Wind Mobile court ruling under review

Industry Minister Tony Clement is reviewing Ottawa’s options and could appeal a court ruling that overturned a cabinet decision allowing new wireless entrant Wind Mobile to operate in Canada.

By THE CANADIAN PRESS

MONTREAL — Industry Minister Tony Clement is reviewing Ottawa’s options and could appeal a court ruling that overturned a cabinet decision allowing new wireless entrant Wind Mobile to operate in Canada.

A recent Federal Court ruling quashed Clement’s decision in 2009 to overrule the federal regulator and its assessment that Globalive, largely financed by Egyptian telecom Orascom, wasn’t Canadian owned and controlled.

“The minister is reviewing the decision and considering options, including a possible appeal,” spokeswoman Gemma Collins said Monday in an email.

The ruling gives a 45-day stay of judgement, which allows Wind Mobile to keep operating and figure out its next move.

Globalive chairman Anthony Lacavera said he’s still assessing his legal options and also hasn’t ruled out appealing Friday’s decision.

But he said the decision hasn’t affected Wind Mobile’s more than 250,000 cellphone customers.

“It does create more cost,” Lacavera said from Toronto. “It does create more confusion for us, but it certainly does not affect our operation.”

Analysts said Monday the government should act quickly and noted the ruling was only a short-term victory for majority players such as Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T).

“In our view, the federal government will have to move quickly to fix things,” RBC Capital Markets analyst Jonathan Allen wrote in a research note.

“They will look exceptionally bad in the public light allowing, encouraging a company to invest a billion dollars in Canada, add a quarter-million customers and then let the rug be pulled out from under them,” Allen wrote.

The ruling is positive for Rogers, Bell and Telus, but Wind Mobile shouldn’t be counted out, he said.

CIBC analyst Robert Bek said new federal legislation could be unveiled shortly.

“While the decision appears to benefit the other wireless players, including the incumbents, the government is working on new legislation that will likely ease foreign ownership limits for smaller entrants with less than 10 per cent of the market share,” Bek wrote in a note.

UBS analyst Phillip Huang said the court ruling may force opposition parties to support the government’s effort to change Canada’s foreign ownership rules for telecommunications companies.

“We are not political experts, but we find it difficult to imagine that any political party would risk being blamed for putting over a quarter million Canadians out of their wireless services,” Huang wrote.

But Huang said that while he believes the Conservative government will ultimately move in support of Wind Mobile, any delays could impair its ability to continue to attract customers and raise financing.

Clement has said the government wasn’t yet ready to outline its plans on relaxing or lifting foreign ownership limits for the industry.

He announced consultations on foreign ownership in May, outlining three options — removing all restrictions; increasing the limit of foreign investment from the current 20 to 49 per cent and/or lifting restrictions for carriers with less than 10 per cent market share.

Rival wireless company Public Mobile, which has been up and running since last spring, also took the ownership issue to the courts but was not available for comment Monday.