will shape the industry in years to come: exactly what constitutes foreign ownership.
Public Mobile, a low-cost wireless carrier with plans to launch in early 2010, said it asked the Federal Court to overturn the cabinet decision that permitted Globalive Wireless Management Corp. to launch last month with significant foreign backing.
Public Mobile isn't attempting to shut down Wind Mobile, the cellular brand of Globalive, which is mostly owned by Egyptian telecom giant Orascom Telecom Holding SAE. Rather, Public Mobile is seeking legal clarity on foreign ownership rules for Canadian telecom companies, which it said have become muddied in recent months.
"Then we could all have the benefit of having foreign capital," said Public Mobile chief executive officer Alek Krstajic. "This is not about stifling competition, this is simply us saying: me too."
Canadian telecommunications law is aimed at preventing foreign companies from controlling carriers here. At a spectrum auction in 2008, where Globalive spent $442-million, Industry Canada approved Globalive's ownership structure. Then the Canadian Radio-television and Telecommunications Commission ruled in October that Orascom, since it held the majority of Globalive's debt, had too much sway. But on Dec. 11, Industry Minister Tony Clement overturned that ruling.
The contradictions infused the industry with uncertainty. And as one industry source put it yesterday, "certainty is always a critical element when you're talking billions of dollars of investment."
Mr. Clement stressed that his decision was based on specific "legal facts" and set no precedent. Critics disagreed, arguing he had opened a Pandora's box, effectively permitting foreign ownership. Globalive's chairman and CEO Anthony Lacavera said he was confused by his rival's move. "I don't know why Public is saying there isn't clarity. We're looking forwards. We're not looking backwards. Maybe they should do the same."
Public Mobile is funded in part by Canadian investors, like the Ontario Municipal Employees Retirement Systems (OMERS). However, much of its seed capital comes from U.S. investors, such as Columbia Capital and M/C Venture Partners.