Canadian carrier stocks down as Globalive gets OK to launch

Wireless carrier stocks in Canada dropped a bit on Friday after Industry Canada ruled Globalive Wireless Management Corp. will be allowed to launch service in Canada after all. Stocks were down a bit in early trading today.
“Globalive is a Canadian company, and meets Canadian ownership and control requirements under the Telecommunications Act,” said the Honourable Tony Clement, Minister of Industry. “We take this decision very seriously. It is based on the application of these requirements to the facts in this case.”
Industry Canada overruled the Canadian Radio-television and Telecommunications Commission, which ruled in October that Globalive failed to meet Canadian-ownership rules for telecommunications carriers. The Canadian Radio-television and Telecommunications Commission at the time ruled that Globalive is 65%-owned by Orscacom Telecommunications Holdings, an Egyption-based company. Globalive paid $442 CND for an AWS license in 2008 as part of a government auction to increase competition in the country, where Rogers Communications Inc., Telus Corp. and Bell Canada Inc. dominate the telecom market. Incumbents petitioned the government for the ownership ruling.
In its decision Friday, Industry Canada said its ruling is narrow. “In varying the CRTC decision, the government is not removing, reducing, bending or creating an exception to Canadian ownership and control requirements in the telecommunications and broadcasting industries. The government’s decision to vary is specific to the facts of this case.”
“Our goal has always been greater competition in the telecommunications industry, which leads to lower prices, better service and more choice for consumers and business,” said Minister Clement in a press release.
Rogers’ stock dropped almost 7% on Friday, following the news, while BCE stock dropped nearly 3% and Telus stock dropped 2%.
“We are disappointed with Cabinet’s decision to give one competitor a unique advantage, after bidders that spent $4 billion in the last auction were explicitly told that the rules prohibited foreign ownership and control,” said Michael Hennessy, Telus senior vice-president of Regulatory and Government Affairs. “This decision has implications extending well beyond the telecommunications industry, given it creates a precedent on what constitutes compliance with foreign control restrictions.”
Globalive partners with Blockbuster
For its part, Globalive is getting ready to launch in Calgary and Toronto before Christmas under the Wind brand. The carrier is partnering with Blockbuster Canada to sell Wind mobile service in 16 Blockbuster locations.
“The 16 Blockbuster locations will house a 150-square-foot ‘store within a store’– featuring Wind Mobile products, plans and staff ready to help with subscription, bills and information on the latest in wireless technology,” according to Wind.