OTTAWA-GATINEAU – Nascent wireless company Globalive is so worried about protecting the identity of its financial backers that this week it has asked the CRTC for what looks like CSIS-level security if and when those financiers do meet the Commission.
Others say the request is unprecedented and should be immediately dismissed.
In a three-page letter to the Commission, Globalive doesn’t just want their competitive financial information kept confidential, but “requests that the Commission treat as confidential the name and other identifying characteristics of a Canadian financial institution (the Bank), or any other financial institution, which may provide witness to appear at the hearing to discuss Globalive’s financing plans,” reads the letter, dated September 3.
The Commission is currently examining the ownership structure of the company, a ‘Type 4’ review of its ownership and control, “given the complexity of Globalive’s corporate structure and financing arrangements,” said the Regulator when it opened the proceeding in July.
Other Canadian companies, such as Telus, say that so much money to launch Globalive has come from abroad, from primary backer and global wireless operator Orascom Telecom, that no matter the share structure, it is not a Canadian company and of course our laws require that Canadian telcos be controlled by Canadians.
“Orascom not only owns, directly and indirectly, 65.06% of the equity of Globalive, it has also contributed 99.92% of Globalive’s known debt,” Telus’ commentary to the Commission read. “Assuming a debt-equity ratio of 50:50, Orascom owns a massive 82% of Globalive’s capital.”
Globalive’s letter to the CRTC this week says its banker does and has done business with other incumbent Canadian telcos and is so worried if those incumbents find out that it is helping the newcomer, that it “could result in material financial loss of business to the Bank (or to other financial institutions) if a major Incumbent Wireless Carrier chose to direct its financing work elsewhere in response to learning that the Bank (or other financial institutions) are assisting Globalive in this regulatory proceeding or generally in its financing plans.”
Bell Canada, which filed a response to the letter today, says there is no way Globalive’s secrecy request is supportable. “Not a shred of evidence has been cited that would give rise to such an expectation that financing business would be transferred,” reads Bell’s letter, dated today. “For example, no contractual provision has been cited that would suggest a threat, let alone a likelihood, that an incumbent carrier would transfer its financial business to a competing financial institution.”
(Ed note: Before it gets even weirder below, we want to note that in covering the industry for 12 years, we have never come across a request like this. Plus, when it comes to securing financing, big companies tend to go to the bank where they can get the best deal, often regardless of with whom else the bank does business.)
However, just before the end of the letter to the Commission (sent by large, well-regarded law firm which does business for many media and telecom clients, McCarthy Tetrault, on behalf of their client Globalive) the company asks for something totally unprecedented.
Basically, it wants a secret passageway for its financiers to appear before commissioners so that no one else can see them.
Globalive wants the Commission to provide “a secure means of access to the hearing room by any witnesses of the Bank or other financial institution, so that representatives of the Incumbent Wireless Carriers or the public cannot ascertain the identity of the Bank or other financial institution.”
And it also wants the CRTC to “take any other steps as may be required to prevent the disclosure of the name or other identifying characteristics of the Bank or other financial institution.”
This “is the most bizarre request I have ever seen,” Telus senior vice-president government and regulatory affairs, Michael Hennessy, someone with several decades of industry regulatory experience, said in an e-mail to Cartt.ca.
Adds Bell’s official response today: “Globalive has failed to address the public interest which overwhelmingly favours disclosing the identity of the financial institution and its representative in this case,” it reads.
“The identity of witnesses and the organizations that they represent is inextricably tied to the conduct of open, transparent and publicly accessible proceedings. Granting Globalive’s request would set a bad precedent that would encourage technical experts, economists and even counsel to request to appear in camera on the basis that their public appearance might jeopardize their ability to attract and retain future business. Such an outcome would engender mistrust rather than confidence in open and transparent Commission processes and decision-making.”
What Globalive’s request might mean – according to chattering speculation among Regulatory folk we’ve talked to – is that billionaire Naguib Sawiris, Orascom’s CEO, is coming to Ottawa for the September 23rd hearing.
Sawiris’ Orascom Telecom does business all over the world and has close to 80 million wireless customers in places like Italy, Greece, Pakistan, North Korea, Egypt and other African nations, but he rarely speaks in public.
You can see recent clips of him here and here, though.
Stay tuned for more on this.
