The Canadian government said Friday that it has approved a request from Egyptian-backed telecom Globalive Wireless Management Corp. to launch its mobile phone service in Canada, according to Associated Press.
It will be the fourth major wireless company serving Canada, competing with Rogers Communications Inc. (NYSE: RCI), BCE Inc. (NYSE: BCE) and Telus Corp. (NYSE: TU).
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Industry Minister Tony Clement said the federal cabinet has determined Globalive meets Canadian ownership requirements, reversing an earlier ruling by the country's federal telecom regulator.
The Canadian Radio-Television and Telecommunications Commission had turned down Globalive's request in October because it is majority funded and controlled by Egypt's Orascom Telecom Holding, the Middle East's largest telecommunications operator by market capitalization.
Orascom, which is controlled by Egyptian telecommunications mogul Naguib Sawiris, holds 65 percent of parent company Globalive Holdings, while Canadian entrepreneur and Globalive chairman Anthony Lacavera owns the rest. Orascom also holds much of Globalive's debt.
However, Clement said 80 percent of Globalive's voting shares are held by Canadians and the wireless company, which is based in Toronto, should be considered Canadian.
Globalive's arrival is expected to put pressure on consumer prices across the industry, as it heralds the entry of more players into the market opened up through an auction of wireless spectrum in 2008. The Organization for Economic Co-operation and Development's annual Communications Outlook study, published in August, found that Canada has the third-highest wireless rates among developed countries after the United States and Spain.
In that auction, Globalive paid 442 million Canadian dollars ($419 million) for airwaves over which to operate and has invested millions more in its network and employees.
Globalive has already hired 800 employees and approximately half have already finished their training and are now doing paid volunteer work at organizations such as food banks, boys and girls groups, literacy groups and the Salvation Army.
The telecom regulator reviewed Globalive's corporate structure last spring and decided its operations would contravene the Telecommunications Act that stipulated companies be controlled by Canadian interests. That decision flew in the face of an earlier review by Industry Canada that gave the company a license in the interest of promoting competition.
The Canadian government, wanting to spark more competition in the telecommunications business, reviewed the earlier ruling with input from the industry.
Clement said last week that the federal cabinet has the power to overrule the telecommunications regulator and that Globalive was entitled to launch its own protest.
Clement stressed that Friday's announcement was not giving Globalive special treatment.
Rogers Communications, BCE and Telus, which together control 95 percent of the Canadian market, lobbied to halt Globalive's advances, saying Globalive was breaking the Telecom Act because it was under foreign control.
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