Cellphone competition is coming this year!

Globalive clears last hurdle
But concerns raised about wireless entrant's ownership structure


Canada's most ambitious new wireless entrant says it is on track to launch cellphone service this year after finally clearing the government's key review.

Globalive Communications Corp. said yesterday that its subsidiary, Globalive Wireless Management Corp., has been issued spectrum licences from Industry Canada after a lengthy examination of its ownership and control structure.

The Toronto-based company, known for its Yak long distance service, paid $442.1-million for 30 licences from Vancouver to Halifax in an auction last summer and is one of the last bidders to receive clearance.

At issue had been the involvement of Orascom Telecom Holding SAE, a large Egyptian firm with wireless operations in Europe, Africa, Asia and the Middle East. Orascom is also the financial backer of Globalive Wireless Management. In return for writing the cheque for the licences and committing to invest up to $700-million (U.S.) in the startup, Orascom secured a 65-per-cent equity stake in the new wireless venture.

Tony Lacavera, chairman and chief executive officer of Globalive Communications, said the ownership formula remains unchanged. He continues to own the remaining 35 per cent of the new subsidiary company and no other Canadian equity has been added, he said.

Industry Canada, however, insisted the control structure be altered to ensure an independent Canadian director sit on the board of Globalive Wireless. Mr. Lacavera said he and Orascom will each have the right to appoint two directors.

The new telecom company still faces a review of its structure by the Canadian Radio-television and Telecommunications Commission.

Big and small competitors alike have been outspoken about Globalive Wireless's structure, demanding that Ottawa hold the firm to the same standards as the rest of the industry of being under Canadian control. The government has had to satisfy a lot of stakeholders with its review, including consumers, foreign investors and incumbents, Mr. Lacavera said in an interview.

'The reality is, there was no way I was going to be able to raise a billion dollars domestically. We need foreign capital. Making the environment where we now have Canadian control, with protections for foreign capital - I think it's a very difficult line to walk down.'

Globalive Wireless aims to launch service in Toronto and Vancouver by late this year and gradually roll out in other provinces. The firm failed to secure a foothold in Quebec, however, and will need to partner with a local carrier to achieve true national service.

The company said yesterday it plans to hire at least 1,000 people in the next 12 months, of which more than 500 will be for call centre positions.

Globalive Wireless is widely considered the biggest threat to the established wireless players of the new entrants, specifically because of its partnership with Orascom. Naguib Sawiris, the Egyptian billionaire who controls that company, brings a wealth of international wireless experience and contacts to Canada.

Globalive Wireless, for example, has signed agreements with three telecom equipment suppliers who have agreed to provide as much as $300-million (Canadian) of financial support. Mr. Lacavera says those contracts would not have happened without the presence of Mr. Sawiris, who will sit on the board of the firm.

The CEO of the startup, Ken Campbell, has previously held several management positions at affiliates of Orascom Telecom Holding. And the co-chairman of Globalive Wireless, Michael O'Connor, served as business development officer of Orascom's majority owner, Weather Investments, as recently as a year ago.

In the past year, Globalive Communications has been adding home phone and high-speed Internet services to its Yak long-distance offerings, which it eventually plans to bundle with its wireless service. Unlike some offerings from the incumbents, Globalive's don't carry system access fees or require a contract.

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