Opening capital markets

April 30, 2012 / 6 Comments

The budget implementation bill has introduced the expected changes to open Canada’s telecom market to more liberalized foreign ownership.

Bill C-38, the Jobs, Growth and Long-term Prosperity Act, contains provisions to amend the telecom act to permit foreign ownership of carriers that have less than 10% share of the total Canadian telecommunications market. This is accomplished by introducing an “or” clause (part c) to the eligibility section:

  1. A Canadian carrier is eligible to operate as a telecommunications common carrier if
  1. it is an entity incorporated, organized or continued under the laws of Canada or a province and is Canadian-owned and controlled;
  2. it owns or operates only a transmission facility that is referred to in subsection (5); or
  3. it has annual revenues from the provision of telecommunications services in Canada that represent less than 10% of the total annual revenues, as determined by the Commission, from the provision of telecommunications services in Canada.

This definition is basically designed to cover all current telecom carriers in Canada other than Bell, Rogers and TELUS.

Foreign owned carriers can grow beyond the 10% limit, as long as it isn’t through acquisition:

  1. A Canadian carrier that is eligible to operate under paragraph (2)(c) remains eligible to operate even if it has annual revenues from the provision of telecommunications services in Canada that represent 10% or more of the total annual revenues from the provision of telecommunications services in Canada as long as the increase in its annual revenues from the provision of telecommunications services in Canada to 10% or more of the total annual revenues from the provision of telecommunications services in Canada did not result from the acquisition of control of another Canadian carrier or from the acquisition of assets used by another Canadian carrier to provide telecommunications services.

Foreign ownership will be among the areas discussed at the Regulatory Blockbuster at The 2012 Canadian Telecom Summit, June 4-6 in Toronto.

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