VANCOUVER, Dec. 11 /CNW/ - TELUS is disappointed the federal Cabinet has overturned a recent decision by the CRTC regarding the application of Canada's foreign ownership rules. The Cabinet decision to overturn the CRTC on this matter sets a new precedent for the interpretation of foreign ownership rules affecting a variety of sectors including telecom and broadcasting.
On October 29, the CRTC found that Globalive was controlled by Orascom Telecom, an Egyptian based carrier that owns more than 80 per cent of its capital structure, and that this unprecedented level of control does not meet Canada's foreign ownership laws. Accordingly, the CRTC set out a path for Globalive to become compliant under the same rules all other companies in the industry are forced to abide by.
"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."
Hennessy added that it is clear Globalive should not have been allowed to participate in the June, 2008 Advanced Wireless Services (AWS) spectrum auction and be licensed as a Canadian carrier to begin with, given it clearly was not complying with the laws governing Canada's telecommunications industry. Not only did the CRTC find that Globalive was not compliant after a comprehensive and open public review process, but that decision followed a number of changes in the corporate structure and governance of Globalive through negotiations with Industry Canada and the CRTC in order to reduce the foreign control by Orascom. The CRTC ruling suggests that Globalive participated in the AWS auction while in a non compliant state thereby affecting the outcome for all bidders, including new entrants that had played by the rules.
"Overturning the CRTC will not change the fact other bidders, including new entrants and incumbents, that were directed by the auction rules to comply with federal law and structured their affairs accordingly feel they were misled," said Hennessy. "If one foreign carrier can control 80 per cent of the capital in a company and still be called Canadian, then the law is now rendered either effectively meaningless or a double standard has been created for the benefit of one carrier, Globalive."
As it did prior to the 2008 AWS wireless auction, TELUS continues to recommend to the government that in order to avoid similar situations arising again, all bidders in future spectrum auctions should be pre-qualified as legitimate, Canadian owned and controlled entities.
Taking an aggressive interpretation and thereby making a special exemption and setting a precedent with respect to Globalive's ownership was not necessary to increase competition. Globalive could have amended its corporate structure and governance to become compliant without any need for government intervention in allowing it to circumvent Canada's foreign ownership laws. Moreover, there are several new wireless companies entering the Canadian market, regardless of Globalive's participation. TELUS welcomes healthy competition in the Canadian wireless industry but maintains that all industry entrants should be required to adhere to Canadian laws that govern foreign ownership until Parliament debates and votes to change the law.
"TELUS has never been opposed to foreign ownership restrictions being lifted by Parliament," said Hennessy. "All we have asked is simply that all communications companies in Canada operate under the same rules without an artificial and unfair advantage being handed to one company."
TELUS (TSX: T, T.A; NYSE: TU) is a leading national telecommunications company in Canada, with $9.6 billion of annual revenue and 11.9 million customer connections including 6.4 million wireless subscribers, 4.1 million wireline network access lines and 1.2 million Internet subscribers and more than 100,000 TELUS TV customers. Led since 2000 by President and CEO, Darren Entwistle, TELUS provides a wide range of communications products and services including data, Internet protocol (IP), voice, entertainment and video. In support of our philosophy to give where we live, TELUS, our team members and retirees have contributed $137 million to charitable and not-for-profit organizations and volunteered more than 2.6 million hours of service to local communities since 2000. Nine TELUS Community Boards across Canada lead our local philanthropic initiatives. For more information about TELUS, please visit TELUS.com.
SOURCE TELUS Corporation
For further information: For further information: Shawn Hall, TELUS Media Relations, (604) 619-7913, firstname.lastname@example.org