Mobilicity wireless launch approved by CRTC

New wireless carrier Mobilicity has been given the green light to start operations this spring, with the CRTC requiring a few minor changes to its ownership and control structure.

Data & Audio-Visual Enterprises (DAVE) Holdings, the company that controls Mobilicity, must first change the veto rights of its two biggest shareholders, Toronto entrepreneur John Bitove and his company Obelysk, and New York-based Quadrangle Capital Partners.

DAVE had proposed that the partners would each have the right to veto any expenditure over $10 million, or any fees for hiring investment bankers or financial advisers over $250,000.

The regulator found the $10 million figure to be less than five per cent of the enterprise value of the company, and has instructed DAVE to adjust the veto's monetary threshold accordingly in order to be consistent with similar decisions on other new wireless companies, Globalive (Wind) and Public Mobile. The $250,000 fees threshold, however, can stand.

The five per cent rule is necessary to ensure that a non-Canadian minority shareholder doesn't undermine the Canadian management team and board of directors, the CRTC said. The enterprise value of the company will have to be calculated every two years by an independent party, it added.

DAVE will also be required to add one more Canadian-nominated director, bringing its proposed nine-member board to 10. The board's chair will also have to be Canadian, and be given a tie-breaking vote in the case of a deadlock, the CRTC said.

The company has 30 days to make the changes to its ownership and control structure.

Mobilicity said it had no issues with the changes and will be proceeding as planned with its spring launch in Toronto.

"Any change is significant, but we'll be making them so we'll be there within the prescribed time frame," said chief operating officer Stewart Lyons. "We'll be out there before you know it."

Bitove and his partners spent $243 million for 10 wireless spectrum licences across Canada in a 2008 auction. In February, the group announced that it would launch service under the Mobilicity brand, first in Toronto this spring, and then in Vancouver, Calgary, Edmonton and Ottawa later this year.

The new carrier will compete with Bell, Rogers and Telus, as well as new carriers Public Mobile and Wind. Public Mobile got CRTC approval, with minor changes, last month. The regulator, however, rejected Wind's ownership structure last year on the grounds that the company's Egyptian backer, Orascom, had too much control.

The federal government overruled the CRTC in December and cleared the way for Wind to launch.