Have your say on telco foreign ownership

The federal government does not plan to lift the foreign ownership restriction on Canadian telecommunications carriers, but the policy has its opponents.

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Telecommunications Act says a firm can operate as a “telecommunications common carrier” if it is Canadian owned and controlled.

Although the Act makes it clear that a carrier is Canadian-owned only if 80 per cent of directors and 80 per cent of shareholders, another condition is not so clearly defined. The Act states the carrier also must be “not otherwise controlled by persons that are not Canadians.”

This was the crux of the problem faced by the Canadian Radio-television and Telecommunications Commission (CRTC) when it heard from Globalive Wireless Management, and from incumbent carriers that don’t want Globalive to get permission to start its wireless service in Canada.

Globalive, which plans to offer service using the Wind Mobile brand, is, in theory, controlled by chairman Anthony Lacavera, who holds the majority of voting shares. But Egyptian firm Orascom holds 65 per cent of the total equity (including non-voting shares) and provided most of the money to buy spectrum and build the network.

While Orascom is a minority shareholder with 32 per cent of the votes in Toronto-based Globalive’s holding company, there are questions about Orascom’s power in the partnership. Orascom, which has interests in cellular companies around the world, has lent Globalive more than $500 million, owns 65 per cent of its shareholder equity and has a $100 million services contract.

“The investment community in Canada does not have the resources to fund startups that require huge amounts of capital,” said Eamon Hoey, senior partner of Toronto-based Hoey Associates Management Consultants Inc. “It's a barrier to entry and a barrier to competition and it creates an industry structure that we have in the wireless industry. In eight of the 11 regions in Canada, we have one carrier that dominates that market, meaning they have at least 50 per cent of subscribers.”