Globalive Wireless Management Corp. squared off with competitors in the Federal Court of Appeal on Wednesday arguing that its cellular upstart, Wind Mobile, has more than enough Canadian ownership to operate.
Lawyers from competition cellular upstart Public Mobile argued that with more than 65 per cent of the company's debt being held by a foreign company, Wind is controlled by foreign interests.
Lawyers from Globalive fired back saying the startup cellular firm has passed government benchmarks used to determine acceptable levels of Canadian ownership and has obtained federal approval to operate in Canada. The company says, while Egyptian firm Orascom owns most of its debt, the foreign company only has 33 per cent of Globalive voting shares, not enough to influence company decisions.
Also on hand were lawyers from the Attorney General of Canada's office who supported the federal government's decision by arguing that while there are foreign ownership limits, there are no limits on the amount of cash a Canadian company can raise from foreign sources of funding and Globalive is free to raise cash from international investors in order to compete in Canada's cellular market.
Globalive has been fighting to prove it does not violate Canadian telecommunication ownership laws since it first launched in 2009.
That fall the Canadian Radio-television and Telecommunications Commission (CRTC) ruled the company's ownership structure, coupled with longer-term loan agreements with Orascom, were enough to push Globalive over foreign ownership restrictions and barred it from starting up business.
The Conservative government, citing a need for more competition in the Canadian cellular market, overturned the CRTC's decision. Wind opened for business in December of that year.
However, after a complaint by Public Mobile in February, a Federal Court judge quashed the government's decision to overrule the CRTC. The judge ruled the government had overstepped its authority by overturning the decision of the telecommunication's regulator.
The judge's decision in February set up Wednesday's showdown in the Federal Court of Appeal, where lawyers spent the day arguing over whether Wind should have ever been allowed to open for business in Canada. The company spent more than $442 million in a 2008 spectrum auction to purchase cellular frequencies so it could begin offering service to Canadians and now has more than 300,000 subscribers across the country.
Judges at the Court of Appeal will now consider the arguments put before them and render a decision.
A court loss wouldn't immediately threaten Wind's customers, as the company could still try to take its case to the Supreme Court of Canada.
Prior to to last month's federal election, the Conservative government also promised to change legislation limiting foreign ownership. While that hasn't happened yet, a newly elected majority government could make those changes in the coming weeks.
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