A Toronto wireless upstart will ask the Federal Court to overturn Ottawa’s decision allowing newcomer Wind Mobile to start business despite its heavy foreign ownership.
In a press release issued late Friday, Public Mobile said it believes the federal cabinet has “thrown out the foreign ownership laws of Canada” with last month’s ruling that Wind Mobile’s parent Globalive Wireless Management Corp. qualifies as as Canadian controlled company.
In the press release Public Mobile’s head suggested what it wants is the same break Wind Mobile got from the cabinet.
“We believe cabinet’s decision is unfair to other wireless carriers, especially new entrants like Public Mobile that have played by the rules and secured substantial Canadian investment,” CEO Alek Krstajic said in the release. “Furthermore, while we respect the Government’s authority we believe what it has done amounts to a change in law, and only Parliament can change Canadian law.”
The move comes weeks after the Canadian Radio-television and Telecommunications Commission (CRTC) said it is conducting a closed-door review of Public Mobile’s ownership to see if it meets the demands of the Telecommunications Act. While Industry Canada has given Public Mobile its spectrum licence, the CRTC gives out wireless carrier licences.
Last fall, after a public hearing, the CRTC refused to give a carrier licence to Wind Mobile’s parent company, Globalive Wireless Management Corp. of Toronto because of the heavy influence of the company’s minority partner, Orascom Telecom SAE of Egypt.
Globalive’s majority shareholder and chairman is Canadian telecom entrepreneur Anthony Lacavera. However, Orascom holds nearly all of the company’s $508 million debt and 68 per cent of its equity.
Public Mobile, which, like Globalive is one of the new wireless companies that won spectrum last year, has not started business yet. It will operate in southern Ontario and Quebec.
Its shareholders are made up of Canadian and American venture and private equity companies, some of whom have deep experience in startup wireless companies. Public Mobile hasn’t publicly revealed what the shareholder and equity stakes are of each partner. It is known that the Ontario Municipal Employees Retirement System (OMERS) has invested $50 million in the startup.
Public Mobile spent $52 million in the auction, which, pales beside the $442 million spent by Globalive and the $554 million spent by Quebecor. However, those two companies bought AWS spectrum, ideal for data-heavy Internet and video demands of subscribers. Public Mobile bought less desirable PCS spectrum, which will work with its low-end business model of targeting people who have been avoiding buying cell phones because of the price. These people don’t want to cruise the Internet with a handset, the company says, but will largely make voice calls.
More importantly, Public Mobile’s $50 million bought it spectrum covering the populous Toronto and Montreal areas, leading at least one industry consultant to say it got the deal of the century at the spectrum auction compared to what others spent.