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| quote: | Canada Govt Overturns Regulator's Decision on Globalive
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(Adds context in paragraph 10.)
By Caroline Van Hasselt
Of DOW JONES NEWSWIRES
OTTAWA (Dow Jones)-- Canadian Industry Minister Tony Clement said Friday the Canadian government is permitting Globalive Communications Corp. (GLC.YY) to enter the Canadian market without delay, overturning a controversial regulatory decision that would have killed the company's bid to become the country's fourth national wireless carrier.
"Today is a great day for Canadian consumers," Globalive Chief Executive Anthony Lacavera told Dow Jones in an email message.
At a celebratory event with employees in downtown Toronto, Globalive said it intends to launch in Toronto and Calgary as early as next week. "We are going to change the structure of the industry in Canada," Lacavera told employees, eliciting thunderous applause from employees who congregated at Queen's Quay Terminal on Toronto's lakefront.
Wind Mobile phones will be sold through Blockbuster retail outlets. Data, as well as voice, will be available nationwide.
"There will be quite a few Mobile Wind phones under the Christmas tree," Wind Mobile Chief Executive Ken Campbell said. "No system access fee, and we won't even charge you to call 411." He said pricing details will be released shortly.
As reported, in October, the Canadian Radio-television and Telecommunications Commission ruled that Globalive, the wireless upstart being bankrolled by Egyptian giant Orascom Communications Corp., didn't meet Canadian ownership requirements, even though Industry Canada said it did. The federal cabinet had the right to overrule the CRTC's decision.
"It's disappointing, as we think Globalive quite clearly does not meet the requirements for Canadian control," said Jacqueline Michelis, a Bell Canada spokeswoman. "We'll be taking a close look at the reasoning behind this decision."
Analysts aren't surprised by the decision, given that Globalive paid a hefty C$442 million for wireless spectrum last year. "We suspected that they wouldn't be completely shut out," said Chris Diceman, DBRS Ltd.'s senior vice-president.
The big three incumbents, Rogers Communications Inc. (RCI), BCE Inc. (BCE) and Telus Corp. (TU), have lobbied vigorously to protect their turf. In an ironic twist of circumstances, Rogers's own wireless roots in the early 1980s were also bankrolled by a foreigner, U.S. giant Ameritech, when the original co-founders were struggling to launch Cantel.
Diceman points out another relevant example, the failed privatization of BCE. While the ownership issue was clear on the equity component for a privatized BCE, a large portion of its debt, which represented a significant part of the new entity's enterprise value, would have come from foreigners, just like Orascom's loan to Globalive, Diceman says. In that case, the CRTC gave its blessing to BCE's landmark C$52 billion leveraged buyout, which was led by the Ontario Teachers' Pension Plan Board (OTP.YY) and two U.S. hedge funds. Ultimately, the LBO died in 2008 after BCE failed to secure a clean bill of financial health from auditor KPMG.
The decision is another blow to the besieged CRTC, which also finds itself under fire in the ugly fee-for-carriage slugfest involving the regulator, and the country's television broadcasters and cable-TV operators. Last month, Heritage Canada ordered the CRTC to seek input from consumers on that issue.
Globalive, which plans to launch in Canada under the popular European brand,Wind Mobile, had hoped to begin offering wireless services this year. The CRTC's decision delayed the plans of all potential new carriers, including Dave Wireless and Public Mobile, while unwittingly giving an edge to the incumbents, which have geared up their marketing campaigns and launched new higher-speed networks, Diceman says.
Now that the government has smoothed the way for Globalive, Canada is expected to see a sea change in the wireless market next year. "It'll be an all-out marketing war for customers," Diceman predicts.
The incumbents are arguing that the government's decision opens the door to liberalizing Canada's stringent telecom foreign-ownership rules, which prohibit international companies from owning more than 20 percent of the operating company's voting stock and one-third of the holding company for a combined 46.7%. As well, 80% of the board must be Canadian.
The decision is unique to Globalive, and is not expected to change the ownership rules. Clement made it clear that the government's decision is consistent with the current rules.
Orascom controls a 65% equity stake, but maintains a 20% voting equity in Globalive's wireless business.
The big three carriers have previously rattled their sabers, threatening potential lawsuits if Globalive had been allowed to launch its network. Unlike other upstarts, such as Fido and Clearnet, both of which were absorbed by the incumbents, Globalive poses a far more dangerous threat to their oligopoly, given Orascom's heft and wireless expertise.
"We knew the incumbents wouldn't make it easy for us, but we expected that after we launched," Campbell said.
The decision roiled the incumbents' share prices. In Toronto Friday, Rogers is down 3.3% to C$32.27, Telus is off 1.7% to C$33.10 and BCE is down 1.3% to C$27.64.
-By Caroline Van Hasselt, Dow Jones Newswires 416-306-2023;
[email protected]
(Carolyn King in Toronto contributed to this article.)
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at least the government has done something right finally
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| quote: | | Scott has been introduced to the rave scene, and Ecstasy, by Craig. The two of them go out on the weekends, with some of Craigs friends, and stay up all night, dancing in a drug-fueled trance. |
Last edited by Moral Hazard on Apr-26-2011 at 07:48
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