CRTC denies Globalive license

Nixes foreign ownership rule rewrite

TORONTO -- Canada's TV and telecoms regulator on Thursday chose not to rewrite the country's foreign ownership rules as it deemed an upstart mobile phone operator controlled by Egyptians not Canadian enough to operate in the domestic phone market.

The Canadian Radio-television and Telecommunications Commission (CRTC) said Globalive Wireless, controlled by Egyptian phone giant Orascom Telecom, did not meet the Canadian ownership requirements set out in the Telecommunications Act.

"...the Commission finds that Orascom has the ongoing ability to determine Globalive's strategic decision-making activities," the CRTC said, citing Orascom proposing to own 65.1% of the equity in the mobile phone carrier and finance its Canadian launch.

Current Canadian foreign ownership rules demand that operational control of domestic broadcasters, phone companies, cable and satellite TV operators reside in Canadian hands.

Denying a mobile carrier license to Globalive marks a victory for incumbent mobile players Rogers Communications, Telus Corp. and Bell Canada, who argued during recent public hearings that an upstart Egyptian-controlled company not be allowed to operate in Canada.

Had the CRTC sided with Globalive and allowed its entry into Canada, existing mobile companies would likely have similarly moved to tap foreign capital, not least by spinning their mobile phone divisions and allowing them to be majority-controlled by foreign telecom giants.

The CRTC ruling will also be scrutinized by domestic Canadian broadcaster Canwest Global Communications Corp., which has filed for creditor protection and will shortly ask the CRTC for approval to allow U.S. bondholders to swap debt for equity in a restructured media group.

The bondholders, who include U.S.-based GoldenTree Asset Management and Beach Point Capital Management, currently hold 70% of debt in Canwest Media Inc., a holding company for Canwest Global.

Under current Canadian rules, foreign companies are limited to a 20% direct equity stake in Canadian broadcasters and other culturally sensitive media companies.

The Canadian government has mulled a reduction or end to foreign ownership restrictions on domestic broadcasters, but has yet to introduce reforms to current rules.
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