Canadian charities benefit from Globalive's dilemma

Wed Nov 18, 2009 3:42pm EST
 
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TORONTO (Reuters) - Hundreds of Canadians who expected to start new jobs in call centers and retail stores during the holiday shopping season are instead manning food banks and soup kitchens with blessing of their new employer.

The company, Globalive, built up a 800-strong workforce as it geared up for launch of Canada's newest mobile phone service in the coming weeks.

But those plans went awry when the country's main telecom regulator ruled the company was effectively under the control of its Egypt-based financial backer, in violation of Canadian rules on foreign ownership.

The federal government now has to decide whether to overrule the regulator and allow Globalive to compete with the country's Big Three carriers: Rogers Communications, BCE Inc and Telus Corp.

Meanwhile, many of those on Globalive's new payroll have nothing to do. So the company sent about 400 of them out to work for Toronto and Calgary-area charities such the Salvation Army and Habitat for Humanity, it said in a statement on Wednesday.

The company spent more than C$442 million ($421 million) on buying wireless spectrum in a government auction last year that was designed to foster fresh competition.

Industry Canada is now reviewing the ruling and could potentially overturn it. BCE, Telus and Rogers oppose intervention and have said the regulator, the Canadian Radio-television and Telecommunications Commission, made the right decision.

The CRTC found that Globalive is under foreign control, since its backer, Orascom Telecom, "has the ongoing ability to determine Globalive's strategic decision-making activities."

The regulator said Orascom owns 65.1 percent of Globalive's equity, has entered into a strategic technical arrangement with Globalive, and controls and holds the Wind brand under which Globalive had been set to operate. It also holds the overwhelming majority of Globalive's outstanding debt.

($1=$1.05 Canadian)

(Reporting by Wojtek Dabrowski; editing by Frank McGurty)