Rogers Communications Inc. and BCE Inc., Canada’s largest phone companies, climbed after a Canadian court overruled the government’s 2009 decision to grant rival Globalive Communications Corp. a wireless license.
“Improper considerations were fundamental” to Industry Minister Tony Clement’s overruling of the regulator, Mr. Justice Roger Hughes said in his ruling. “Therefore the decision of the governor in council must be quashed,” he said referring to the legal term for Clement and the government cabinet.
Globalive, backed by Egyptian billionaire Naguib Sawiris’ Orascom Telecom Holding SAE, was deemed not to meet Canada’s foreign ownership rules by the country’s telecommunications regulator in October 2009. That decision was reversed weeks later by Clement, paving the way for the company to sell mobile phones to Canadians in December 2009.
Globalive is “very disappointed with this decision,” the Toronto-based company said today in a statement. “From the beginning, we have maintained that we are fully compliant with the rules.”
At the time Clement overruled the Ottawa-based Canadian Radio-television and Telecommunications Commission, he said there were differences over the interpretation of whether foreigners had “effective control” of the company. The CRTC had ruled that a non-Canadian holds two-thirds of Globalive’s equity, is the principal source of technical expertise, and provides it with access to an established trademark.
The company said it is examining its options and doesn’t “intend to back down,” Globalive Chief Executive Officer Anthony Lacavera said in the statement.
Justice Hughes said he was deferring when the ruling would take effect by 45 days. Clement said his government is considering appealing today’s ruling.
“We are carefully studying the decision and considering the options, including a possible appeal,” Clement said in a posting on Twitter that was confirmed by his office.
“This seems to be a very big deal, and potentially quite positive for the incumbents,” Jonathan Allen, an analyst at RBC Capital Markets in Toronto, said today in a note. He has an “outperform” rating on BCE and “sector perform” rating on Rogers.
Rogers climbed 2.1 percent to C$35.82 at 4:15 p.m. in Toronto Stock Exchange trading. BCE climbed 1 cent to C$36.45, reversing an earlier decline.
BCE is reviewing the decision and doesn’t have any immediate comment, said Mark Langton, a spokesman for the Montreal-based company. Jan Innes, a Rogers spokeswoman, declined to comment.