A new wireless company with ties to an Egyptian cellphone mogul got a rough ride in public hearings, as the country's major telecom players argued it violates Canadian laws on foreign ownership.
At CRTC hearings in Gatineau, Que., Anthony Lacavera, chief executive officer of Globalive Wireless Management Corp., defended his company's right to do business in Canada and said that his new venture is compliant with the rules because he has control and is a Canadian citizen.
The Telecom Act specifies that carriers must be overwhelmingly Canadian-controlled. Globalive insists that it has satisfied the requirements with a structure where Egyptian-based cellphone company Orascom holds a 65-per-cent equity stake. The arrangement uses a complicated formula that involves two holding companies in which Mr. Lacavera owns the majority of voting shares.
Last year, Globalive won 30 wireless spectrum licences in a government auction, at a price tag of more than $442-million. But Industry Canada raised questions about the company's ownership, as did the three major players in Canadian telecom, who appealed to the CRTC to keep Globalive out.
Mr. Lacavera told the commission he would take over as chairman of the board at Globalive Wireless and its holding companies.
"I own 35 per cent of the business and I clearly have the management of the votes," he said.
But Telus vice-president Ted Woodhead and Rogers Wireless executive Ken Engelhart argued Globalive was simply obscuring the fact that Naguib Sawiris, an Egyptian billionaire and CEO of Orascom, was using the company as a pawn to get its hands in the Canadian market.
"The capital structure is not compliant," Mr. Woodhead said, "and the web of other connections and control can lead to no other conclusion than Globalive has yielded control to non-Canadians."
The chief of regulatory affairs at Bell Canada, Mirko Bibic, also argued that Globalive does not have a Canadian majority on its board, another legal requirement.
"You've got Orascom directly appointing three [board members]and having a say ... in the other four," Mr. Bibic said. "That's control ... that allows Orascom to completely control the operating entity.... We submit that it's all merely window dressing."
Mr. Bibic told the regulator it should deny Globalive a licence to operate in Canada.
But Mr. Lacavera said his potential competitors - Rogers Wireless, Telus and Bell Mobility - had used the hearings to their advantage. "The incumbents have turned this review process into an adversarial one, with the single-minded purpose of trying to prevent us from being able to compete with them," he said.
The telecom incumbents have good reason to be worried. A study released last week by Toronto-based Convergence Consulting Group Ltd. predicted that by 2014, new entrants like Globalive and Data & Audio-Visual Enterprises Wireless Inc. (DAVE Wireless) would take 24 per cent of the wireless market - and they're still sticking to that forecast, said Brahm Eiley, a principal with the group. If the CRTC does decide Globalive can't operate in Canada, the effect will be noticeable, he said.
"These new entrants are going to have a big impact," he said. "Lots of downward pressure in [average revenue per user] lots of downward pressure in margin.... So pulling out one of the key new players, that will have a major impact. The story won't be over."
The CRTC will continue its review of Globalive in private hearings today.