ARCHIVÉ -  Transcription de l'audience

TRANSCRIPTION DES AUDIENCES DEVANT

LE CONSEIL DE LA RADIODIFFUSION

ET DES TÉLÉCOMMUNICATIONS CANADIENNES

SUJET:

Instance visant à vérifier si Globalive répond aux critères en matière de propriété et de contrôle

TENUE À:

Salon Réal Therrien

1, Promenade du Portage

Gatineau (Québec)

le 23 septembre 2009

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès-verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

Conseil de la radiodiffusion et des

télécommunications canadiennes

Transcription

Instance visant à vérifier si Globalive répond aux critères en matière de propriété et de contrôle

DEVANT:

Konrad von Finckenstein   Président

Len Katz   Conseiller

Peter Menzies   Conseiller

AUSSI PRÉSENTS:

Cindy Ventura   Secretaire

Stephen Millington   Conseillers juridiques

Leigh-Anna Gates

Lyne Renaud   Gérante de l'audience

TENUE À:

Salon Réal Therrien

1, Promenade du Portage

Gatineau (Québec)

le 23 septembre 2009

- iv -

TABLE DES MATIÈRES

   PAGE / PARA

Globalive   6 / 34

TELUS   161 / 991

Rogers Communications Inc.   196 / 1186

Bell Canada   231 / 1362

   Gatineau (Québec)

--- L'audience débute le mercredi 23 septembre 2009 à 0900

1   THE CHAIRPERSON: Good morning. Bonjour, tout le monde.

2   Je vous présente les membres du comité d'audition: Len Katz, le vice-président des télécommunications; Peter Menzies, conseiller régional de l'Alberta et des Territoires-du-Nord-Ouest; et moi-même, Konrad von Finckenstein, président du CRTC. Je vais présider l'audience.

3   L'équipe du Conseil qui nous assiste comprend, notamment, Lyne Renaud, coordonnatrice de l'audience et directrice des propriétés et des acquisitions; Steve Millington et Leigh-Anna Gates, conseillers juridiques; et Cindy Ventura, notre secrétaire d'audience.

4   Avec une infrastructure qui relie presque tous les foyers du pays, les communications jouent un rôle essentiel dans le développement économique et social du Canada. C'est pourquoi la Loi sur les télécommunications stipule que les Canadiens doivent avoir le contrôle des entreprises de télécommunication. Elle précise aussi le niveau acceptable de propriété et de contrôle étranger.

5   Under subsection 16(3) of the Act a corporation is considered Canadian-owned and controlled if at least 80 percent of the members of its board of directors are Canadians; Canadians own, directly or indirectly, at least 80 percent of the voting shares that have been issued and are outstanding; and if it is not otherwise controlled by persons that are not Canadians.

6   Globalive Wireless Management Corporation is a new company seeking to enter the Canadian wireless market. At this hearing the Commission will consider whether Globalive is in compliance with Canadian ownership rules, which require that a telecommunications company be Canadian-owned and controlled, de jure and de facto at all times.

7   This public review is being conducted under the Commission's new framework which was introduced in July 2009.

8   Globalive has submitted documentation indicating it has entered into a number of ownership and financial arrangements that are both complex and novel. Consequently, we determined that our review would benefit from the input of third parties during a public hearing. That is what we are doing today.

9   As you know, a determination as to Globalive's Canadian ownership has already been conducted by Industry Canada. While the Commission and Industry Canada's determinations are made pursuant to different statutes, the test applied by both of us is essentially the same.

10   Industry Canada made their determination under the Radio Communications Act at an earlier point in time and in the context of awarding a licence pursuant to the advanced wireless auction process.

11   We are looking at the issue now under the Telecommunications Act in the context of a company that must establish a telecommunications network and operate as a telecommunications carrier. In effect, we are applying the same text test, but in a different context and with a different focus.

12   The first phase of the hearing will include public participation and take all of today.

13   During the second phase, beginning tomorrow, the Panel will question Globalive's representatives in camera about confidential materials. Only the Panel, Commission staff and representatives from Globalive will be in attendance during that phase. A redacted version of the discussion will be made available for the public record of any information that is not confidential.

14   During the third phase, which we will start at 4:00 p.m. tomorrow, the Panel will hear closing arguments from parties in reverse order, i.e. starting with TELUS, Rogers, Bell Canada and ending with Globalive.

15   Our intention is to issue a decision on this matter within 30 days from the end of the hearing process.

16   That's all I have to say by way of introduction.

17   J'invite la secrétaire d'audience, madame Ventura, à faire quelques annonces.

18   Madame Ventura.

19   THE SECRETARY: Thank you, Mr. Chairman, et bonjour à tous.

20   Before beginning I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.

21   Le service d'interprétation simultanée est disponible durant cette audience. L'interprétation anglaise se trouve au canal 4 et l'interprétation française au canal 5.

22   Interpretation services will be available throughout the duration of the hearing. English interpretation is available on Channel 4 and French interpretation on Channel 5. You may obtain an interpretation receiver at the back of the room.

23   When you are in the hearing room we would ask that you please turn off and not only put on vibration mode your cell phones and BlackBerrys as they call interference in the internal communication systems used by our translators and interpreters. We would appreciate your cooperation in this regard throughout the hearing.

24   Please note that there is extra seating in the examination room located to your left outside of the hearing room where you can hear and see the hearing via our video conference system. In the examination room you may consult the public documents for this hearing. The phone number for the examination room is 819-997-7998.

25   There is a verbatim transcript of the hearing being taken by the court reporter sitting to the table on my left. If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break.

26   Please note that the transcript for the public portion of the hearing will be posted on the Commission's website.

27   Finally, the Commission is placing on the public record of this proceeding a document entitled "Globalive Ownership Structure". Copies are available in the public examination room.

28   We will now proceed with the presentations in the order of appearance set out in the Agenda. Each participant will make their presentation, followed by questions by the Hearing Panel.

29   Now, Mr. Chairman, we will proceed with Item 1 on the agenda.

30   I would now invite Globalive to make its presentation.

31   Appearing for Globalive is Mr. Anthony Lacavera.

32   Please introduce your colleagues, including anyone participating via video conference and you will then have 45 minutes for your presentation.

33   Mr. Lacavera...?

PRÉSENTATION

34   MR. LACAVERA: Thank you.

35   Good morning, Mr. Chairman, Commissioners Katz and Menzies, and members of the CRTC staff.

36   I am Anthony Lacavera, Chairman and Chief Executive Officer of Globalive Communications and I am the controlling shareholder in AAL holdings, the major Canadian investor in Globalive Wireless Management Corp.

37   I would like to introduce the other members of our witness panel.

38   Ken Campbell is the Chief Executive Officer of Globalive Wireless Management Corp.

39   Aldo Mareuse is the group Chief Financial Officer of Orascom Telecom, OT.

40   Brice Scheschuk is the Chief Financial Officer of both AAL Telecom and Globalive Communications.

41   Alex Shalaby is a Member of the Board of OT and an authorized representative of the board present at this hearing.

42   Simon Lockie is the Chief Legal Officer of both AAL Telecom and Globalive Communications Corp.

43   Bruno Ducharme, President and Chief Executive Officer of TIW Capital, is an independent Director of Globalive Wireless and its holding companies.

44   Behind me and to my left are David Dobbie, Director of Legal Affairs at OT;

45   Hank Intven, a partner of McCarthy Tétrault and External Regulatory Counsel to the jointly owned Globalive Investment Holdings Corp.; and

46   John Andrew, a partner of Lang Michener and OT's counsel for the Globalive Wireless transactions.

47   Appearing by video link from Egypt is the founder and Chairman of OT, Mr. Naguib Sawiris.

48   In addition, I would like to introduce some of the key members of our team who are present in the room today and available to answer any questions you may have for them.

49   Behind me and to my right is Ezio D'Onofrio, President and CEO of Globalive Communications;

50   Michael O'Connor, who owns the holding company that is the third shareholder in Globalive Investment Holdings Corp.;

51   Michel Hubert is with the Corporate Finance Group at OT in France;

52   Andrea Wood is the Chief Legal Officer of Globalive Wireless Management Corp.; and

53   Alaa Abdesghaffar is the Access Technical Development Director at OT and he is the leader of OT's Operation Support for Globalive.

54   Lastly, Ed Antecol is the VP Regulatory Affairs for Globalive Communications.

55   I would now like to begin with our formal presentation.

56   We have organized our remarks around the themes that the Commission has indicated it would like to explore today in these proceedings.

57   First I would like to address the relative experience of the shareholders in Globalive Wireless.

58   Over the past 10 years the company I started, Globalive Communications, has grown into a successful player in a number of Canadian telecom markets. The Globalive group of companies includes Yak Communications, includes Yak Communications, OneConnect Services, Canopco Hospitality Telecom, and Globalive Carrier Services, and now Globalive Wireless which, as the Commission knows, will be operating under the "WIND" brand name in Canada.

59   Globalive provides services to over a million Canadian households under the Yak brand, over 3000 hotels and hospitals in over 30 countries with Canopco, and over 5000 businesses in North America through OneConnect.

60   Globalive Carrier Services provides wholesale billing and collection services to carriers around the world.

61   I have started, co-founded or provided seed funding to seven telecom businesses to date. I am very proud of the fact that our companies have won numerous business awards which recognize them as being well-managed, fast growing, successful start-ups and great places to work.

62   I have been watching the wireless space very closely, waiting for the right opportunity to get involved. During that time we pursued joint venture discussions with a number of Canadian telcos and investors, but none crystallized into a live venture.

63   The AWS spectrum auction was just that opportunity. I realized that while I had been successful in competing with TELUS, Rogers and Bell in various niche markets, the wireless space would represent a large new challenge in terms of capital requirements and wireless expertise so I spent a lot of time talking to potential investors and strategic partners. This included alternative Canadian and foreign partners.

64   In particular, I had in-depth discussions with an Icelandic company called Novator. Ultimately those discussions fell through.

65   OT was the ideal partner for us. It had a substantial amount of experience launching wireless businesses internationally; it had access to the necessary start-up capital; but, most importantly, OT and its founder, Naguib Sawiris, share my entrepreneurial spirit and passion for innovation.

66   I recognize that Globalive could successfully manage OT's wireless experience and financial clout with our own Canadian telecommunications experience and our existing Globalive businesses, so I met with OT and we agreed that we would develop a new and innovative approach to bringing a new competitive wireless offering to Canadians.

67   Finally, just as the spectrum auction started Novator dropped out of our consortium. We agreed on a three-way deal between AAL, OT and Michael O'Connor, who had acted as the important intermediary during the early days of our venture.

68   We struck a deal on how to proceed with the venture in a manner that would give us the flexibility we needed to get the business launched quickly and successfully. It also give us flexibility to pursue additional and alternative financing for the business on an ongoing basis. Both OT and I instructed our lawyers and other advisers to develop a corporate structure that suited her different needs as investors and that complied with Canadian law.

69   Mr. Chairman, you will understand from what I have said that my business relationship with OT only crystallized in the last few days before the auction. In fact, Novator was still part of our consortium when the first bids were made for the spectrum prices. No one knew how high the auction fees might go. There was a huge amount of risk for all of us and we were very cautious about our relationship.

70   That was then. We have now had over a year of working together. We have deepened our business relationship and become much more comfortable with each other.

71   As with any good partners, we have continued to look for ways to improve our relationship. To that end, I am pleased to say that we have just agreed to make a few changes to our shareholder arrangements. Since these changes are relevant to some of the issues we will be discussing today and in these proceedings and, since they are quite simple to describe, I will do that now.

72   First, have decided that I will take over the role of Chairman of the Boards of both the wireless operating company, Globalive Wireless Management Corp., and its holding companies.

73   Second, I have agreed to remove from our agreement the withdrawal right which permitted me to extract the wireline business from our joint venture during the first year after the grant of spectrum licences.

74   In addition, we have agreed I will not be entitled to exercise the rights I had to put my shares and OT will give up its right to call my shares. I do not expect to ever exercise my put right which was put in place as an exit mechanism to help deal with any irreconcilable differences, but now I have agreed that we will definitely not exercise the put or call rights in the first three-year period.

75   Mr. Chairman, we would be pleased to answer any questions about these changes after our presentation.

76   We respect the Commission's authority to conduct this review of our ownership and control. We have co-operated fully in this hearing process and have provided the Commission and our competitors with a great deal of information about our business.

77   However, while it was undoubtedly not the Commission's intent, the incumbents have turned this review process into an adversarial one with the single-minded purpose of trying to prevent us from being able to compete with them.

78   Despite the considerable uncertainty raised by this hearing process we have continued to build our business and to hire employees. We plan to launch our new wireless services as soon as possible following your review.

79   We are hopeful that, like Industry Canada, you will find arrangements fully compliant.

80   We look forward to working with you to complete your review as expeditiously as possible.

81   Mr. Chairman, Members of the Commission, I would now like to direct your attention to the video monitor and Mr. Naguib Sawiris who will now address you.

82   NR. SAWIRIS: Good morning, Mr. Chairman. Thank you very much for this opportunity to address you, Members of the Commission.

83   My name is Naguib Sawiris, I am the Chairman and Chief Executive Officer of Orascom Telecom. I will comment on some of the matters which are the subject of your hearing and also provide my perspective on the Canadian market and my reasons for agreeing to invest, I would say, in Canada.

84   Orascom Telecom agreed to partner with Tony Lacavera's company for two main reasons.

85   First, the potential in the Canadian market was obvious.

86   Second, Tony and his team impressed us as being the right co-investors for us in Canada.

87   The Canadian wireless market is significantly under-penetrated at 62 percent penetration. Canada lags behind the U.S. by three years, which translates into about 7 million missing subscribers. In addition, the incumbent wireless operators in Canada have very high ARPUs.

88   We were also attracted by the fact that the Canadian government announced a strong pro-competitive policy for new wireless competition. This was clear to us with the setting aside of AWS spectrum for new entrants and with the mandatory roaming and tower sharing rules -- which have not been so successful to date to implement, by the way due to the resistance from the incumbents to co-operate, I would say.

89   I understand that the incumbents are arguing that OT somehow controls Globalive. That is not true. I knew from day one that OT cannot control Globalive. I told our legal and finance team from the outset to work with Tony and his team to fully comply with your ownership and control rules.

90   You may be wondering why OT invested as much as it has in Canada when it does not have control. There are several reasons.

91   We know that is the only way a non-Canadian company is allowed to invest in Canada -- that is the obvious reason -- so we wanted to be sure we had a partner we could trust.

92   I met with Tony personally and that's where I spent most of my time. I wanted to be sure that if we are going to entrust someone with the control of a company I need to be sure that he is the right person and he has the right criteria and he has the right merit.

93   Tony has impressed me as being an honest, young and very ambitious entrepreneur. He was the partner I was looking for. I met him and liked him. It's important for me. I usually am not a good partner when the chemistry doesn't work, I always judge my feeling towards a person. Tony is a real entrepreneur and builder. I liked the fact that he was as ambitious as I was at his age. I still am at my age, but I think that should be a proof at why I ventured into a difficult venture like that one.

94   I also believe that our independent board members, like Bruno Ducharme, as well as Ken Campbell as CEO, will help protect and grow our investment. These are individuals with a successful track record in the telecom business.

95   I am not the right person to talk about the details of our investment structure and the legal documents. I left the development of those details to Mr. Aldo Mareuse, my Chief Financial Officer; David and the Orascom Telecom team.

96   Orascom Telecom is a large publicly listed company and our management always represents the interests of our broad base of shareholders.

97   While I certainly trust Tony, of course the OT legal and finance teams work to try and secure the usual minority shareholder protection rights in accordance with your rules. This is not an attempt by OT to control Globalive Wireless, but rather simply reflects good corporate governance and usual market practices. We owe it to our own shareholders to do that.

98   Orascom Telecom is not very happy about having become the main financial sponsor of the Globalive Wireless business, especially in this financial crisis that has dried all the cash around us. We would more than welcome additional Canadian capital -- I might add, which we have sought seriously with no success until now, I am however more optimistic in the future.

99   However, the reality is that after we invested in the spectrum auction we ran into a severe -- I say not "we", but the world ran into a severe financial crisis which has prevented us from obtaining other financing reasonable terms. I have done some roadshows myself and it was like talking to an empty box. Market conditions have been awful since then and it has been impossible to raise capital anywhere in the world.

100   That said, I strongly believe that final regulatory clearance, improved markets and the imminent launch of Globalive service -- which I might add was done under a lot of risks from our side taking this process which we had, I must say, not envisaged to be as lengthy and thorough as it is -- it will provide a good platform for raising additional money in the future.

101   Orascom Telecom does not want to be the sole lender or the primary lender for the Globalive Wireless business and is doing it out of necessity and not of conviction. That is not our business model. We are not in the lending business and I want to emphasize that. However, our reputation and integrity forces us many times to prove that we care very much for our image and therefore we did that. I want to reduce Globalive's reliance on our debt financing as quickly as I can, but to date we have no other options.

102   As you will hear from Brice, Aldo and others, our efforts to reduce the venture's dependence on risk capital are well underway, but any artificial deadlines or restrictions would only make the task more difficult, if not impossible. The most critical element of a mobile company's success is speed, speed to market.

103   If we are to compete efficiently, I can't emphasize enough how important it is for us that CRTC compliance process be completed as soon as possible. The fact that we have continued to invest regardless of these issues shows our determination not to deprive the Canadian consumers from a new competitor in the market while complying to all your regulations which we expect and intend to adhere to completely.

104   Thank you very much. That completes my remarks.

105   MR. LACAVERA: Thank you, Naguib.

106   Now, Mr. Chairman, I would like to ask Mr. Bruno Ducharme to say a bit more about the relative experience issue.

107   Bruno is one of the independent Directors of Globalive Wireless and is holding companies and he is one of the real luminaries of the global wireless industry.

108   Bruno...?

109   MR. DUCHARME: Thanks, Tony.

110   Good morning, Mr. Chairman, Members of the Commission, it is a pleasure to be here this morning.

111   I have some experience dating close to 20 years at telecommunications wireless and I have some perspectives on the issues of size and competitiveness and competitive intensity and markets. I also have some perspective on the criteria for success in mobile competition, namely, entrepreneurial management style, financial and operating discipline, and last but not least, consistent and continuous access to capital markets.

112   I would like to make a few comments about these points.

113   From a Canadian perspective, I was born and bred in Canada, but I have operated around the world.

114   As far back as 1992, I assisted in setting up a small company, which had a CT2 Plus licence, called Canada PopFone. Commissioner Katz will remember that company from way back when. That company became Microcell a couple of years later, and successfully applied for and won the licence to be a PCS operator in Canada, alongside Clearnet, obviously. Those two new entrants played a very big role in introducing genuine competition in Canada and low prices, obviously.

115   Both of these companies had a brilliant start. Both of them went public, actually pretty quickly, soon after launch, and this was an environment where, obviously, customers in Canada had plenty of choice. We had Bell Mobility, we had Rogers Cantel, we had BCTel, we had AGT, we had Microcell, and obviously we had Clearnet.

116   Unfortunately, the telecom bubble collapse in 2001 was unkind to Microcell, which found itself in a tough refinancing spot in 2003-2004, and was eventually absorbed by Rogers; that is, after a hostile bid from TELUS.

117   Clearnet was a bit luckier, at least their shareholders were, as they sold out to TELUS. If you will recall, it was George Cope at the time who was the CEO of Clearnet and moved on to TELUS, and he is now with BCE.

118   The upshot of all of this, of course, is that the competitive environment shrank dramatically, and the competitive experiment fell short. And I would say that it was not because managers were not good, it was not because they didn't have discipline, I would say that access to markets was really the thing that changed the environment here in Canada.

119   In the mid-nineties I left the Canadian telecom scene to start up a new company called TIW. We started from scratch and won licences in the late nineties in China, India, Brazil, Romania and the Czech Republic. We did a number of start-ups, six or more start-ups, and we had a fortunate outcome, we sold the company in 2004-2005 to Vodafone for more than $5 billion.

120   At the time we had about 7 million customers, which, by Canadian standards, is pretty big, but obviously, globally, it's pretty small, especially when compared to the type of people that we were competing against, such as Orange -- that is, France Telecom -- Deutsch Telecom, Telefonica and others. Each of these players has about 100 million customers worldwide.

121   One of the things that I appreciated from that experience was what it takes to succeed internationally, or in any new market. You need good entrepreneurial managers, you need entrepreneurial vision, you need operating and financial discipline, and, again, you need timely and consistent access to capital markets.

122   Since my retirement in 2005, I actually continued working pretty much as hard as I ever had. I continue to act as a strategic advisor and a partner in various mobile ventures around the world, alongside private equity groups, in Japan, in Greece, Lithuania, Latvia and Austria. In all of these cases, in all of these markets, it's the same story, we are competing against very big players, and in all cases our operating companies are independent companies, independent of large, multinational groups.

123   In each case, our success rests entirely on the people that we have at the front line, talented executives. They are the people who make the difference, and you might say that they are the people who control the business.

124   As you will have found in the evidence, one of the people who used to work with me in Lithuania and Latvia was none other than Ken Campbell, who moved on from Lithuania and Latvia to head up Globalive, and previously was an executive in our group in Romania.

125   Tony and Naguib asked me to join because my experience is absolutely relevant to the issues that we have here in the Canadian market. I have experience in Canada, I have experience elsewhere, and my desire, my intention, is to continue to serve the interests not of any one shareholder, but the interests of the company, to ensure that it remains compliant with Canadian regulation, and, of course, that it succeeds in the market.

126   Thank you very much.

127   MR. CAMPBELL: Good morning, Mr. Chairman, Commissioner Katz and Commissioner Menzies. My name is Ken Campbell and I am the Chief Executive Officer of Globalive Wireless.

128   We understand that you would like confirmation of who is actually running the Globalive Wireless business.

129   As CEO, I run the business on a day-to-day basis, but I don't do it alone. I have my Board, I have my shareholders, and, most importantly, as we speak, there are over 260 men and women across this country building a brand new wireless network.

130   Since I was appointed CEO last November 1st, we have assembled an exceptional management team, a team of highly motivated people who are intent on bringing a better wireless experience to Canadians.

131   These people are making operational decisions every day, all of them. For major strategic decisions, it is my responsibility, as with all CEOs, to seek the guidance and support of shareholders and my Board.

132   The eight key members of my team, all of whom, except one, are Canadians, include Chris Robbins, who is from Edmonton. He has overall responsibility for our commercial operations. Chris worked with me at Vodafone and TIW.

133   Our CFO, who just started today, is Heather Gomes, who was previously with Bell and Virgin Mobile.

134   Our Chief Legal Officer, who is here with us, is Andrea Wood. Andrea was previously with Bennett Jones and with Alliance Atlantis.

135   Our Chief Technical Officer is Marius Armeanca, who is a Romanian national. Marius previously worked for OT on building several Greenfield sites in other parts of the world.

136   Our head of HR, Christina Sanders, was previously with Virgin Mobile.

137   Our head of Procurement, Maged Wadie, a Canadian, was previously with Wind in Italy.

138   Our head of Customer Operations, Larry Austin, was previously with MTS Allstream and with the Canadian Military.

139   Finally, our Chief Information Officer is Scott Waller, who previously headed successful online businesses and software businesses here in Ottawa.

140   We are currently hiring, Mr. Chairman, up to 300 additional positions -- right now -- for our stores and for our call centres. My objective in accepting the position of CEO has been and remains very simple: to launch and to run a successful wireless business that will compete effectively in the marketplace and will, in return, generate exceptional value for my shareholders.

141   Mr. Chairman, the capital investment required for a national wireless start-up is well over $1 billion. Since there is a limited amount of venture capital in Canada, I think everyone expected that international debt and international equity would come to our market during the auction. All Canadian telecom carriers clearly have to comply with the guidelines set out in the Telecommunications Act. However, neither that Act nor the government's spectrum policies excluded foreign capital or investment.

142   As Naguib has explained, last year's credit crunch has forced us to rely on more shareholder debt than is optimal. For management, our interest is, frankly, in building equity and not simply servicing debt.

143   My mandate includes building a stronger balance sheet for this business, to allow it to grow without compromising the initial investments that each of the founding shareholders has made.

144   This is a difficult task, and it is made all the more complex by the regulatory process and by the current macroeconomic conditions.

145   While we do have a strong management team, we are also fortunate that we can rely on our shareholders for advice and for expertise in a number of areas. Understandably AAL and Tony's advice is largely related to the Canadian telecom market. OT's advice is related to matters in which its international relationships and its perspective can add value in areas such as procurement.

146   Under our Technical Services Agreement we are entitled to seek technical advice from OT. The agreement clearly provides for OT to provide advisory services only. In practice, OT has provided very helpful advice to Globalive Wireless on a number of technical matters. It has provided useful input, especially in our ongoing negotiations with suppliers and vendors.

147   A major source of value added from OT has been its ability to leverage its relationships with suppliers to ensure that the prices we secure are as low as possible, and that system specifications are particularly relevant to our needs.

148   This helps us, sir, in maintaining and building a strong, lean and competitive operation.

149   We have now entered into comprehensive, turnkey equipment and services agreements with two major vendors. These companies are now a primary source of advice on technical and operational issues.

150   OT, for its part, continues to play a role in advising our Technical and IT departments on issues related to vendor management, but this requirement has subsided as we have built our strong internal team here in Canada over the last several months.

151   As well, the vendors themselves play an active role in the implementation and rollout of our network.

152   Going forward, we do not expect to have anyone from OT full-time here in Canada, although we will likely request specialized staff for short-term secondments, or for brief working visits, as the need arises.

153   OT will continue to be a source of specialized technical advice on wireless operational matters, as will AAL. However, operational decisions will be made by Globalive's Canadian management, with advice from vendors and various consultants that we engage from time to time.

154   Finally, we were pleased to be able to persuade our non-Canadian investor to license the Wind brand. This licence is on extremely favourable terms, with absolutely no strings attached in terms of influence or control. The brand licensing agreement will translate into significant savings for Globalive Wireless. It will allow us to leverage their relationships and piggy-back on Wind purchases.

155   MR. LACAVERA: Mr. Chairman, I would now like to turn your attention to a discussion of the business deal between the shareholders.

156   The essence of the deal works like this. My company and OT agreed just before the deadline for bidding that we would co-invest and cooperate together to bid in the auction.

157   I agreed to contribute my interest in Globalive Communications Corp. as equity capital in the business -- in the wireless venture.

158   OT contributed cash as equity to buy out minority shareholders in Globalive.

159   And since we were literally on the eve of the auction when we made our deal, OT also agreed to loan the venture sufficient funds to pay for the spectrum auction fees.

160   We then asked our lawyers and financial advisors to develop a transaction structure that reflected the interests of OT and AAL, as well as those of Michael O'Connor, a Canadian who had been working with OT and who was instrumental in the plan for the new wireless venture.

161   I would like to ask Mr. Aldo Mareuse, the group CFO of OT, to give his company's perspective on the arrangements between the shareholders.

162   MR. MAREUSE: Thank you, Tony.

163   Mr. Chairman, Commissioners Katz and Menzies, it is a pleasure to be here with you today to speak for OT in relation to its investment in Globalive Wireless.

164   OT is not as old and well-established a company as TELUS, Rogers and Bell, but we are proud of what the company has achieved to date. Our vision is to become one of the world's leading telecom operators, providing the best quality services to our customers, value to our shareholders, and a dynamic, challenging and fun environment for our employees.

165   We saw Tony and his company as a good match for our entrepreneurial corporate culture. We liked the fact that, like OT, he had significant experience in starting up new ventures, and, unlike us, doing it in Canada. So we agreed to develop a joint project with him.

166   He came to us with a proposal to jointly pursue this opportunity. His track record and enthusiasm won us over, together with a good market analysis prepared by his team.

167   Now I would ask my colleague Mr. Alex Shalaby, a member of the Board of Directors, to introduce himself.

168   MR. SHALABY: Good morning, Mr. Chairman and Members of the Commission. As Aldo said, I am a member of the Board of OT and chairman of the Egyptian company for mobile services, Mobinil.

169   I was involved in the discussions with our CEO and with other Board members on the opportunity to participate in this new venture.

170   I was authorized by resolution of the Board to represent them at the hearing. You have since asked our chairman, Mr. Sawiris, to participate as well, and, like him, I would be pleased to answer any questions you have about our investment in Globalive Wireless. Thank you.

171   MR. LOCKIE: Thank you, Alex. Good morning, I am the Chief Legal Officer of both Globalive Communications, and its various subsidiaries, and also AAL Holdings, of which I am also a shareholder. It is in this capacity that I am appearing before you today.

172   I also fulfilled the same role for Globalive Wireless until recently, when Andrea Wood joined as its full-time Chief Legal Officer.

173   The ownership structure being reviewed today began developing when the parties first met. At that time they identified a mutual interest, as partners, in proceeding to the AWS auction, and entered into an investment agreement intended to set certain parameters and procedures around their relationship in that auction.

174   The focus at that time was on getting to a point where the parties were comfortable proceeding to the auction and letting this new relationship mature and develop.

175   This it did, over the course of the auction and after. A complete set of finalized and executed ownership and control documentation was then filed with Industry Canada following the auction's completion.

176   This set of documentation underwent a thorough and lengthy review by Industry Canada. The documents themselves went through various changes and iterations as part of that process, leading to an ultimate determination of compliance with the applicable rules and restrictions.

177   It was this set of documents that was submitted very shortly after for the Commission's review.

178   This context is relevant to understanding the structure overall, especially as regards the various entities and the shareholder rights and obligations.

179   Our structure has been described as complex, but in reality, in our view, it is straightforward. It is the result of a protracted series of negotiations involving numerous parties, including the Government of Canada, at various stages.

180   The Commission will also appreciate that the ownership structure needed to be flexible enough to reflect the combination of an established wireline business -- that comprised the majority of our net worth -- with a new capital-intensive start-up wireless business, with brand new partners, that we got to know very well, very quickly.

181   For example, the existing Shareholders' Agreements provide for a right, which we have recently given up, to extract the wireline business in the first year following licence issuance. Understanding that right is not difficult, when you understand the context in which the agreements were drafted.

182   Of course, operating within the confines of the applicable ownership and control restrictions, the structure, composition and membership qualifications of the Boards of each entity, and the governance regime of each company, ensures that under all circumstances the right directors are in place, while control and decision-making authority resides with a majority of independent Canadians.

183   As with every other aspect of the structure, these provisions were reviewed at length by Industry Canada. They suggested some changes, which we made.

184   Similarly, there are required shareholder approvals and shareholder veto rights. These operate in precisely the same way and with precisely the same intent as such provisions in virtually all shareholders' agreements that I have ever worked on.

185   These vetoes and required approvals were also carefully scrutinized, and in some cases adjusted, by Industry Canada to ensure compliance with the applicable restrictions.

186   MR. SCHESCHUK: Good morning, Mr. Chairman, my name is Brice Scheschuk and I am the Chief Financial Officer of Globalive Communications Corp. and also of AAL Holdings, of which I am also a shareholder.

187   I also fulfilled the same role for Globalive Wireless from its inception, until recently, when Ms Gomes joined as its full-time CFO.

188   I will begin with a description of the financing of Globalive Wireless.

189   I would like to thank the Commission for properly ruling that the information we have filed about our specific past, present and future financing plans is to be treated confidentially. This information is clearly very competitively sensitive, and disclosing it would affect our future financing negotiations, so we will be limiting our discussion today to issues on the public record.

190   First, we would like to address the fact that OT, in addition to its equity investment, holds most of the outstanding debt financing in Globalive Wireless. As you have already heard, both OT and AAL had planned to rely heavily on external financing to capitalize the Globalive Wireless business and to implement its business plan.

191   The Shareholders' Agreement clearly authorizes GIHC to complete equity financings in amounts sufficient to implement the company's business plan and to refinance the shareholders' start-up financing.

192   The OT loans are in the nature of start-up financing. OT advanced these funds on a quick basis, soon after the shareholders agreed to team up to bid in the AWS spectrum auction. This was necessary in order to meet the auction requirements and cover start-up operational costs. These loans are meant to provide interim financing only.

193   After the AWS auction was completed in August 2008, we pursued external financing to fund the network rollout and business start-up. Details of these financing discussions have been provided to the Commission in confidence.

194   Unfortunately, Globalive's external financing efforts coincided with the most significant business and consumer spending contraction and credit crunch since the 1930s. OT, AAL and the management team of Globalive Wireless are fully committed to replacing the OT bridge loans and to attracting additional debt and equity financing. These efforts will be facilitated by the removal of the regulatory uncertainty once the Commission completes its review.

195   In addition, the project will clearly be more capable of attracting both external debt, as well as equity capital, on reasonable commercial terms, once there are predictable cash flows from the business.

196   Mr. Mareuse...

197   MR. MAREUSE: Thank you, Brice.

198   As you heard from Mr. Sawiris, OT is completely committed to getting out of its loans to Globalive Wireless as soon as possible. We are not interested in remaining the major lender to this project. Our cost of capital is much higher than that of a bank. We want to leverage other people's money, not our own. So any suggestion that we are happy about it, or that we want to delay replacing our loans with other capital, is simply incorrect.

199   The interest rates on the OT bridge loans are reasonable and market-based rates. This is clearly not the type of venture that could be financed by a bank loan. In fact, when the loan agreements were advanced, OT itself was rated single B+. It has since been downgraded to single B.

200   Any suggestion that the interest rates on the bridge loans are high doesn't accurately reflect the level of risk involved in a Greenfield wireless start-up.

201   Finally, Mr. Chairman, we notice that some concerns have been expressed about OT using its loans as a means of controlling the Globalive Wireless business. Anyone who has examined the actual terms of our loan agreement would quickly realize that it has no covenants or other restrictions that could be used to exercise control over the business. It is consistent with, but contains even fewer restrictions than our shareholder agreements.

202   MR. INTVEN: Mr. Chairman and Members of the Commission, I will briefly speak about the legal and policy framework for a section 16 review.

203   There are two parts to the Canadian ownership and control test set out in section 16 of the Telecom Act. As you have said, Mr. Chairman, the first involves purely quantitative thresholds on voting shares and Board seats. No one disagrees that the Globalive Wireless structure is fully compliant with those thresholds.

204   So the only question is whether Globalive Wireless complies with the requirement that:

"...a corporation is not otherwise controlled by persons that are non-Canadians."

205   Note that the law does not say that it must be shown that a company is controlled by Canadians but that it is not controlled by non-Canadians.

206   So, in effect, to find a company ineligible to operate under section 16, it must be positively demonstrated that a company is controlled by non-Canadians, and the Commission will recognize, of course, that this test is different from the test that is set out in broadcasting law.

207   The Telecommunications Act defines "control in fact" as:

"...control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, agreement or other arrangement, the ownership of any body corporate or otherwise..."

208   So the question to address, we would respectfully submit, is whether there is any direct or indirect arrangement, et cetera, that demonstrably allows OT to control Globalive Wireless.

209   The Commission has indicated that it considers the appropriate test for assessing control in fact is the one set out in the NTA's Canadian Airlines decision.

"In that decision, the NTA found that control in fact generally can be viewed as the ongoing power or ability, whether exercised or not, to determine the strategic decision-making activities of an enterprise. It can also be viewed as the ability to manage and run the day-to-day operations of an enterprise."

210   However, the Canadian Airlines decision also states that:

"...minority shareholders and their designated directors normally have the ability to influence a company, as do others such as bankers and employees. The influence, which can be exercised either positively or negatively by way of veto rights, needs to be dominant or determining, however, for it to translate into control in fact."

211   Based on this, it is clear that the proper test to apply in a case like Globalive's is to ask whether the non-Canadian investor demonstrably has the ability to unilaterally "determine" strategic decision-making or to "dominate" decisions related to the day-to-day operations of an enterprise.

212   The ability to influence strategy or operations is not enough. If it is not demonstrable to you that OT has the clear power to determine or dominate such decisions, then it cannot be found to exercise control in fact according to the Canadian Airlines decision and similar precedents.

213   Finally, I would like to summarize four legal, regulatory and policy principles that we submit the Commission should consider in assessing whether a non-Canadian demonstrably controls a Canadian carrier.

214   First, as the Commission has stated in the past:

"The matter [of determining control in fact] is one of fact. Each situation will inevitably raise special concerns. Each will have to be decided on its own particular facts, and on a case-by-case basis."

215   It is neither possible nor practical to develop a rigid template for specific ownership or control arrangements, like vetoes or board membership, which must be applied in all cases. Market participants should be free to develop new approaches to structuring their investments in telecom carriers.

216   Second, it is the policy of the government of Canada to promote wireless competition by introducing new entrants to the wireless markets. Industry Canada has already made a clear finding, as you said, Mr. Chairman, a finding that Globalive Wireless is compliant with the Canadian ownership and control rules.

217   In this context, where two regulatory agencies operate under two statutes that are really part of the same regulatory scheme, the case law suggests that the regulators should carry out their responsibilities in a manner that "presumes a harmony, coherence, and consistency between statutes dealing with the same subject matter."

218   Third, the Canadian ownership and control rules set out in section 16 only apply to companies that are "operating" as telecommunications common carriers, which Globalive, you will recognize, is not today. The rules do not apply to any pre-operational arrangements or work.

219   We have heard some suggestions that if a venture like Globalive Wireless had certain pre-launch problems then they can never be resolved later. That is simply wrong as a matter of law. The time for determining control in fact is once a carrier is operational.

220   Finally, as a matter of policy, we should keep in mind that many, if not most, Canadian telecom carriers were started by or heavily financed in their early years by foreign investors. This includes Bell Canada, TELUS, Unitel-Allstream and many more recent wireline and wireless start-ups.

221   Due to the constraints of our small capital markets, Canadian consumers owe a great debt to non-Canadian entrepreneurs and financial sponsors for helping to establish our industry and to keep it competitive.

222   The last policy argument should obviously not cause the Commission to ignore the law. However, section 16 provides the Commission with substantial discretion to determine what is required to comply with the law in each case.

223   So we are submitting respectfully that the Commission should keep in mind the policy context and not exercise its discretion to scare off the type of non-Canadian risk capital that has helped to establish and to maintain the competitiveness of our telecom industry.

224   MR. CAMPBELL: Mr. Chairman and Members of the Commission, that concludes our opening presentation. Our team is now available to answer any questions you may have.

225   Given the number of representatives we have here, I think the best way to proceed is for you to address any general questions to me. I will either answer them myself or pass them on to the appropriate member of our team. You may, of course, choose to ask specific questions to specific members of our team.

226   Thank you for your time and attention. We look forward to your questions.

227   THE CHAIRPERSON: Thank you for your presentation.

228   First of all, as the Secretary mentioned, there is a document called "Globalive Ownership Structure" which I will use mainly because it is a nice pictorial presentation.

229   I will also ask staff to hand out something called Appendix 8, Globalive's current Board of Directors and Officers. As it was before your announcement this morning, would you please give it to the people from Globalive because I want to understand this morning's changes.

230   Cindy, please start with Mr. Lacavera.

--- Pause

231   THE CHAIRPERSON: As you see there -- and I am sorry, Mr. Sawiris, since you are not here, I can't hand it out to you but we can fax it or e-mail it to you. If somebody gives the Secretary an address, we will do that. Maybe, Mr. Campbell, you or somebody can tell her how to get it to him.

232   MR. SAWIRIS: We will send our e-mail address now.

233   THE CHAIRPERSON: Okay. Perfect.

234   Now, this is what you said this morning and I want to understand what the changes are, Mr. Lacavera.

235   You are now, if I understand it, the Chairman of what we call HoldCo and Opco, is that correct, or Globalive Management Corporation and Globalive Holding Corporation?

236   MR. LACAVERA: Mr. Chairman, as you can see, I have been a Director since the start of the project on all three of the Boards. What we have now done is make me the Chairman of each of those three Boards. I was already the Co-Chairman of the GCHC Board.

237   THE CHAIRPERSON: Yes.

238   MR. LACAVERA: And I am now the Chairman of that Board.

239   THE CHAIRPERSON: So Mr. O'Connor has resigned as Co-Chairman?

240   MR. LACAVERA: I was just going to say Mr. O'Connor is the Vice-Chairman of that Board, GCHC.

241   THE CHAIRPERSON: Okay.

242   MR. LOCKIE: Mr. Chairman, if I can just clarify for the Commission, these agreements were reached very recently. The documentation is not yet completed. We have our lawyers working on that. We would expect in the next couple of days.

243   THE CHAIRPERSON: I expect you to further revise the documents but since this is a fact, you have made the decision, I am trying to put it on here so we can use it in questioning you.

244   So if I understand it now, on page 2, it has also changed, Michael O'Connor, Vice-Chairman and Anthony Lacavera, Chairman?

245   The document I just gave you, second page, top line, it says: Name of Officer. It says: Michael O'Connor, Co-Chairman. It now is Vice-Chairman, if I understand you?

246   MR. LACAVERA: Correct.

247   THE CHAIRPERSON: And the next one, Globalive Management Corporation, it says Dr. W. K. Michael, Chairman. He will resign or has resigned and you will be the Chairman?

248   MR. LACAVERA: Correct.

--- Pause

249   THE CHAIRPERSON: Okay. Mr. Lacavera, so you now are the Chairman of all three corporations?

250   MR. LACAVERA: That's correct, Mr. Chairman.

251   THE CHAIRPERSON: Okay. Now, explain this corporate structure to me, Mr. Campbell, Mr. Lacavera, Mr. Sawiris, whoever wants to. Why are we having this structure? Why do we have three levels of entities? It's obviously in order to comply with the legislation. Where is the strategy is being made? Where is the heart of this beast? Who is going to run the show, at what Board level?

252   MR. LACAVERA: Mr. Chairman, I will pass off to Simon Lockie, David Dobbie, whoever else in a moment or Mr. Sawiris, Mr. Campbell.

253   But from my perspective, of course, the day-to-day operations of the business are run by Mr. Ken Campbell, who was appointed CEO by the Board of CWMC, Globalive Wireless Management Corp.

254   And, of course, I will be a very active Chairman on that Board given my Canadian telecom experience in starting and building Canadian telecom companies. So that is where the day-to-day decisions are being made.

255   And then what I would like to do is maybe start with Ken if you have anything to add to that or Simon to talk about the specifics.

256   MR. CAMPBELL: I think that is a good place to start. That is the way the Wireless Board -- I report to the Board of Directors of Globalive Wireless. I think Simon can explain the upper holding companies.

257   MR. LOCKIE: Certainly. There is no special magic to it. The way that it came together, obviously bearing in mind the restrictions in the Act, the top-level HoldCo, what you referred to as HoldCo, I believe --

258   THE CHAIRPERSON: M'hmm.

259   MR. LOCKIE: -- that is simply the vehicle through which each of the shareholders own their interest and their relationship is governed at that level. So there is a shareholders' agreement there.

260   The GCHC company, which is obviously underneath GIHC, that was intended as a vehicle basically to hold the operating companies but also to serve eventually as a vehicle for additional financing.

261   THE CHAIRPERSON: Okay. But then the strategy for Globalive decisions as to should we use the WIND trademark or some other one or should we buy it from Nokia or Siemens or whatever, where is that being made? Where is the heart of this operation? I want to hear from the people who run it, not from the lawyers.

262   MR. LOCKIE: The licensing agreement, for example, with WIND is held at the GWMC level. The contracts with NSN or with any major vendor are at the GWMC level.

263   THE CHAIRPERSON: The overall business plan, the strategy, where is that going to be developed?

264   MR. LOCKIE: For the wireless business, yes, our business plans, budgets, the normal operating activity of a wireless operator is done at GWMC.

265   THE CHAIRPERSON: Now, Mr. Campbell, you have a funny position. You are, on the one hand, the CEO, the man who runs the show. But if I understand this voting structure correctly, you are a member of the nominating committee, et cetera, if you want, who nominates the independent part of the Board of Globalive Investment Holdings Corporation?

266   MR. CAMPBELL: That is correct.

267   THE CHAIRPERSON: Isn't this a bit circular here? There is a holding company, there is another holding company, an operating company, the CEO of the operating company is also the one who turns around and says I determine who is the independent on the top holding company.

268   MR. CAMPBELL: There is a three-person committee that includes representatives from AAL, from Orascom and myself, and that Chairman is determined -- as Tony has explained, Tony will be the Chairman of that holding company.

269   THE CHAIRPERSON: I know but in order for that holding company to be operational, you need five people and you are part of the committee that determines the fifth person.

270   Yet, when you follow down that set-up, it's the Board of Globalive Investments and Globalive Holdings and Globalive Wireless who appoint you. So, on the one hand, you are appointed by these people; on the other hand, you initially determine who is the fifth member of the ultimate controlling Board?

271   MR. CAMPBELL: That is correct and that is the way the structure works.

272   THE CHAIRPERSON: Now, can you explain the logic for me? I have never seen anything like that. It doesn't make sense to me. I would have thought that control flows down. It is not the guy at the bottom who also controls who is at the top.

273   MR. CAMPBELL: Well, there is a bit of history to it. Some of it has to do with some discussions that took place at Industry Canada.

274   I was not specifically -- I did not specifically request this role but I can tell you from my perspective the benefit that it provides, and in the case of Bruno Ducharme, who was the Chairman there, and also in the case of Tony. I can provide my perspective on who would be a strong Chairman or a strong supporter of management. So certainly, that would be the perspective that I would be able to lend to the process.

275   THE CHAIRPERSON: So if you leave Globalive for greener pastures, become the Chairman of Vodafone or the CEO of Vodafone or something, then your successor is actually the one who is going to be on the nominating committee for the new entity -- for the Globalive Investment Holdings?

276   MR. CAMPBELL: The way the current structure works, the CEO of GWMC, regardless of whether it is me or not, would be the swing vote or be the -- not necessarily the swing vote because AAL and OT could agree on the Chairman but would certainly form part of that committee to select the Chairman.

277   THE CHAIRPERSON: You used that expression "swing vote." Should there be a conflict, then indeed, that is the swing vote?

278   MR. CAMPBELL: Should there be a conflict?

279   THE CHAIRPERSON: I mean if AAL wants as the independent director somebody else than OT, then, in effect, you will be the swing vote?

280   MR. CAMPBELL: Yes, the CEO could be that swing vote.

281   THE CHAIRPERSON: Well, you haven't given me an answer, you have explained to me how it happens. I don't understand how the person at the bottom can control the top. I mean power flows down, it doesn't flow circular. So if you are running the company here, you should not be determining who the swing vote is in the top of the structural pyramid. I just don't -- it is illogical.

282   MR. INTVEN: Mr. Chairman, if I might, I just want to point out, as I think you are aware, that in proper governance circles the view you have expressed is often the case but in the communications industry, particularly among closely held companies, it is more often than not a rule that is breach than observance.

283   CEOs often play a very dominant role and a very key role both in the management of the business and in the selection of Boards and those of us that have been in the business community would agree that that is actually quite common.

284   THE CHAIRPERSON: I appreciate what you are saying, that CEOs have a large say in the selection of Boards, et cetera, but to actually formalize this is what I am talking about here. So you might take this under advisement.

285   The other thing, you, and especially your counsel Mr. Intven is more than familiar with our rulings on Bell and our rulings on Canwest, who have basically the same structure, two and two and one independent to be chosen by two, the non-Canadian containing two.

286   And in both cases, we abundantly, categorically, clearly said: This is not acceptable. We will not accept that. In those cases, the outside was a financial company. It was not also an operator. It was not also the company that provides the main technical support.

287   So given that history, given that full knowledge that this in our view does not fly, you still come forward with a proposal like that. What is there so special about Globalive that we should say, notwithstanding our precedents, notwithstanding our clear expressed view, in this case this is acceptable?

288   MR. LACAVERA: Mr. Chairman, thank you, we hear your concern and we understand the concern. It is just we take it away, we take it under advisement.

289   THE CHAIRPERSON: Okay, thank you.

290   You will recall that what we did effectively in Bell, I think it was, is enlarge the Board by two more persons and then you have a majority of those and you have only one independent.

291   But anyway, however you want to address it, I just wanted to voice it to you. This is, as you know, not an adversarial hearing. You know our views and when I looked at this I was struck by this provision. You have given an answer, so I will leave it at that.

292   HoldCo, same thing applies but in HoldCo I have -- Globalive Canada Holdings Corporation. As far as I know, this is even aggravated because you have just one -- the Canadian decisions or Canadian shareholders of Globalive Investment Holdings Corporation, which already has a large interest of OT in it, and then OT comes again and has three out of the seven directors at that.

293   So you have a Canadian representation through Globalive Investment Holdings, which already has a large dose of foreign influence in it, and they then have three votes, the foreign interests have three votes and another independent. So again, if anything, the principle that we established for Bell and for Canwest is diluted one further step, unless I missed something here.

294   MR. LACAVERA: Mr. Chairman, I guess I would say again we understand the concern and how it flows down from the concern you raised at the top and I guess I would propose that we take it under advisement and return with solutions.

295   THE CHAIRPERSON: Okay.

296   You provide for something called a Managing Director. What is a Managing Director? Do you intend to appoint somebody? If I understood it correctly, the Managing Director would be both the CEO and the Chairman?

297   MR. LACAVERA: The Managing Director, it is really just a choice of words. You could call it a Chief Executive. You could call it a President. The bylaws certainly provide that it would be the same individual. That is not necessarily the intent for the shareholders' agreement.

298   THE CHAIRPERSON: Leigh-Anna, can you please give me the binder with section 4 for GIHC, section 4.6. Let me make sure I understand this here.

--- Pause

299   THE CHAIRPERSON: I am looking at the amended Shareholders' Agreement of February 17th, 2009 between AAL, Mojo, Orascom and Globalive Investments.

--- Pause

300   THE CHAIRPERSON: So, if I understand you correctly, at section 4.7, it says:

"...a Managing Director or CEO who shall be an independent Canadian, and such officer as the Board may from time to time demand." (As read)

301   Is this managing director also going to -- is he only the CEO, or is he also going to be chairman?

302   MR. LOCKIE: Yeah, and I would like to speak to that.

303   The documents, as I say, are currently in the stage of being drafted, pursuant to the agreement. Currently, the chairman is going to be Tony. There hasn't been discussion yet about who will occupy that executive role. We would observe that it's not a pressing issue, from an operational standpoint, simply at the HoldCo level, simply because there are no current operations with those HoldCos.

304   THE CHAIRPERSON: And this provision does not apply to the Opco? I mean, what I want to say, you started this morning saying Tony is going to be the chairman.

305   MR. LOCKIE: That's correct.

306   THE CHAIRPERSON: Ken Campbell's the CEO.

307   MR. LOCKIE: Correct.

308   THE CHAIRPERSON: If you appoint Ken Campbell managing director, he becomes chairman automatically, and Tony is out. And I want to know, is this going to happen or not? Or are you reserving the possibility for that or is it going to be that the chairman is Mr. Lacavera, the CEO is Mr. Campbell?

309   MR. LOCKIE: No, that is precisely the distinction, at the operational Opco level, not at the GIHC --

310   THE CHAIRPERSON: Yeah.

311   MR. INTVEN: -- or GCHC, then Tony will be chairman, but Ken will continue as CEO.

312   THE CHAIRPERSON: And you make the necessary changes to the documentation so that's clear.

313   MR. LOCKIE: Absolutely.

314   THE CHAIRPERSON: That if, for some reason, you change his title to managing director, he does not automatically become chairman?

315   MR. LOCKIE: Absolutely.

316   THE CHAIRPERSON: I see that's the mandate for Opco. I didn't see anywhere a mandate for HoldCo or InvesCo, or, if you want to call them, formerly Globalive Investment Holdings and Globalive Canada Holdings Corporation. Is there a mandate for those two companies?

317   MR. LACAVERA: I will let Mr. Lockie expand on it, Mr. Chairman, but the mandate that's sort of been formalized for the GCHC, or the middle Globalive Canada Holdings, that middle HoldCo has been really designated as a vehicle for financing, as Mr. Lockie referred -- or alluded to earlier.

318   We believe there's a requirement to look at that as a financing vehicle, as potential opportunity to finance both the fixed-line and the wireless businesses.

319   THE CHAIRPERSON: So what does that mean, Mr. Lacavera? So you think there is no requirement for a mandate for that?

320   MR. LACAVERA: As I was saying, the mandate -- I will let Simon expand upon it, but the mandate that we formalized to date, recognizing that these discussions are ongoing between the partners, is that we would contemplate that as a financing vehicle, GCHC.

321   MR. LOCKIE: Yeah, and to just to, I guess, amplify or confirm that, there is no operating mandate for either of the HoldCos.

322   THE CHAIRPERSON: And you don't see the necessity for one, if I understand you correctly.

323   MR. LOCKIE: No.

324   MR. LACAVERA: Not at this time.

325   THE CHAIRPERSON: Yeah.

326   And just a technical one. I see that the chairman of both GIHC and the chairman of Global Wireless Management Corporation, however, has a tie-breaking vote, but for some reason the chairman for HoldCo doesn't have that. Was that an oversight or is there something behind this? I don't understand.

327   MR. LOCKIE: Could you just give us one moment.

328   THE CHAIRPERSON: Sure.

--- Pause

329   MR. LOCKIE: Actually, if I could turn this one to John Andrew.

330   THE CHAIRPERSON: Okay.

331   MR. ANDREW: Mr. Chairman, if I could assist.

332   The provision for the chairman to have a casting of vote only arises in circumstances where the shareholders have changed the number of directors on the Board, which is not currently the circumstance.

333   THE CHAIRPERSON: Well, this doesn't answer my question. I mean, there's a provision in the agreement for InvestCo and there's one for -- I can't give you specific references, but we didn't see anything for HoldCo, and I just wondered why. I assume it's just an oversight, but I would like you to confirm to me one way or the other whether there's something else here.

334   I mean, it's normal for a chairman to have the tie-breaking vote. I can't imagine why you wouldn't have it here.

335   MR. ANDREW: In the case of GIHC, the chairman only has a tie-breaking vote in the event that the number of directors on the Board is changed to an even number. And I believe that same provision exists in GWMC, but, as you have noted, Mr. Chairman, it does not exist in GCHC. And, I mean, that may be simply an oversight or an inconsistency between the structures and the two companies.

336   THE CHAIRPERSON: Well, I would like a clear answer. Are you going to change it to make them all consistent or not? I mean, if it's an oversight, it's one thing. If there's a design behind it, I want to know what the design is.

337   MR. SAWIRIS: The issue is not necessary, Mr. Chairman -- this is Mr. Sawiris speaking --

338   THE CHAIRPERSON: Yes.

339   MR. SAWIRIS: -- because, if you have an uneven number, then the occurrence of a tie would not happen.

340   THE CHAIRPERSON: Absolutely.

341   MR. SAWIRIS: The casting vote is only important if you --

342   THE CHAIRPERSON: You are right, and that's exactly why I'm drilling in now. If, for some reason, you have an even number because one of the directors can't make it, doesn't want to make it, or whatever, does the chairman have a tie-breaking vote or not?

343   It is, strangely enough, not at this level, it's at the two other levels, and I would like to have an answer. Are you going to provide that or not? Or if you don't provide it, then you must have a rationale why you are not providing it, and I'm looking for that rationale.

344   MR. ANDREW: Mr. Chairman, there is no specific rationale, but is not a tie-breaking vote in the case that there are an even number of directors at a meeting? It only arises in a circumstance where the number of directors has actually been changed.

345   The GIHC Board consists of five directors. If four were in attendance in a meeting, the Chairman would not have a tie-breaking vote.

346   THE CHAIRPERSON: No, but wouldn't he reconvene, and then -- the elaborate process of reconvening, and then the second time around he has a tie-breaking vote or something?

347   MR. ANDREW: With respect, Mr. Chairman, that would only be applicable if the shareholders have actually changed the mandated number of directors for that company.

348   I understand your concern, Mr. Chairman, and we can certainly take that away and discuss it. It would be more appropriate to make it consistent.

349   THE CHAIRPERSON: My counsel has something to add.

350   Go ahead.

351   MS KEARNY: Mr. Chairman, just so that we are all sure we are all speaking on the same page, section 4.8 of the HoldCo Shareholders Agreement does address a casting vote for chairman in the case of a quorum, so I don't believe it is only in the circumstances where the shareholders have agreed to change the number of directors.

352   THE CHAIRPERSON: Okay, let's not get into a legal argument. The point here is what I'm trying to see. I assumed you have the same rights flowing through the three levels. If, for some reason, they are not in the chairman of the middle company, it's restricted in its powers for some reason. I want to know the reason. Otherwise, I don't see any reason why you wouldn't harmonize it.

353   MR. INTVEN: Mr. Chairman, it sounds like there was no design to that, and we will get back to you tomorrow to clarify it.

354   THE CHAIRPERSON: Okay. Thank you.

355   Then, let's talk about the veto rights. Both the Shareholders Agreements have essentially the same restrictions. They say:

"...no liability or expenditure over $10 million without Orascom's consent, no contract with somebody, except for Orascom, over $5 million, and no debt, except Orascom, over $20 million." (As read)

356   I'm somewhat surprised that you put this figures in, et cetera. Again, as Mr. Intven is probably very familiar, I mean, this issue has come up and we have debated it and we dealt with it, and I think we have more or less established that the number should be 5 per cent.

357   Now, since you are not up and running now, presumably, you start off with 5 per cent of the asset value, and then once you are up an running it's 5 per cent of the interprice value.

358   Why do we have these different figures and where do they come from, and what's the latest justification?

359   MR. CAMPBELL: Mr. Chairman, it's normal that a shareholder, a minority shareholder, would request certain thresholds. Each one of them comes into play in different circumstances.

360   As far as the business is concerned, we are in start-up mode. The clause which probably relates most to us is the clause related to material contracts and values in excess of $5 million, which we would look to on occasion to seek consent from shareholders.

361   THE CHAIRPERSON: Yeah, but, I mean, I understand that. I mean, the minority shareholder is hardly a minority shareholder. He has a majority of the equity, he has a minority of the votes. He needs to be protected, and I fully realize that.

362   And, of course, once it doesn't want something, that's why they get Board representation and that's why they want to make sure that the company does on something, it gets it, and it goes down their way then. But where does it kick in?

363   You, as the CEO, also need some flexibility in the operational, et cetera. And these levels are very low. I mean, you are right now at -- by your own statement this morning, you are at $500 million or something that you have put into this enterprise, et cetera. And then to tie these levels so low. I would have thought that the 5 per cent, as I say, that we have always used, and we have made it quite clear that we consider that the norm, would be very appropriate here. So, again, that's something you may want to reflect on.

364   You know, we will talk tomorrow about the value of it when we go into the confidential, but I really want to have an understanding of both the asset value and the enterprise value, but I appreciate that those are confidential figures and I'm not going to push you on that right now.

365   Material change, that's the other clause you have in there, which, in the GIHC Agreement, you don't define it at all. Why is this? I mean, is it 5 per cent? Is it less? Or when does this kick in?

366   Maybe we should go to it. Leigh-Anna, can you show me the document, please?

367   MR. CAMPBELL: Are you referring to Part 2, Schedule A of GIHC?

368   THE CHAIRPERSON: I'm on page 417 of the document that you handed me, which is the -- which document are we in now? It's the Shareholders Agreement of -- sorry if I'm stumbling, the record is so voluminous that -- the Shareholders Agreement between AAL, Mojo, Orascom, Telecom and Globalive Investment Holding, GIHC.

369   Part 1 says:

"The Corporation shall not take any of the following actions without the consent of at least 75 per cent of the voting share, i.e., without the consent of Orascom." (As read)

370   -- and it says --

"...and I approve any material change to the portion of the business plan applicable to non-wireless business during the first year of the agreement." (As read)

371   That material change has not been defined. I am just surprised by your -- I appreciate we are talking about the non-wireless part, but why are you not defining it? What is "material change" in that context?

372   MR. DOBBIE: Mr. Chairman, if I could speak to that?

373   We didn't need to define "material change" because we were relying on the specific threshold set out in the same subclause --

374   THE CHAIRPERSON: In the what?

375   MR. DOBBIE: -- I guess in reference to 10 per cent.

376   THE CHAIRPERSON: I'm sorry, repeat that answer. I just didn't understand it.

377   MR. DOBBIE: No problem.

378   The reason that "material change" and changes to the business plan are not defined is that that clause relies on the definition 10 per cent set out in the same subclause.

379   THE CHAIRPERSON: I'm sorry, I don't see a 10 per cent in that subclause. Sorry, I am confused.

380   MR. DOBBIE: Mr. Chairman, are you looking at Part 1 --

381   MS KEARNY: Yes.

382   MR. DOBBIE: -- subsection (i)? It's correct that that is not defined.

383   This provision relates to the wireline business only, not to the wireless business. The equivalent right for the wireless business, which I was referring to, is in Part 2 of the same schedule, at subparagraph (c), which refers to the 10 per cent. Apologies for the confusion.

384   THE CHAIRPERSON: I understand that, but the wireline business is Mr. Lacavera's home base. You are now telling him he can't do anything, any material change to his home base without Orascom's approval, and you don't even define what "material change" is, that's my point.

385   MR. LOCKIE: If I can maybe clarify a bit, just with respect to the context for that specific provision, the extraction right that we have agreed to give up carried with it a positive obligation on Tony's part to operate the wireline business independently from wireless.

386   I think it's fair to say -- and we will maybe speak to Orascom on this -- but during the discussions it was clear that that broad-ranging ability, without any types of restrictions or vetos or required approvals, et cetera, carried with it, basically, some heavy reliance on the existing business plan. So they were only looking within the context of that complete strategic and operational control some threshold of protection during that one-year period.

387   And as for the specific question, we were relying purely on a straightforward reading of "material change".

388   THE CHAIRPERSON: I appreciate that, but, I mean, the point is, you know, "material change" may be something in the eye of the beholder, and so that's why I'm -- normally, you would define it in some ways, too, so it's clear what is the flexibility that Mr. Lacavera has and what they are not.

389   MR. LOCKIE: That's understood, and the shareholders at that time did not see any dispute arising on that term, so it just wasn't an issue that was of concern to us.

390   MR. LACAVERA: It wasn't an issue for me, Mr. Chairman. We had agreed -- because the arrangements were put together so quickly before the auction and there was very little time between, you know, the AWS framework announcement and the deadline for an application, we had very little time to negotiate these agreements. And what was agreed amongst the partners was that I would have total control of the fixed-line business during this period where the extraction right would exist.

391   I think Simon mentioned we are in the process of now updating documentation reflecting that that extraction right is no longer applicable and, of course, that has implications for the rest of the documents.

392   MR. DOBBIE: Mr. Chairman, if I could just add one final point, this was also added at the request of Tony, for the reason that he can exercise a veto under Part 1 of that schedule, and he wanted to ensure that the business plan of the wireline change could not be changed arbitrarily.

393   MR. LOCKIE: And, as well, I would like to add that this is among the provisions that simply won't be in the documents. It's one of the changes that would come out of a recent decision.

394   THE CHAIRPERSON: Well, these retraction rights, they are gone totally or they are not exercised for three years or whatever? It wasn't quite clear from this morning's presentation what you are doing.

395   MR. LACAVERA: So there are two separate issues --

396   THE CHAIRPERSON: Yeah, right.

397   MR. LACAVERA: -- I think you referred to there, Mr. Chairman. They are the put-and-call and the extraction right?

398   THE CHAIRPERSON: Yes.

399   MR. LACAVERA: So the extraction right that was due to expire in March of 2010 that right is --

400   THE CHAIRPERSON: Gone.

401   MR. LACAVERA: Is gone. So there are no -- nothing else to say about that.

402   And the put-and-call have been deferred for three years, and, really, are now being -- are being oriented towards a dispute resolution mechanism. They were always intended to be that, but, of course, as you know, there was a very early strike or exercise opportunity on the put-and-call and, as the partners have gotten to know each other, you know, we have agreed to defer that now for three years. And we are very comfortable that it's now a long-term arrangement.

403   THE CHAIRPERSON: So after the three years, then, they come alive again, the put-and-call rights, in their present form?

404   MR. LOCKIE: I apologize, as I'm a lawyer, but I will speak to this one.

405   The first three-year period, so once we get into 2013, there will still be a put that AAL can take advantage of. During the course of calendar 2013 --

406   THE CHAIRPERSON: Yeah

407   MR. LOCKIE: -- there are no -- beyond that any, per se, put or call. There will be a dispute resolution mechanism, which, if it is unsuccessful in resolving the dispute, will involve the shares being sold to an eligible purchaser. And that has no timeframe on it. That's actually just sort of going into the future.

408   THE CHAIRPERSON: Okay. I want to be sure I follow you, I'm sorry. You live with this daily. I have a few other files to work.

409   So the put-and-call will still exist, but only exercisable after 2013? Or just the put? Do you know?

410   MR. LOCKIE: Yeah, there's certainly just -- I mean, the terminology is, I guess, less relevant, but there will a put, in the sense that there will be a put of Tony's shares by AAL to an eligible purchaser.

411   THE CHAIRPERSON: Yeah.

412   MR. LOCKIE: There is no corresponding call in this new world going forward. There is a dispute resolution that has a similar effect to a put-and-call, but because it's purely a dispute resolution mechanism, I wouldn't use those terms.

413   THE CHAIRPERSON: Yeah. Yeah, no, that's the follow-up to a dispute, I can understand that. So basically no irreconcilable differences is what you are talking about here?

414   MR. LOCKIE: Correct.

415   MR. DOBBIE: And, Mr. Chairman, I can confirm for OT that OT has waived its call rights, which was existent under the documentation.

416   THE CHAIRPERSON: Okay, but the put right, as it was -- oh, there's a big mark here saying that they are confidential, so maybe I will reserve that for tomorrow.

417   The eligible purchaser, in either case, it can be sold to an eligible first person. What I don't quite understand is the definition or "eligible purchaser". If I read it correctly, it basically means somebody who is not in the telecom business.

418   MR. LACAVERA: I would like, actually, to get like Simon Lockie to provide --

419   THE CHAIRPERSON: Yeah.

420   MR. LACAVERA: -- the definition as we have defined it, Mr. Chairman.

421   MR. LOCKIE: That's certainly one component of it, Mr. Chairman. The other, I would suggest, major component to it, is that it has to be someone who's qualified under the applicable regulations to follow the rules to acquire those shares.

422   THE CHAIRPERSON: Yeah, that part I understand. But, I mean, essentially, you can only send it to financing and you cannot sell it to an existing player in the business, if I understand it correctly, without Orascom's content, right, the way eligible...?

423   MR. LOCKIE: Correct.

424   MR. SAWIRIS: Mr. Chairman, I think the eligibility is only -- this is Mr. Sawiris speaking --

425   THE CHAIRPERSON: Yes.

426   MR. SAWIRIS: -- the eligibility is only addressing the fact that it needs to be a Canadian entity. That's what we understand of it.

427   THE CHAIRPERSON: But that's not what it says. Let's look at the actual definition because...

--- Pause

428   MR. DOBBIE: Mr. Chairman, would you like us to explain the negotiation background to that?

429   THE CHAIRPERSON: Yeah, well, maybe. I'm looking at the definition and it says "who is not a strategic competitor, an affiliate or associate of a strategic competitor". That seems to me excluding anybody who's in the telecom business. Surely those are the most likely purchasers. So I'm somewhat perplexed by this provision. Doesn't this limit the ability to find an eligible purchaser enormously because you are basically telling me you can only sell it to newcomers, you can't sell it to somebody who's in the business? If I misinterpret this, please, correct me.

430   MR. DOBBIE: That's very true, Mr. Chairman, and I will pass that over to Tony and Aldo to speak to it in a moment. But just to explain the negotiating background that led us to that, those parties were concerned that if one party exists, the other party is going to be left with the new eligible purchaser. And both parties were concerned that they wouldn't -- they would end up being subsumed into an existing Canadian player without their consent.

431   So what the effect of this provisions is: any sale to a strategic player will require the consent of the party that is staying on in the arrangement.

432   But I can pass that over Tony and Aldo to explain further.

433   THE CHAIRPERSON: Tony.

434   MR. SAWIRIS: Can I just answer that also, Mr. Chairman?

435   THE CHAIRPERSON: Please.

436   MR. SAWIRIS: This is Mr. Sawiris speaking.

437   It is very common in our telecom business that telecom operators do not want another operator to come and interfere in their own business. There is a conflict of interest, mostly they are competitors, and if you -- even the regulator in Canada, I'm sure, with all what we are seeing, would not agree to a competitor being present as he's interested in enlarging the competitive scheme.

438   For your information, too, nowadays the biggest buyers of such stakes are mostly private equity people and there are several assets in the world today owned by private equity or other financial investors.

439   So this clause is more or less only restrictive to, I would say, the three incumbents in Canada, as much as I would think they should be, and I'm sure also this restriction would be subject to the regulatory -- telecom regulator's opinion in Canada.

440   It's not restrictive. I have several --

441   THE CHAIRPERSON: But surely that's a totally different issue. You have to live these regulations and you have to comply with them. Any purchaser, you know, if there is a regulatory hurdle via competition or telecoms, you have to overcome that.

442   But this here basically says it cannot be sold without your consent to anybody who is in the business. It can only be sold, to use your words, Mr. Sawiris, to private equity. That's really what the net effect of this cause is, which limits your option.

443   MR. SAWIRIS: Or any international --

444   MR. LACAVERA: From our perspective, Mr. Chairman, it's a very --

445   THE CHAIRPERSON: Mr. Sawiris, you are saying --

446   MR. SAWIRIS: Any financial investor.

447   THE CHAIRPERSON: Mr. Sawiris --

448   MR. SAWIRIS: It could be any financial investor. It could be also that when we list -- we might list the entity prior to the three-year restriction and then these restrictions will immediately fall in case of an IPO. Or what we are saying here is we can't have TELUS or Rogers become our partners in that venture, you know.

449   MR. LACAVERA: Mr. Chairman, I just want to say I think it's very appropriate production for OT given the level of investment they are making upfront, the start-up risk capital they are putting upfront into the venture.

450   To be sideswiped, you know, at the early phase of the business plan that we created together would be really inappropriate, you know, from my perspective.

451   So I find it an appropriate protection.

452   THE CHAIRPERSON: I just want to follow up on what Mr. Sawiris just said. He said it could be an international purchaser.

453   Let's take for an example Vodafone. Vodafone is not operating in Canada, has no stake, to my knowledge, et cetera.

454   Would you consider them a strategic competitor?

455   MR. SAWIRIS: It depends if they are Canadian or not.

456   As I mentioned, there is a legal restriction on the ownership structure so it has to be Canadian. So I would think that Vodafone would not fall into that.

457   I am talking about financial funds who qualify under the Canadian rule.

458   What we are trying to say is that if you will allow Vodafone or an international competitor who is not competing in the market to operate, we would agree to that. Or what we are not agreeing to is any operator who is currently acting in Canada.

459   I mean that's -- Mr. Chairman, we intend to make this venture a reality and compete. We are not, let's say, coming here to sell out and run away or we are not -- personally we are not a financial investor, we are an industrial investor. We believe we will bring value to that venture and what we are trying to do here is protect our competitiveness in that market who, in my personal opinion, without offence, has been protected.

460   THE CHAIRPERSON: Now, let me follow up on something else you said. You said something about a list of ineligible purchasers.

461   Did I hear that correctly, Mr. Sawiris?

462   MR. SAWIRIS: No. What I said is that in case Globalive -- I will repeat and make it more clear.

463   In case Globalive gets listed and it is open to Canadian individual shareholders, it's a listed company, then I think this clause will not be necessary because Mr. Lacavera will have a way to liquid -- how would I say, a liquid exit to partly of his stake or his stake you know. So a Canadian listing at the Canadian Stock Exchange should also resolve that matter.

464   So I was just trying to point out that he has more than one buyer. He could sell to financial institutions, private equity or a Canadian listing would also solve that matter.

465   THE CHAIRPERSON: Okay. Then explain to me the drag along rights. They are in clause GIHC(ph) Agreement 6.4.

466   I mean I'm just stunned. I'm used to drag along rights for a majority to deal with a recalcitrant minority. Here, if I understand, Orascom is actually the minority partner in terms of voting rights yet, unless I read this clause wrongly, it basically means if Orascom sells out they can drag you along and you, the majority voting partner, have to sell too.

467   Is that true? Is that basically how this clause works?

468   MR. LACAVERA: Yes, that is currently how the clause works, Mr. Chairman.

469   THE CHAIRPERSON: But don't you then essentially have sort of Damocles hanging over your head. If you and Orascom don't work together he can always say "Look, I'm out of here, I'm selling the whole thing and, by the way, I'm telling you, too."

470   Isn't that the net effect of it?

471   MR. LACAVERA: I think that it's important to recognize, Mr. Chairman, that the parties have gotten to know each other a lot over the past year and so, you know, I have become a lot more comfortable with Naguib as my partner and I think his track record and my track record speak for themselves in terms of our desire to create real value here.

472   Neither of us is interested in selling prematurely. Both of us are interested in building real long-term value.

473   THE CHAIRPERSON: I understand that and I am delighted that you have such a good working relationship and I hope you prosper. That's not the point.

474   I, as a regulator, have to look at a worst-case scenario and the worst-case scenario is you have a serious difference of opinion on the future of the company, where it should go, et cetera.

475   Unless I understand the 6.4 clause wrongly, and you just told me I don't, then it exactly means at some point in time in effect Globalive can be sold by Orascom, you are the majority shareholder in terms of voting rights, you are the Chairman of all three corporations, yet Orascom comes and says "I'm out of Canada, I'm selling and, by the way, any buyer you want to buy this thing, you can buy me and you can also buy Tony's share."

476   MR. LACAVERA: Your interpretation of the clause is correct, Mr. Chairman. I understand the concern.

477   THE CHAIRPERSON: Okay.

478   MR. DOBBIE: Mr. Chairman, Tony -- obviously, Tony, subject to your right of first refusal. So if the offer that is under consideration pursuant to the drag along clause is not to your liking, you have the right of first refusal, Tony.

479   You might want to explain that.

480   MR. LACAVERA: Thank you, David.

481   That's correct, Mr. Chairman, I do have a right of first refusal --

482   THE CHAIRPERSON: I appreciate that.

483   MR. LACAVERA: -- which I'm sure you understand.

484   MR. DOBBIE: Mr. Chairman, in addition, if we could point out the sale is again to an eligible purchaser.

485   THE CHAIRPERSON: Oh yes. I know that.

486   Just to clean up something, as I say, you explained it to me and I still think my metaphor of Damocles is not totally inappropriate here, but I must say this clause gives me a problem, let's put it that way.

487   In the mandate you talked to "an annual strategic plan". In all the documents my counsel could not find an annual strategic plan, all they could find is a business plan that you filed in response to the interrogatory 615-1, which is dated January 12, 2008.

488   Now, first of all, is that a problem of terminology? Is the strategic plan and the business plan the same thing?

489   MR. CAMPBELL: It is the same plan, sir.

490   THE CHAIRPERSON: It's the same plan.

491   And that's the one you are operating under right now, the one dated January 12, 2008, or is there an update?

492   MR. CAMPBELL: That is correct. We are working on an update for this year. It's the normal process, yes.

493   THE CHAIRPERSON: Okay.

494   There is also, if I understand it correctly, a veto on any additional shares being issued. That's in Part 1 of Schedule A, the special matters requiring shareholders' consent.

495   Part 2, sorry (a):

".. issue, allot, redeem, purchase or grant share options for security, for re-organize any..."

496   I appreciate that very much.

497   What about you, Mr. Campbell, you are the CEO, don't you get rewarded some stock option and, if so, does it mean here that without Orascom's consent your contract cannot contain any stock options?

498   MR. CAMPBELL: There is not a stock option plan in place right now, sir. We are in -- it's a developing one.

499   THE CHAIRPERSON: But as a start-up in order to attract the best and capable talent, is it common to have, I don't know, rewards and stock options so they have an incentive and they share in the up side should there be one?

500   It strikes me here that this provision says it cannot be done. Even if Mr. Lacavera thinks that's a good idea, the shareholder agreement says if Orascom doesn't agree it's not going to happen.

501   MR. CAMPBELL: Well, just with regard to the long-term incentive program, the business did start in a hurry and we are putting it in place. In fact, a discussion document was presented at our last board meeting.

502   With regard to their rights to issue -- for example to set up a stock option plan, it has been in fact supported by all shareholders and so I would not expect to have any issues with that, but it is part of the minority rights.

503   THE CHAIRPERSON: I mean I'm asking you as a man who is in charge of obviously attracting the best talent, et cetera, et cetera.

504   MR. CAMPBELL: Yes.

505   THE CHAIRPERSON: It struck us as somewhat surprising that there should be that restriction on the exercise by the minority shareholder.

506   MR. CAMPBELL: I'm sorry, sir, your question is...?

507   THE CHAIRPERSON: Is to what extent do you feel this limits your ability to run the company effectively and attract the best talent?

508   MR. CAMPBELL: Sir, we have had no problem attracting great talent to the team, so no, it hasn't impacted that ability.

509   It was always the understanding with management that we will have a long-term incentive plan in place and that will -- I expect to be put in place before the end of the year.

510   So no, it hasn't affected my ability to manage the company.

511   MR. SAWIRIS: Mr. Chairman, if I --

512   THE CHAIRPERSON: Please go ahead, Mr. Sawiris.

513   MR. SAWIRIS: Mr. Chairman, if I may add?

514   Just on our last board meeting the board has addressed that issue and we are awaiting a proposal that is currently being prepared for the stock option of the personnel.

515   This agreement has been drafted before we launched and in most of our operations we reward management with stock options and it's quite common. So whatever is written there will be amended to accommodate a stock option plan for the individuals.

516   And it was actually not subject to this hearing, it was in process. When we launch there are millions of things we need to do and therefore management has been well compensated in their salary and bonuses and were promised a stock option plan that is being developed right now. It's just not done yet, but we have agreed that it should be presented before the next board meeting.

517   MR. LACAVERA: Mr. Chairman, as you may know, Globalive has a long history of -- you know, I have a long history of granting options to management in all the different telecom businesses that I have started up, so it is absolutely consistent with our operating practice and of course we will implement it in this case as well.

518   Naguib and I spoke on it as recently as a couple of weeks ago on getting the long-term incentive plan in place.

519   THE CHAIRPERSON: Okay.

520   Now my next question really is for you, Mr. Sawiris, and this is the section 3.5 of the agreement.

521   You are the minority voting shareholder. You know that this morning in your opening you said you picked Tony because of his entrepreneurship so you saw a younger version of yourself, you have the same vision, you want to do the same, yet you insist on keeping 51 percent of the economic equity at all points in time and any new -- even if you find new Canadian shareholders, et cetera, you retain 51 percent.

522   Why is that necessary?

523   If I understood you correctly, you are the financier by default, you actually would like to see more Canadian participation, a greater equity for other qualified Canadians, and yet you put this provision in there making sure that at all points in time you have 51 percent of the economic equity.

524   MR. SAWIRIS: First I would like to state that I am allowed by Canadian law to retain the 51 percent.

525   Second, the issue for us is merely an accounting issue. In order for us to consolidate any operation among our 14 or 15 operations around the world, the new IFRS Regulations would not allow any company to consolidate its operation unless it has a threshold of ownership above the 51 percent.

526   There are other ways to do them, if you have lower percentages, but then they would not be qualified under the Canadian regulations, which means you need to either show that you would have control, which we don't have, and we would be deprived from consolidating that venture.

527   It's purely accounting requirement, it has no significance unless -- as much as for us it is very important to reflect the economical position we have in that venture into our balance sheet.

528   THE CHAIRPERSON: Okay. I understand the part about the consolidation and for accounting, but it also has the effect that you will always be -- it will always be your company, you will always own the biggest slice of it. So anybody --

529   MR. SAWIRIS: But we also, Mr. Chair --

530   THE CHAIRPERSON: I mean anybody investing in --

531   MR. SAWIRIS: Unless there is any -- I mean the question is, are we allowed to do so or not. If we are allowed to we would like to.

532   We are not -- as I mentioned, our investment philosophy, we are not a private equity fund, we are not sellers. I might add to your good self that we have received already several offers to sell the whole operation and get out of that market, you know.

533   We are -- we have a reputation of being quite persistent, long-termers. We don't like to exit or sell. You know, we are an industrial player. We have advanced in the last 10 years. We have 130 million subscribers around the world and we intend to increase them by the 5 or 7 million left for us in Canada, if there is no objection from anybody's side, you know.

534   THE CHAIRPERSON: No, I wasn't questioning the legality. What we are talking about here is to what extent the various factors that we are looking at in their totality allow you to, in effect, exercise control over the Canadian operations of Globalive. That's what it boils --

535   And it's a cue when you look at the various factors and one of them which clearly sticks out here that you have 51 percent economic interest and you are going to retain it. No matter what you are going to have 51 percent.

536   MR. LACAVERA: Mr. Chairman, if I may just for a minute -- Naguib, jump in.

537   Mr. Chairman, the clauses you are referring to in terms of dilution protection, I think it's important to note there as well that I clearly have -- AAL clearly has some pretty substantial dilution protection. I think that the 51 percent were talking about, as Mr. Sawiris alluded to, is an accounting issue.

538   Obviously it's also representative of the fact that all of the start-up capital has been contributed and, frankly, I see it as a positive in the sense that we can count on further capital being contributed by OT.

539   Certainly OT's contributions have allowed us to get going in this very difficult capital market over the past 12 months where many, many start-ups have failed for starvation of capital reasons.

540   So I think that the provision -- and of course my corresponding right or my related right to top myself up, or AAL up I should say, keeping this personal, but, you know, OT and AAL have corresponding rights in this regard that I think are a fair and balanced representation of our start-up contributions.

541   Sorry to interrupt, Naguib. Do you have -- you were adding?

542   MR. SAWIRIS: No, no. Just I'm trying to explain to the Chairman that usually if it was not Canada we would even want to own more, you know.

543   We believe very much in that business. We are long-termers. We don't go into countries and sell out and make money and leave, you know. We are just into the telecom as a business, you know. We don't -- it's not about control.

544   Mr. Chairman, I would like to just give you the story in short, I mean, why did we do that. I mean there were three questions when I looked at that.

545   Is there a business case? Can we make money or not?

546   We don't have control. Will I find a partner that I can trust who he will not abuse his control to extract any non-agreed benefits or push us out of that market or anything, which I have been experiencing in other parts of the world. Is he the right partner? Does he have the knowledge? Does he qualify? Is he honest and straightforward or not, ambitious like me or not?

547   And the third element that was very important for me was to find out -- and that's the area that might be misperceived as control -- are we going to be able to lend this operation our industrial knowledge or not? Because if we go in alone and we don't -- we are not able to use the power we have in procurement -- you asked this question about who chooses Nokia. So of course Ken does everything and so on, but if he has an Nokia we have much more power to talk to Nokia and push them to reduce the price.

548   Like recently one of the Canadian competitors threatened a supplier to block our handsets if he would deliver our handsets. If we didn't have the same leverage on that supplier around the world, Globalive would be a very risky situation.

549   I might add that if it was not us I doubt that anybody else would have done this very dangerous investment, you know. You are coming into a country at a penetration rate which is quite high, relatively high, the incumbents are there, and without us being able to use our industrial knowledge and techniques, commercial, and our relations to the suppliers to make sure that you are getting the best buy and the best prices and service, it would have been for us not a venture we would do.

550   So it was a balance into leaving control and being able to lend our knowledge. I would have not done it if the letter was not available.

551   MR. LACAVERA: I would like to stress right on that point, Mr. Chairman, that I think it's exactly how formidable the partnership we have created is. It's a lot of the impetus for the extensiveness which the incumbents are looking for this, our structure to be reviewed here.

552   I understand your requirement to review it, but the reality is that AAL is a long-term builder, I am a long-term builder in telecom in Canada and Naguib brings to the table global experience in this area and together we have a very formidable partnership.

553   I think it's critically important, sir, that you hear the points that he just made about our ability to leverage international experience and scale of Orascom to make a true long-term viable competitor in Canada.

554   THE CHAIRPERSON: I understand that. I understand the great value is to you and I appreciate very much --

555   MR. LACAVERA: I can also say from firsthand experience Naguib's point about finding an alternate partner, sir. I searched around the world to find a partner and ultimately Orascom proved to be -- Naguib proved to be the only one with the fortitude to really go the distance here.

556   THE CHAIRPERSON: It still doesn't answer the question of 51 percent.

557   I heard his accounting answer, but in terms he could do the same thing if he had a 45 percent interest in your company.

558   MR. LACAVERA: I understand, sir.

559   THE CHAIRPERSON: That was the point I was addressing.

560   MR. LACAVERA: I understand, sir.

561   THE CHAIRPERSON: Let's talk about --

562   MR. SAWIRIS: Unfortunately, Mr. Chairman, I don't -- I sorry.

563   THE CHAIRPERSON: Go ahead.

564   MR. SAWIRIS: I mean the answer for us in the 51 percent is purely the accounting issue, nothing more.

565   THE CHAIRPERSON: Okay.

566   MR. SAWIRIS: If we would have the same rights with 40 percent we would be satisfied with 40 percent, you know.

567   But the main issue here is accounting. We can't invest this kind of amount of money and then not consolidate the numbers in our balance sheet, otherwise it would be -- we don't get the benefits of an investment like that.

568   THE CHAIRPERSON: Yes. I'm nearly finished.

569   The trademark agreement. You made this trademark agreement, we looked through it. It obviously gives you a great advantage, gives you the clout, the negotiating stance with vendors, et cetera.

570   Is it exclusive or could you at the Globalive model level for instance decide that you wanted to have a second brand, let's say fighting brand or a low-cost brand, et cetera?

571   MR. CAMPBELL: No, it's not exclusive. We have incredible latitude within our licensing agreement.

572   We have, as you may have heard, discussed sub-brands and certainly the commercial strategy is still on the table.

573   THE CHAIRPERSON: Okay.

574   Lastly, I got piles and piles of documents about the various corporate involvements of the key people. You obviously know each other, you trust each other, you feel comfortable working with each other, you have a past history and why not, but you work with people who you -- I just want to make sure for the record the key people who are here, which is Mr. Sawiris, Mr. Lacavera and Mr. Ducharme, let me go through each one of you and ask you:

575   Mr. Lacavera, does Mr. Sawiris directly through Orascom, through Weather anyway, have any interest in your AAL?

576   MR. LACAVERA: No, sir. No interest.

577   THE CHAIRPERSON: And do you have any interest, vice versa, in any of the organizations that he owns, controls or is involved in?

578   MR. LACAVERA: No, sir, none whatsoever.

579   THE CHAIRPERSON: Okay.

580   Mr. Ducharme, you were involved with TIM Hellas, et cetera, which then I gather was bought eventually, part of it -- I couldn't figure out quite what happened, it was a very complicated transaction, but wasn't it bought by Weather and then finally wound up with Vodafone, et cetera.

581   So as a result of all of this and all your other -- do have any economic interests in any of Mr. Sawiris' companies?

582   MR. DUCHARME: None whatsoever.

583   THE CHAIRPERSON: Does he have any in the ones that you are involved?

584   MR. DUCHARME: None whatsoever.

585   THE CHAIRPERSON: Okay.

586   For the record, Mr. Sawiris, would you please answer.

587   Do you have any interest in either Mr. Lacavera's or Mr. Ducharme's companies?

588   MR. SAWIRIS: No, sir. No sir.

589   THE CHAIRPERSON: And they don't have any in Orascom, Weather or any of the other entities that you control?

590   MR. SAWIRIS: No, sir, I don't think so. I don't know, but I mean --

591   THE CHAIRPERSON: To your knowledge. To your knowledge.

592   MR. SAWIRIS: It is a publicly traded company, anybody can buy the shares.

593   THE CHAIRPERSON: Yes. That's not what I'm talking about. I just wanted to make that clear.

594   What about you, Mr. Campbell?

595   MR. CAMPBELL: No, I have no interest in any of his companies.

596   THE CHAIRPERSON: Okay.

597   Okay then, let's take a 10-minute break and then Mr. Katz will ask you some questions about the financing.

598   Thank you.

--- Suspension à 1100

--- Reprise à 1117

599   THE CHAIRPERSON: Let's resume.

600   Before we resume, I would like my counsel, Ms Kearney, to clarify one point.

601   MS KEARNEY: This is a question for Mr. Sawiris, and then for Mr. Ducharme, when he returns, and Mr. Lacavera. It is to basically expand the question that was --

602   MR. INTVEN: Excuse me, I don't think the video is working, and I don't think that Mr. Sawiris can hear you.

603   THE CHAIRPERSON: He may have the "Mute" button on, unfortunately.

--- Rires

--- Difficultés techniques

604   MR. SAWIRIS: Now I can hear you.

605   THE CHAIRPERSON: My counsel wanted to put one clarifying question.

606   Ms Kearney...

607   MS KEARNEY: Mr. Sawiris, this is a question for yourself, Mr. Ducharme and Mr. Lacavera. It is just to expand on the question asked by the Chairman before our break.

608   Mr. Sawiris, to your knowledge, is there any company in which you have invested, either as an individual, as Orascom or as Weather, in which either Mr. Ducharme or Mr. Lacavera, either in his own right or as AAL, has a significant interest or business interest in?

609   MR. SAWIRIS: No, ma'am, I don't.

610   THE CHAIRPERSON: I believe there is a company --

611   MS KEARNEY: Perhaps I will ask Mr. Lacavera the same question.

612   MR. LACAVERA: You may be referring to the business "Lingo Media Corporation", where Orascom Telecom made an investment.

613   Naguib, you will recall that OT made an investment in Lingo Media Corporation, which is the "Speak to Me" product.

614   I think that is what is being referred to.

615   MR. SAWIRIS: Yes.

616   MR. LACAVERA: So, yes, we are both investors in that business.

617   MS KEARNEY: And that is the only one?

618   MR. LACAVERA: There is a business called MyScreen, which OT also invested in, but I don't...

619   Just give me one second.

--- Pause

620   MR. LACAVERA: AAL does not have an interest in MyScreen.

621   MS KEARNEY: MyScreen is a business that is being used by Globalive in some capacity, but you and AAL do not have an interest in it.

622   MR. LACAVERA: That's correct.

623   There is a contract of some kind. I think that Ken --

624   MR. SAWIRIS: Tony, it would also help if you mentioned the figures, because, as I understand it, it was quite a very small investment that we made.

625   MR. LACAVERA: That is absolutely correct, Naguib. OT invested $5 million in Lingo and has some warrants to make an additional investment, which, of course, is a modest investment; and $10 million to date, I believe, in MyScreen, although Michael O'Connor could actually confirm that.

626   Yes, it was $10 million to MyScreen.

627   So, yes, Naguib -- and warrants, as well, in MyScreen.

628   THE CHAIRPERSON: Okay, thank you.

629   Mr. Katz...

630   COMMISSIONER KATZ: Thank you, Mr. Chairman, and good morning. I have a series of questions that we will get into in a minute, but I would like to follow up on some issues from this morning, just so I understand.

631   I would refer you back to Appendix 8, which was handed out. I want to get a clear understanding of the representations on the various boards. Before I do that, there was some discussion about the title Managing Director and the title of CEO.

632   I know that in Europe they use the title Managing Director quite a bit, and, historically, it has been equivalent to CEO.

633   Is that how it is being used here, or is there a possibility that we will have a Managing Director over a CEO in some of the organizations that you have created?

634   MR. LOCKIE: No, they are just being used as equivalents.

635   COMMISSIONER KATZ: They are equivalents, okay.

636   MR. LOCKIE: In fact, if you look at the section relevant to GWMC, it mentions that there will be either a Managing Director or a CEO.

637   COMMISSIONER KATZ: Okay. If we look at Investco, I guess GIHC, Mr. Lacavera will become the Chairman and CEO, or, as you called him here, the Managing Director, replacing Mr. Ducharme?

638   MR. LOCKIE: Mr. Lacavera will certainly become the Chairman. No decision has been made yet as to whether he would take on the executive role as CEO or Managing Director.

639   COMMISSIONER KATZ: So, currently, you have Mr. Ducharme here as Chairman of the Board and Managing Director.

640   MR. LOCKIE: Correct. So he would, unless the parties agreed otherwise, retain his position as Managing Director or CEO of the company, but Tony would become the Chairman.

641   COMMISSIONER KATZ: When we get to Holdco, CGHC, we have Mr. Lacavera as Chairperson, Mr. O'Connor as the Vice-Chairperson, and Mr. Mohsen Kamel as the CEO and/or Managing Director, as the case may be?

642   MR. LOCKIE: That's correct.

643   COMMISSIONER KATZ: And if we move down to Globalive and the company GWMC, Mr. Lacavera becomes the Chairman.

644   There is a Mr. W. K. Michael that is on the Board of Directors. Is he coming off the Board of Directors, or does he remain on the Board of Directors?

645   MR. LOCKIE: He would remain on the Board of Directors.

646   Tony already was on the Board, so he will be assuming the Chair.

647   COMMISSIONER KATZ: Okay. So the composition of the Board stays the same.

648   MR. LOCKIE: Correct.

649   COMMISSIONER KATZ: Now, just so I understand, as well, when we go back to Investco, Mr. Ducharme is the independent director, and Mr. Lacavera and Mr. D'Onofrio are the appointees of AAL?

650   MR. LOCKIE: That's correct.

651   COMMISSIONER KATZ: And, currently, Mr. O'Connor and Mr. Farid are both the appointees of Orascom?

652   MR. LOCKIE: That's also correct.

653   COMMISSIONER KATZ: And we talked about that with the Chairman earlier, just to clarify that.

654   Mr. Lockie, I think you mentioned earlier, as well, that there are no operating roles for the holdcos at this point in time, although one of them may end up becoming an investment vehicle.

655   MR. LOCKIE: That's correct.

656   COMMISSIONER KATZ: If there is no operating role for them, why were two created instead of just one?

657   MR. LOCKIE: They were created initially for the purposes that I described at the outset. The top level holdco is simply the vehicle through which the parties have their equity stake, their primary equity stake, and they govern themselves as shareholders at that level.

658   The company below, which is the proposed vehicle for an investment of an equity nature, would be the vehicle that owns the operating companies. That is the primary purpose.

659   When you look at the composition of the two boards, they speak to that. The nominees at the holdco level, GCHC, are directors with a specific financing background.

660   COMMISSIONER KATZ: I believe, in my read of the file, that Mr. Campbell -- when Mr. Michael was the Chairman of the Board, Mr. Campbell reported to Mr. Michael and not to the Board of Directors.

661   I thought I heard this morning Mr. Campbell slip in that he reports to the Board now and not to the Chairman of the Board.

662   Is that correct?

663   MR. LOCKIE: That is correct.

664   COMMISSIONER KATZ: At one time Mr. Campbell reported to Mr. Michael.

665   MR. LOCKIE: No, in fact -- I guess I'm not clear on where that is coming from, but he was appointed by and reports to the Board.

666   COMMISSIONER KATZ: Okay. In both cases, then and now?

667   MR. CAMPBELL: Correct.

668   MR. LOCKIE: Correct.

669   And he has been, until recently, the Chairman of that Board.

670   COMMISSIONER KATZ: I'm sorry, I thought I had read somewhere that Mr. Campbell reported to Mr. Michael and not to the Board, but I could be wrong.

671   MS KEARNEY: I believe it was a clause in the employment agreement.

672   MR. CAMPBELL: There may be a reference to it in the employment agreement, but certainly, effectively, I report to the Board.

673   THE CHAIRPERSON: But, if I understand, you are going to file revised corporate documents anyway, so this point will be clarified to the effect that Mr. Campbell reports to the Board.

674   MR. LOCKIE: We would be very happy to clarify that.

675   COMMISSIONER KATZ: The last question I have on the structure -- and I would refer you to the organization chart that was provided earlier, as well.

676   When I look at this, the composition of the holdco is four representatives appointed from the investco, if I can call it that, and three from Orascom, which, roughly, is about 50 percent, or 47 percent, or 46 percent, if my math is correct, in terms of representation, yet both the voting and the equity from Orascom into holdco was 33 percent.

677   That begs the question, if there are seven members on that Board, 33 percent would be roughly two, as opposed to three.

678   Can someone tell me how Orascom ended up with three Board representations with 33 percent?

679   MR. LOCKIE: I would be happy to turn that over, if anyone else wants to speak to it, but certainly, at the time, there was no attempt to match up the equity holdings with positions on the Board. The intent at that time was simply to comply with the applicable restrictions.

680   COMMISSIONER KATZ: So there was no attempt to match them up. Okay, I will accept that as the answer.

681   Onto some of the finance issues...

682   Based on what I have heard, Orascom is involved in all aspects of the operating business. It is currently acting -- and I say currently acting -- as a banker, as a financier, and, in some respects, as an indirect operator of the operating company, as well.

683   My questions, both today and tomorrow, will revolve around the one question that I believe is fundamental, that is, is Globalive Wireless financially independent of Orascom or not?

684   I am sensitive to the fact that part of the record has been filed and accepted in confidence, so I will leave it to you all to tell me at what point in time you want me to adjourn part of the questioning and leave it for tomorrow at the in camera session.

685   With that said, let me start with the current debt outstanding to Orascom. Can you tell us what the current outstanding debt levels are, what the prevailing interest rates are, and the terms of the loans?

686   MR. SCHESCHUK: Thank you, Mr. Vice-Chair.

687   The approximate amount outstanding under the operating loans is about --

688   MR. SAWIRIS: Excuse me; is it all right to have this question tomorrow, or do we need to ask this question now?

689   I understood from you that we can address whatever we consider as sensitive information tomorrow.

690   I am happy to let it go if you insist, but I think it is still a competitive issue here, and I am sure that among the listeners in the hall right now there are competitors.

691   THE CHAIRPERSON: Mr. Sawiris, as the regulator, we are obliged to do as much on the public record as we can. We appreciate that there are things that are confidential that you can't share, and that is why we will have an in camera hearing tomorrow. But, to the extent that these documents have not been claimed confidential by you, and are on the public record, or are otherwise publicly available, we should discuss it here.

692   We will discuss those aspects on which you have claimed confidence tomorrow, and as the Vice-Chairman said, you answer the questions that you can. If there are some you can't, we will deal with them tomorrow.

693   But not all of these you have claimed confidence on, and if you didn't, you should answer the question.

694   MR. INTVEN: Mr. Chairman, if I might say something here, it is quite correct that the current rates on the debt were made a matter of public record; however, the current level of debt and all of the current financing of the company are things on which confidentiality has been claimed.

695   If you feel it appropriate to have some discussion on the public record, Mr. Vice-Chairman, I would suggest that perhaps it could be restricted only to the level of the interest rate, and then, when we get to the actual financing plans, we could deal with them tomorrow.

696   Would that be appropriate?

697   COMMISSIONER KATZ: Yes. It was actually my recommendation that we go as far as we can here, but, clearly, the ability to finance the level of debt would be discussed tomorrow, when we get into the actual business plan.

698   I think you mentioned, Mr. Campbell, that your latest business plan was January 2008, with the Chairman. There is something on the record in March of 2009, I think, that I saw --

699   MR. CAMPBELL: I will have to refer back, Mr. Katz, but we will use the most current business plan as a frame of reference. It is updated from time to time.

700   COMMISSIONER KATZ: You may want to come back to us tomorrow with the latest plan, as well, just so we are all working from the same document.

701   Okay. Without necessarily releasing the accrued or the cumulated interest -- although the interest rates, I believe, are on the public record, as well as, I believe, the date for the termination of the term loans.

702   And I look to you to confirm that --

703   MR. INTVEN: That's correct, Mr. Katz.

704   COMMISSIONER KATZ: Okay. Let's start with the fact that there were two term loans, one of $442 million and one of $66 million, which carried interest rates up to, I believe, 18 percent.

705   Is that correct?

706   MR. SCHESCHUK: That is correct.

707   COMMISSIONER KATZ: And that was entered into when?

708   MR. SCHESCHUK: The initial date of the loan docs -- I am not sure if both facilities were the same, but I think it was in August of `08. At least one of them.

709   COMMISSIONER KATZ: And those rates are somewhat high, and I think the record shows -- and you stated again this morning in your opening comments that you are working diligently to finance this on a longer term basis, which ultimately would reduce the cost of borrowing, as well.

710   MR. SCHESCHUK: That is correct, Mr. Katz, but if I may, when we negotiated those rates with Orascom, our comparables were a number of different things. One of those would have been our experience in financing the Globalive wireline business and some of the sub-debt, and so on, that we have raised over the years.

711   We also looked a little bit to, primarily, U.S. precedents and comparables on new entrant, highly debt financed, spectrum-type companies. There are probably five or six that are commonly cited.

712   I believe we filed a presentation from one of our bankers that does highlight those, and I would be happy to get into more detail on that tomorrow, but the point is that a new entrant, spectrum-secured financing, was, at least, a reasonably used vehicle in the U.S., and there are some comparables that we can look to that our rates would fall into line with.

713   MR. MAREUSE: I would like to comment on two things. The comparables you will see are comparables for the U.S. market, as Brice mentioned, but they were also done in very different market conditions. They were done in conditions which were much rosier than the one we had when we negotiated these loans. That's number one.

714   The other thing, obviously, is that all of the financing was done with companies which had no uncertainty in terms of the regulatory environment and the licence.

715   So those are two caveats that, also, you have to keep in mind when you compare the interest rates.

716   COMMISSIONER KATZ: Clearly, Greenfield financing is a little bit different from going concerns, but what I have heard -- one of the benefits that Mr. Lacavera has in relying on Orascom is their breadth and depth of operations, and their experience in the operations. One would think that would lead you to getting better rates on borrowing, as well.

717   I have heard about all of the negotiations on equipment and vendor financing, but I haven't seen a break on the interest rate at all, and one would think that Orascom could do much better on their own, even in these tight times, than what the general market would bear.

718   MR. MAREUSE: At the time we negotiated --

719   MR. SAWIRIS: Mr. Vice-Chairman --

720   MR. MAREUSE: Naguib, just one second.

721   At the time we negotiated the loan, our bond at the Orascom level was trading at 25 percent. That was at the time we did it, and we are, obviously, a mature company -- a much more mature company.

722   This just tells you a little bit about the environment in which we negotiated this, and you will see all of these examples so clearly that -- you know, these interest rates are very standard for this type of venture.

723   Now, your question was different, it was why were we not able to negotiate better terms. I agree with you, and, believe me, it's not because we did not try, it's just because the environment in which we negotiated these loans was right after the September 15th, 2008 debacle, and there was no one at the time able to provide us with better terms.

724   COMMISSIONER KATZ: Are you saying that you raised money at the same cost that you passed on to --

725   MR. MAREUSE: No, that's not -- you know that we have a publicly trading bond, and because of the crisis at the time, in September, when we negotiated the term loan with Globalive Wireless, our bonds were trading at an implied yield of about 25 percent.

726   COMMISSIONER KATZ: Because they were trading at a discount, you are saying.

727   MR. MAREUSE: Yes.

728   MR. SCHESCHUK: Mr. Katz, if I may, there wasn't an expectation -- and I will have Tony chime in as he sees fit -- on AAL's end that we would get kind of a break from Orascom on interest rates.

729   Similarly, if we are to gain leverage from Orascom from a purchasing perspective with respect to vendor pricing, we wouldn't expect Orascom to then give us a further discount somehow and eat that difference.

730   The negotiation was to market no better or worse than that, I guess is what I would say.

731   COMMISSIONER KATZ: I would have hoped that Orascom's compensation for getting you those deals was embedded in the Technical Services Agreement and not in the cost of financing.

732   Why don't I let Mr. Sawiris speak, because he was about to say something a minute ago.

733   MR. SAWIRIS: I think that Brice said the first half, so I will not repeat it.

734   What we have offered Globalive is market pricing, no better or no less. We are an equal partner with the other shareholders, and it is not expected that any shareholder should subsidize the operation.

735   The other part that I might add is -- and, please, I hope that the Commission will not be upset with what I am trying to say. We made these loans at times when neither Industry Canada nor this hearing had taken place, nor were we ever sure whether we would get the necessary approvals, as we are not sure to this minute.

736   Let's take the worst scenario, where the Commission decides no -- gives a no to Globalive. Then, all of the money spent until now would be down the drain.

737   I wonder if there would be anybody else in the world who would have lent to a company this amount of money with these risks looming.

738   I would say that if it was not for the character of myself, and the trust that we put in Tony, and the trust that we put in your country and your Commission and your laws, and our lawyers, that they have done all the right things, we would not have done that.

739   If you want to couple that with the current crisis that has hit most of the world, I can say very correctly that we are currently negotiating a loan for our company which is going to cost us even more than the money we have lent to Globalive.

740   MR. LACAVERA: Mr. Vice-Chairman, if I may, I would also like to add to Brice and Naguib's comments that in the midst of things getting much worse in the capital markets, and in the midst of the company needing funding to move forward, Orascom never, at any time, made any attempt to extract improved terms from AAL or from Globalive in any way.

741   I think it is important to recognize the fortitude and staying power of Orascom, which, I can say, I definitely -- AAL and Globalive definitely needed at a time when there was no other financing available.

742   In terms of the entry to the auction, with all of the risks associated with that, the level of risk that OT took, and with all of the uncertainty, I think that is reflected in the cost of the financing, which, really, against our business plan, is not a very onerous cost.

743   COMMISSIONER KATZ: Okay.

744   MR. DUCHARME: If I may comment, there is an issue of the glass being half full or half empty. The entrepreneur who is confident that he has a tremendous opportunity in front of him is willing to borrow at what may come across as expensive rates to others who don't understand the opportunity.

745   If you will recall, Rogers Communications, back in the eighties, was borrowing at 17, 18, 19 percent even, because Ted had the belief that the rate of return that he could realize on his equity investment was substantially above the rates that he was paying to the Drexel Burnham bond holders.

746   And, likewise, back in the nineties, when Clearnet did its IPO, when Microcell did its IPO -- and both companies already were public -- when they did their high yield offerings, back in those days it was done at rates that were around 14 or 15 percent, and those rates were considered logical, in view of the potential to earn a significant rate of return on the equity.

747   What I am saying, basically, is that the rate is one thing, but perhaps more important for the equity owner is the availability of the funding.

748   As I said, it's a question of the glass being half full or half empty. I consider, as an independent, that a business opportunity such as this one, which can, in fact, be financed -- in other words, it has the availability -- whether the financing is done at 14 percent or 19 percent or 20 percent is almost secondary and is not a proper measure of the attractiveness of the opportunity.

749   COMMISSIONER KATZ: I don't think we are necessarily here to ratify interest rates, but, as I said earlier, what we are here to deal with is the perception that we have Orascom here as a banker, a financier, and also intimately involved in some of the operations, at least in building the infrastructure for the business.

750   MR. DUCHARME: Let me correct you on that point -- and this is not really for me to answer, but, basically, the management of the company is entirely in control of the operations. If there are resources from Orascom, they are technical experts who are brought in to provide assistance. They don't have -- unless they are seconded on a permanent basis, they don't have accountability for actions. The accountability rests squarely with management.

751   So to imply that Orascom does everything here, I think, is a slight exaggeration, at least as concerns the role of management.

752   Ken Campbell has plenty of experience in this business. His management team has plenty of experience. A lot of these people used to work for me, and they are quite able to hold their own.

753   Of course, they will try to get input from technical experts, as required, on issues that they may not have up-to-date knowledge on.

754   COMMISSIONER KATZ: Let's get back to the financing issue, if we can.

755   I think I heard in your opening remarks mention of the fact that to put a clock on anything would cost more, in terms of negotiating ability, as well.

756   Is that your position?

757   MR. LACAVERA: To put a clock on -- I'm sorry, Mr. Katz, I'm not sure that I understand your question.

758   COMMISSIONER KATZ: On raising long-term debt and diversifying the holdings of Orascom, and the reliance on Orascom as the banker.

759   MR. LACAVERA: We have been seeking financing -- I have, over the past ten years, been seeking third party financing for the ventures I have started up, and certainly this case is no different.

760   We have had an ongoing process led by a very experienced team at OT led by Aldo, and on my side by Brice, to investigate a variety of financing alternatives, equity and debt, and, of course, as Aldo stated earlier, Orascom is not at all in the banking business. So this is a result of incredible global circumstances that I don't think anyone could have seen coming that we have ended up in the situation we are in.

761   MR. MAREUSE: I think it is very important to understand that this is not our interest. We are a public company. We have shareholders. They don't want us to have so much money tied in. We use, as I said in my statement -- we leverage other people's money. So we just went into the situation because of the market.

762   Our intention is to reduce as much as we can our financial exposure because this is not our business and we were just put in the situation because of the global crisis. So we have a very, very, very clear -- you know, we are very clear on this, as much as we can reduce, this is in our interest.

763   MR. LACAVERA: What is very important --

764   MR. SCHESCHUK: I am sorry, can I just --

765   Mr. Katz, to be very specific to the question that you asked, which is about a clock, in my experience, and I think that we are quite aligned on this end, all the shareholders, when you put a financing condition on a financing or on an entity that is looking for money, it becomes the lowest common denominator.

766   So immediately if there is a clock, we will be held hostage either pre or at the time of that clock being put on and we have -- I mean people have raised financings under constraints before and would, I think, agree with me.

767   The existing constraints that we have had to work our way through -- an example would be the Industry Canada approval, I mean that was the leading conversation in every financing discussion.

768   You can guess what the current leading financing question is in every conversation that we are having now and if we walked out of here and the hypothetical one-year you need X or dictation to capital structure, that will be the leading question and will put us in a very, very tight box.

769   MR. LACAVERA: We have said, Mr. Vice-Chairman, publicly a number of times that we must have the ability to raise capital on commercial terms, and, you know, an imposition of any kind of constraint timeline -- frankly, a timeline, even it if were extended out a period of time, will really result in, of course, given the nature of this hearing, being on the public record. You will actually in many ways defer our ability to have financing alternatives to about 30-60 days before we have to close on that financing.

770   We have got a long history of raising third-party capital and this business is no different for us. We are working hard to make that a reality.

771   COMMISSIONER KATZ: And I guess we will have to wait till tomorrow to get into what it is you are actually doing and who you are talking to.

772   But let me just ask one follow-up question. That is, you are also looking for long-term capital with the lowest rates you possibly can. At the same time the rates you are paying right now are market rates, as you say, plus 18 percent or whatever.

773   So it begs the question: In the interim, are you saying there is nobody on Wall Street, there is no one internationally that would take short-term paper at these rates?

774   MR. SCHESCHUK: Mr. Katz, again, we are talking to the banking community daily, I can say pretty comfortably. The post-crisis, any type of new entrant spectrum-secured, short- or long-term bridge or longer-term financing died. That market, to my knowledge and to the feedback that I have still been getting, has not come back. And we will have, as you know, bankers in the room tomorrow to talk somewhat to that.

775   COMMISSIONER KATZ: Okay.

776   MR. DUCHARME: If I may add, Mr. Katz, in addition to that, my experience -- and it is echoed by many people who have done this -- is that until a company is in service and has traction in the market, has subscribers, generates revenues, it is extremely difficult to raise external funding.

777   External funding from public institutions, from private equity investors, is not funding that is able or willing to take on the entrepreneurial risk that you deal with in a start-up phase pre-launch, pre-subscribers.

778   COMMISSIONER KATZ: Fortunately, I think, in this --

779   MR. SAWIRIS: On the risk of --

780   COMMISSIONER KATZ: Go ahead.

781   MR. SAWIRIS: I am sorry. On the risk of being repetitive, I need to again emphasize and repeat, in the absence of final regulatory approval, any lender needs to be half as crazy as we are.

--- Rires

782   COMMISSIONER KATZ: Okay. So that begs the question. If we continue on without getting any long-term funding, we come up with a clause that is in your term agreement that has a definitive date on it for when default arises; is that right?

783   MR. SCHESCHUK: That is correct. There is a maturity date on the facility.

784   MR. MAREUSE: Obviously, as Orascom, as we are a minority shareholder and we have put, as you know, a substantial amount of money, it is not in our interest to do anything to eliminate this clause. That is obvious. So we have to put terms but it is not in our interest.

785   COMMISSIONER KATZ: It's some of those terms though that I want to pursue. You have terms in there with regard to -- I think that the clause is actually 7.2 and it is called appropriation of monies and I need to get a better understanding as to what recourse Orascom has set aside as part of its alternatives should the term loan be called and what happens to the operation at that point in time because it appears as though an awful lot of things get triggered at that point in time, not the least of which is the Technical Services Agreement which also falls into default and allows for Orascom to stop providing services under that TSA as well.

786   So all this talks to the ability for Orascom to influence the decisions in the interim and ultimately until that debt has been disposed of and distributed to non-Orascom operations.

787   MR. SCHESCHUK: Mr. Katz, could you just repeat that clause for me, please?

788   COMMISSIONER KATZ: I think it was 7.2 of the term agreements.

789   MR. SCHESCHUK: If you just give me one moment.

--- Pause

790   MR. MAREUSE: I can just repeat what we said. You know, we have so much money tied in this investment that it is not in our interest to trigger this clause. We would just be shooting ourselves in the foot. That is pretty clear.

791   COMMISSIONER KATZ: If it is not in your interest, then why did you put it in?

792   MR. MAREUSE: Because you have to put an end, you know. This is a standard -- you know, you can't have just a loan that never expires. Then it becomes equity. I think, you know, if this was a term, then you would say this is equity, this is not a debt.

793   COMMISSIONER KATZ: But this clause as well as the trigger on the TSA, the Technical Services Agreement, it stops as well at your discretion. It gives Orascom the ability to further influence, if it chooses to, and all I am looking at are these clauses that give you the opportunity to do it. I am not saying you will do it but it begs the question: If you are not going to do it, why would you put it in? And if you are putting it in to protect yourself, then it is there because you may decide to use it.

794   MR. CAMPBELL: Mr. Vice-Chairman, if I could perhaps assist. The clause in the lending agreement is a fairly routine and standard banking clause that you would find in any lending arrangement and it provides that in the event of default, I think what Mr. Mareuse is saying is that it is very unlikely that Orascom would enforce that clause and likely would be looking at extending the loan and eliminating the default.

795   COMMISSIONER KATZ: Well, those are the issues that I have got, so I will leave that thought with you. I mean it basically says the opportunity is there and what we are looking at here is an interpretation of control in fact, and I am saying these things lead one to suggest that there is recourse at some point in time whenever that default happens.

796   MR. INTVEN: Mr. Katz, if I could perhaps be a little more explicit than my friend the banking lawyer, this clause is what turns this agreement into a loan and not an equity investment. Unless there was a possibility to take recourse against the borrower, it would be an equity investment. So it is a perfectly standard clause in any lending agreement. Without that, you wouldn't lend.

797   COMMISSIONER KATZ: It may be a standard clause in any lending agreement, I don't dispute that, and if TELUS or Bell or Rogers went to a bank, I can understand that but we are dealing here with a non-Canadian entity who has extended those funds with the recourse that he does have, should he decide to use it. That is the difference.

798   MR. INTVEN: Right. It is a loan.

799   MR. SAWIRIS: Can I make a point, please? It is very important to clarify that.

800   There is no loan in the world without an end, without a date, and there is no loan without a default clause. So there is no other way to do it if we want to lend to Globalive. If we wanted to put more equity, it is not allowed. So if you have -- nobody has invented a third way. It is either equity or you make a loan with a deadline and a recourse, you know.

801   Again, it is very important to mention that, again, we had not intended to provide that loan if the economic crisis would not have occurred and if the lending markets would not have dried up completely, and if we had found any other private equity Canadian investor that would have liked to join, we would have welcomed that, you know. It is just important to see all the circumstances under which this loan is done.

802   We have not done that in any other operations. We don't usually like to provide shareholders' loan because they reduce our return.

803   MR. SCHESCHUK: Mr. Katz, we appreciate your point and we will take that away. I would say that these documents were drafted obviously in anticipation that there would be additional financing as well in the structure.

804   COMMISSIONER KATZ: Yes.

805   MR. SCHESCHUK: Thank you.

806   COMMISSIONER KATZ: I am sure there was.

807   And to that same point, the TSA also falls into breach when the default happens as well. So basically Mr. Campbell is left with no support at all on date certain, whenever that default occurs and I guess -- was that also intended?

808   MR. LOCKIE: Yes. I mean I think that it is helpful, again, to return to the context in which these agreements were entered into. The contemplated event of default that you are referring to and the provision for it in the TSA, both of those arose in a context where this was intended to be very short-term bridge financing. The points you have made are understood and we will take that under advisement but the context has changed.

809   COMMISSIONER KATZ: Okay, thank you.

810   I am a little leery about getting into the next question. It has to do with vendor financing and I think I am going to wait till tomorrow for that because it also ties into the ability for Globalive Wireless to actually fund and finance the debt and the vendor financing at some point in time as well. So we will come back to those questions tomorrow.

811   MR. LOCKIE: Yes.

812   COMMISSIONER KATZ: Those are all my questions, Mr. Chairman.

813   MR. SCHESCHUK: Could I just make one remark, Mr. Katz?

814   You had made a mention of business plans and I think I understand that there were a few different plans filed in the various documents.

815   If I was to pre-emptively steer you for tomorrow's discussion, the main document that I would like to talk to you from a capital structure perspective -- and obviously these things are works-in-progress and are always moving -- but interrogatory 6.6-1 is probably our best one to talk to for financing.

816   COMMISSIONER KATZ: Thank you very much.

817   THE CHAIRPERSON: Okay.

818   Mr. Menzies.

819   COMMISSIONER MENZIES: Thank you. I have a few questions relating to your presentation to get clarity on and then I will just touch on a couple of other things having to do with control in fact and corporate culture.

820   Mr. Lacavera, you mentioned in your presentation, and you have just mentioned it again, that you searched high and low for partners in this, and this was in the context of your talking about relative experience.

821   And then in paragraph 10 of your presentation, the last sentence says:

"Ultimately those fell through."

822   Can you expand on that a little bit and help us understand why those fell through?

823   MR. LACAVERA: Yes. Mr. Menzies, I think there are a number of factors. When I looked at getting into the wireless business, definitely, immediately I recognized that I had to look outside of Canada for capital, and because I hadn't yet been in the wireless business, I felt operational expertise was critically important as well.

824   And then, of course, the fact that the incumbents are entrenched in the marketplace in Canada and I have had 10 years of having fun competing with them in various niche markets, I recognized the need for this to be a very large financing. And probably most importantly with respect to that, staying power, ability to go through ups and downs like any business has.

825   I had discussions with AAL's team. Brice, Simon and myself being the core team, we literally met with upwards of 50 different potential partners for this business. We talked to equity investors, institutional investors. We talked to banks. We talked to intermediaries. We talked to principals. And I spent an extensive amount of time literally around the world talking to parties on how this could be done.

826   The regulatory framework is clearly a hurdle in Canada to bringing international investment, foreign investment. The market reality that there are three very well run incumbents that have their own flanker brands makes it a competitive environment and their ability to move in the market.

827   So all these factors led to really coming down to the need to partner with someone who was an entrepreneur like myself, someone who has been successful in the wireless business and seen what can go right and what can go wrong in the wireless business so that we don't trip ourselves up and make mistakes, and the ability to help bring a team to the table, in addition, to bolster my team, Ken, Bruno being examples -- Ken actually was brought by Michael O'Connor and Ken actually introduced Bruno.

828   So you can see how things go. This is not about OT bringing everything to the table. It is already much bigger than that.

829   I don't think it was realistic to have gotten where we are today without partnering with someone who has the fortitude to go the distance in this market and go through the regulatory hurdles now, but now, with your blessing, we will be through those. Now, we have to actually launch a business and compete with the incumbents.

830   COMMISSIONER MENZIES: Are you saying that -- I am just trying to make a long story short.

831   MR. LACAVERA: Yes.

832   COMMISSIONER MENZIES: Are you saying that basically the entrepreneurial drive to invest in this sort of business and create competition, in your experience at least, didn't exist in Canada?

833   MR. LACAVERA: I could not find it and, you know, I have been in the business for 10 years and I have talked to parties that are also entrepreneurs in Canada, and again, it is a very large proposition to get into wireless in Canada. So the answer is no, none of the my relationships at the time.

834   I am very happy with the new partnership that I formed with Naguib and then obviously the OT team and now the management team we have. I think that -- you know, as I said in my interrogatory, I have never worked for anyone. So actually this idea of OT controlling me didn't actually even occur to me until it was raised in this interrogatory process. I just have never had anyone -- I can say quite literally, I have never had a job. I have always been starting businesses and building businesses.

835   So this question of influence, I mean I was able to find financing, which I think is incredible financing, the financing that OT has contributed, incredibly powerful financing for the market we are in today. And now things are improving and we are continuing to have discussions about now third-party financing.

836   COMMISSIONER MENZIES: Okay, thank you.

837   The next question is for Mr. Campbell. You mentioned in your presentation, in paragraph 41, that:

"It is [your] responsibility, as with all CEOs, to seek the guidance and support of shareholders or the Board."

838   It seems to me that CEOs have quite a juggling act to do, that there are many relationships to manage in reality --

839   MR. CAMPBELL: This is true, sir.

840   COMMISSIONER MENZIES: -- would you agree? And typically you have got Boards, you have got shareholders, you have got client suppliers, you have got staff, you have got whoever it is you directly report to and it is a major challenge.

841   In this case, you have one player, Orascom, who is essentially -- well, not essentially, is in fact your major shareholder. It is your major avenue to creating good business arrangements with its purchasing power and its influence. It is your banker. It is your brand supplier.

842   It seems to me that, in fact, in terms of the amount of influence it brings into the room, influence goes beyond the number of votes that a person has from time to time.

843   Tell me how you would manage the fact that there are that many eggs in one basket in terms of managing the variety of those relationships that we talked about.

844   MR. CAMPBELL: Well, it certainly is a balancing act but as managers we have a responsibility to all shareholders. I have worked in various businesses in other countries with multiple shareholders, but each of whom has a common interest in the success of that business.

845   So my job as CEO is to garner the resources that I can from shareholders and from partners and from the team that we have built up within Globalive.

846   So am I restricted by the relationship that I have with Tony or with OT? In fact, no. We all share that common view of where this business needs to go and my job is really to leverage those resources as much as I possibly can.

847   This is a very common mandate and one which personally I am quite familiar with, having had to manage with multiple shareholders and multiple stakeholders before.

848   COMMISSIONER MENZIES: So the fact that one of the shareholders that you have to deal with can pull the plug and sell the whole company, lock, stock and barrel --

849   MR. CAMPBELL: As has been expressed, I don't think it is anyone's interest to do that. Certainly, shareholders exit businesses all the time and management has to manage within those parameters.

850   We have the resources that we have got today, and frankly, I think we are very lucky to be able to tap into OT's technical know-how, we are able to tap into Tony's and AAL's knowledge of the market, and Brice, for example, his knowledge of the capital markets here in Canada.

851   So no. Do I feel restricted in any way? No. I just simply look at each one of the resources that I have got to tap into and I say, how can I best leverage that for the benefit of the team that we have built, for the benefit of the shareholders that we have across the board.

852   COMMISSIONER MENZIES: Sure. I can appreciate that you all get along very well now but in the course of things, from time to time, business relationships do break down and that was why I mentioned the drag-alongs and how that might affect the amount of influence Orascom had in your mind.

853   MR. CAMPBELL: Certainly, the drag-along rights had not even entered my mind until we started these discussions.

854   Before I joined this business, one of the things I did was I sat down with Tony, I sat down with OT and I sat down with the other minority shareholder, Michael O'Connor, to get a sense of their commitment to this business, and that obviously was important to me, and also that gave me some confidence that they had the view on the long term.

855   Shareholder relationships do break down. Management has to manage within the parameters they have got. We have got to seek other forms of financing. We have got to see how we can continue to build the business based on the balance sheet we have got and simply manage around that.

856   COMMISSIONER MENZIES: Thank you. My next question has to do with the Technical Services Agreement. You said this morning that you were entitled to seek technical advice from OT. Are you entitled or are you obliged?

857   MR. CAMPBELL: We are entitled. In fact, the TSA is a non-exclusive agreement. We not only use OT for consultancy services, we use lots of other consultants.

858   What I particularly take advantage of with the OT relationship is the fact that they have a scale. This business, the telecom business, the wireless business is a hugely capital-intensive business. We are buying massive amounts of equipment. And so for me to be able to tap into the price books of OT is a huge advantage.

859   And just to let you know, in the last operation that I was CEO of, we were a partner network of Vodafone. That relationship only allowed me to access certain amounts -- certain pieces of value in that relationship but they benefited us greatly with regard to handsets in particular.

860   So this kind of relationship is not uncommon and it is certainly something that as a manager I really want to take advantage of to the extent that I can.

861   COMMISSIONER MENZIES: So just explain to me the circumstances with the TSA. Are you obliged to commit to a certain level of work from them? How do you build them?

862   MR. CAMPBELL: No. In fact, I think some of them might be happy if we didn't engage them as much. I think --

863   COMMISSIONER MENZIES: I meant with Orascom.

864   MR. CAMPBELL: Yes. Now, there is no requirement for -- what we have done is we have set up a process whereby, particularly for our large vendor agreements, we seek to ensure two things.

865   One, that we leverage the price books that exist globally, that OT has managed to negotiate globally based on their scale.

866   And secondly, what we are procuring in fact represents a like for like comparison to other operations so that we are not sourcing technology that may be irrelevant to our needs. So we do seek advice on that particular stuff.

867   The thing that OT has also been able to help on, we are a start-up business, so I started in the business in November and at that point in time I was the first employee. Well, you know, you look around you and you have got to -- first of all, you build your team but you are also drawing on the resources, whether it is Simon Lockie over here or Brice or Tony or Aldo or some of the other people in this room and you start to build it up over time.

868   And as you build your own team, and I described my own team to you earlier, they start to take things over. So now we are at the point, I think, given the fact that we are launching our stores and our call centres, we are going to be up to over 300 people very shortly. Well, that is, frankly, much more than OT has in their group operating company, I believe.

869   So, you know, it is very much the Canadian management, it is very much the people on the ground here that are driving things, and we are seeking particular advice when we need it.

870   COMMISSIONER MENZIES: Okay. I just wanted to clarify one thing. You said there wasn't a particular minimum obligation to OT in the TSA?

871   MR. CAMPBELL: Not that I recall. There is a fee for their services, as I recall. I will have to refer to --

872   COMMISSIONER MENZIES: Okay.

873   MR. CAMPBELL: Yes.

874   COMMISSIONER MENZIES: Now, does OT have -- it is my understanding that it has some veto rights regarding where else you can go for services.

875   MR. CAMPBELL: The shareholder agreement provides for that any material, contract or arrangement in excess of $5 million they could have a veto on. And so this largely comes into play when you are talking about large systems or network vendors, of which, unfortunately, there are becoming fewer and fewer options.

876   COMMISSIONER MENZIES: So how does that restrict you in your decision-making?

877   MR. CAMPBELL: In my decision-making so far, I haven't had any restrictions on this. As we have announced publicly, there are two major radio access vendors that we are working with. Both of these are strategic partners of Orascom.

878   In fact, the agreements were effectively drawn up before I joined the organization and we were able to leverage them. So there wasn't really any debate about that. And there are, as I say, only a few different alternatives globally that you could use for building out your network.

879   COMMISSIONER MENZIES: Okay. Who is in charge of your -- I have heard from everybody today that they share an entrepreneurial spirit, et cetera, et cetera, et cetera, which is all good news because you need that in a company.

880   Who is in charge of your company's culture and your entrepreneurial spirit? Who is the largest influencer in that?

881   MR. CAMPBELL: You know, that is a good question. I mean clearly, it comes from the heart of our employees, from every one of them. We developed a set of values ourselves as a company, which, in fact, the WIND brand is simply a name. The values that underpin that have to come from our employees and from the culture that we have. We share some of these values with our shareholders, especially Globalive, who is the local Canadian shareholder.

882   We talk about four values, about creativity, about courage, about sharing and about caring, and these are the four values that have been developed by our own employees, and, frankly, we try to live them every day.

883   COMMISSIONER MENZIES: Mr. Lacavera, when did you and Mr. O'Connor first meet? Can you fill us in a little bit on your background together?

884   MR. LACAVERA: Yes.

885   So while I was -- I guess as I alluded to earlier, or described earlier, I was looking for partners to get into the wireless business with, partners strategic and operating expertise, as well as financial investment.

886   I connected through an advisor or friend of Naguib, I connected with Mr. O'Connor, and he being from Peterborough, Ontario, I am from a small town, Welland, Ontario, he and I had a lot in common actually, you know, right out of the gate.

887   Obviously I was pretty excited to meet someone who was a Canadian, born in Canada and grew up in Canada, but had gained, through his experience with OT, a lot of international knowledge and experience in the wireless base.

888   So he and I hit it off well and we met quickly. Again, as I described, there is a very short -- it was a very short timeframe between the end of November of '07 and March of '08 when the deadline was for the -- and obviously no one expected that I would -- that AAL would be a contender in the auction.

889   So I was starting from scratch at the end of November in terms of getting a financial partner and an operating partner.

890   COMMISSIONER MENZIES: How did that unfold?

891   MR. LACAVERA: In terms of...?

892   COMMISSIONER MENZIES: In terms of the AWS auction?

893   MR. LACAVERA: Well, we submitted the deposit in March of '08 for the rules and then -- sorry, maybe I didn't understand your question.

894   COMMISSIONER MENZIES: That's all right.

895   Just in terms of your relationship with Mr. O'Connor.

896   MR. LACAVERA: How has it evolved?

897   COMMISSIONER MENZIES: Yes. How has that relationship -- we know where it started.

898   MR. LACAVERA: Right.

899   COMMISSIONER MENZIES: How has it evolved? How has it evolved from there through the AWS auction and on through here.

900   MR. LACAVERA: Right.

901   Mr. O'Connor has had a lot of experience in auctions and leading auctions, the bidding process and understanding game theory and so on, so he was really, I would say, on the ground the leading representative of OT at that time, worked directly with me, Brice Scheschuk, Simon. At this time Ken had not yet -- obviously we were just bidding so we didn't have frequencies or business -- we had a business plan, but it was sort of very hypothetical because of course we didn't know the cost of the spectrum and what licences we would potentially win, et cetera.

902   So he was very involved. He is now -- obviously that was a key role for him. He has now become really a strategic advisor. I know that Ken uses him. I talk to him all the time. He is a director at GCHC, he is now Vice Chairman of GCHC, as we mentioned earlier, and has a tremendous amount of knowledge and ability to contribute to this venture.

903   So I hope that he is a Director long-term.

904   COMMISSIONER MENZIES: Who was the primary influence in the decision to change from the Yak to the WIND brand?

905   MR. LACAVERA: well, just to correct on that, we still actually obviously have the Yak brand and we have said a number of times that we are investigating a multi-brand strategy. So we have many customers with Yak. We are selling Yak.

906   That business, Yak, is run by Mr. Ezio D'Onofrio, who is here today as well. He has been working with me for six, seven years -- no, longer, eight years now, has been the President of Globalive for over five years.

907   COMMISSIONER MENZIES: I'm sorry to have prejudged Mr. D'Onofrio's demise, but who was the -- let me rephrase the question.

908   Who was the primary influencer in bringing the WIND brand?

909   MR. LACAVERA: Well, when Naguib -- I mean from my -- there were many discussions that went on, but from my concerns the opportunity to leverage the WIND brand is sort of exactly what I have been saying is so important for this business to be successful.

910   There is a well-established brand, fastest growing brand in Italy, obviously fully implemented and deployed in a very large way, larger than the Canadian market in wireless right now in terms of subscribers. So I personally jumped, you know, all over that opportunity.

911   Naguib will remember me texting him immediately when I heard he was willing to do that, saying that would be fantastic.

912   COMMISSIONER MENZIES: So it was your idea?

913   MR. LACAVERA: It was not -- it did not originate with me. I don't actually know.

914   Ken, can you -- who originated?

915   MR. CAMPBELL: We considered a bunch of different alternatives. Ultimately we presented to the Board I think two or three different alternatives, some of which I think were filed with you, some names. The Board ultimately made the call to go with the WIND brand.

916   Frankly, we have gotten excellent feedback from employees, I think from all stakeholders. Not everyone is a Roma fan, but the WIND brand really does resonate with a lot of people and ultimately the Board felt that and so we are very happy that we have been able to secure a licensing agreement on it.

917   COMMISSIONER MENZIES: So the idea came from inside this country?

918   MR. CAMPBELL: From a process with inside Globalive.

919   COMMISSIONER MENZIES: Thank you.

--- Pause

920   COMMISSIONER MENZIES: Thank you. That's all.

921   THE CHAIRPERSON: Okay. Before we break for lunch I have a couple of follow-up questions.

922   First of all, Mr. Sawiris, when we discussed the antidilution clause you said it was absolutely mandatory for you in order for you to consolidate your balance sheets and carry this as part of your assets.

923   Is that an absolute or are there other ways you could do that? I mean if, for instance, Commission would say "I'm sorry, we cannot approve this deal with that antidilution clause in there", is that a deal killer or are there ways to deal with the issue of consolidation of accounts?

924   MR. SAWIRIS: It's not a deal killer.

925   When we decided to do this investment we investigated what is the maximum economical ownership we can have.

926   So it was part of our investment decision that we knew we were allowed to own, I think something around 65 percent, you know. So it was just given by the rules and laws of the country when we were deciding on the investment.

927   It's not a killer.

928   If I may say something, it is not our intention to consolidate in the first years of operation, because on the first years of operation there will be tremendous losses and it will actually hurt our balance sheet.

929   All we are saying is that if the laws change -- let's assume that one day the laws will change in Canada too and you will be -- maybe I can convince you of opening up and not to be so protective on your telecom market.

930   Or I can tell you what is happening in Egypt. In Egypt we have the British, the French and the Emirates and they dominate our telecom and there is not an 100 percent Egyptian company owning the operation. Even we as Orascom Telecom, we own only 30 percent of the local company in our own country.

931   So we just want to leave the option open for ourselves in the future. We believe that -- I sincerely believe that one day also Canada will be globalized and opened up and might decide to remove some of these restrictions, because personally, as a capitalist and a very liberal and ultra capitalist, I believe that opening up and globalization and competition is very good for innovation, for new practices.

932   Even now when I was talking about the brand and that the idea came from Canada, I was wondering what would happen if a good idea comes outside of Canada. I mean it's not -- I mean I hope that Globalive will be open if even myself have a good idea for them, that I might have the right to tell them, "Listen guys, this is a good idea, why don't you do like that or this".

933   So having said that, sir, it's not a killer. There are other ways to consolidate. But if we were allowed to do that, as I mentioned before, normally -- let me explain something.

934   In all of our operations where we have started around the 14 countries, wherever we owned a little share, because we didn't have the financial means -- and I might add that I started like Tony exactly, I was not a big guy with a lot of money, I was a starter, you know, we took smaller percentages and then every time we had to go and buy an extra percentage we tripled or quadrupled the price. We had to pay four times the original investment sometimes.

935   So it is our experience that it is best to take the high risk now, buy cheap and wait for the future as we are sure of the operation.

936   But sorry that I took so much time to answer the question.

937   THE CHAIRPERSON: No, I appreciate your elaborations.

938   On the technical services agreement, Mr. Campbell, I understand this was all a precondition of this deal. It is referenced in Appendix 2 of the investment agreement.

939   MR. CAMPBELL: From what I understand, Mr. Chairman -- and certainly I think what we have heard from Orascom -- this was an important value-added that they could contribute to the operation. So I think somebody else can answer whether it's a precondition or not, but what I heard from Mr. Sawiris and what I know from the history of it, it's important to the value that we can build here.

940   THE CHAIRPERSON: But attached to the investment

941   MR. SAWIRIS: Can I answer that?

942   THE CHAIRPERSON: Please, go ahead.

943   MR. SAWIRIS: Can I answer that?

944   I mean it is just if we are going to go into an investment of that size and compete against the incumbents who are yearly buying equipment in billions of dollars, unless we can provide the match for this newcomer to have the same equivalent power, it would have been a failed investment.

945   So you cannot call it a precondition, but the business case would completely be out of context. You know, you just can't.

946   I mean I can give you dozens of examples. I mentioned one before, is that one of the incumbents has forced one of our main suppliers of handsets to not even honour a contract he has signed because he threatened him to cut his business, you know.

947   So unless we have some kind of leverage Globalive would be doomed for failure, you know, and I'm sure this is not in the best interest of the consumers.

948   THE CHAIRPERSON: Okay, let's not use the word "precondition".

949   This was part of the original deal, part of your investment of you getting together with Mr. Lacavera where their service agreement forms part of the overall package.

950   MR. LACAVERA: And it's a very important. I think the point is it's a very important part of the agreement.

951   THE CHAIRPERSON: Okay.

952   Now, looking at the agreement itself, I noticed there is a fee, unless I don't understand it correctly, the way that it works is you pay the fee regardless during the year, on a monthly basis or whatever it is, and you also pay for all services that you acquire under the fee from Orascom.

953   So let's say you get advice from them on the design of handsets or whatever it is, you pay the out-of-pocket expenses they have, et cetera, and over and above that you pay the fee?

954   MR. CAMPBELL: That's correct, we pay their out-of-pocket expenses and we pay a fee.

955   THE CHAIRPERSON: Yes. Which also means that if you used somebody else you would still be paying the fee. You would be --

956   MR. CAMPBELL: If I --

957   THE CHAIRPERSON: So it's not exclusive, but de facto business sense to the extent that you can you will use this rather than any other services?

958   MR. CAMPBELL: Absolutely.

959   THE CHAIRPERSON: Right.

960   MR. CAMPBELL: To the extent I can I will leverage Orascom.

961   THE CHAIRPERSON: Yes.

962   And then, if I understand it correctly, you can only terminate it if there is a material breach of the terms of this agreement which has not been remedied?

963   MR. CAMPBELL: Let me refer to it.

964   MR. DUCHARME: If I can step in, if you don't mind, Mr. Chairman, just for a moment and I would invite Mr. Scheschuk or Mr. Lacavera...

965   These were shareholder arrangements entered into. You know, you described it I think, or someone did, as a precondition but, as you say, it simply was an appendix to an agreement, an important understanding, certainly from an AAL perspective, as to the kinds of skills and resources that Orascom could bring to the table.

966   The nature of the fees are exactly as you described and I think that that can be drawn pretty directly to the fact that it was a shareholder understanding with respect to the operation of the business.

967   THE CHAIRPERSON: Look, you and Mr. Lacavera and Mr. Campbell make a very valid point that these are partners, they have clout, they have expertise, et cetera, it brings great advantage to us as a start-up company. I understand that.

968   I'm looking at the other side, to what the extent it doesn't help you but could be used as clout to influence you.

969   This is an agreement where you pay the fee regardless of whether you use services or not. You pay for the services on a cost reimbursement, but you have to pay a fee anyway. That means you will use them all the time, as Mr. Campbell just said, right now because you have to pay the fee -- I won't mention the percentage of the fee because that's confidential.

970   But so you have -- what happens if you are dissatisfied? As long as it works in your favour, wonderful. But if it doesn't work or you feel the service -- if I understand here you have -- unless I misread something, unless it's a material breach you cannot go somewhere else, or if you go to somebody else, you are free to do it, but you are still paying the fee to Orascom. That's how I understand it.

971   If I misunderstood it, fine, correct. I just want to understand what the nature of this service agreement is.

972   MR. INTVEN: Mr. Chairman, I wonder if we could continue this conversation tomorrow. There is an element of the service fee that relates to more than the services being provided and that is something that has been granted.

973   THE CHAIRPERSON: Perfect. Let's do that. Let's make a note of it.

974   I certainly do not want to go into any confidential area.

975   MR. CAMPBELL: Thank you.

976   THE CHAIRPERSON: Okay. Then let's continue that tomorrow.

977   I think we will break now. We will break and we will resume at 2 o'clock.

978   Is that okay? What is the time schedule for the afternoon?

979   MR. SAWIRIS: Mr. Chairman, can I just ask whether you require my presence, because I was told to that I am required for the three hours and it's nighttime in my part. I understand if you need me in the afternoon.

980   THE CHAIRPERSON: Thank you very much for your presence.

981   I don't need you in the afternoon. We will hear from the others. Obviously you are more than welcome to listen in to what your opponents have to say, or your competitors, but we will need you tomorrow when we do the confidential part.

982   MR. SAWIRIS: Okay. Thank you very much.

983   THE CHAIRPERSON: Okay.

984   I gather we are running a bit behind time so let's take an hour break and resume at 1:30.

985   Thank you.

--- Suspension à 1230

--- Reprise à 1331

986   THE CHAIRPERSON: Okay. Madam Secretary, let's continue.

987   THE SECRETARY: Thank you, Mr. Chairman. To reiterate what (technical difficulties).

988   Tomorrow morning we will start in camera session which will end at four o'clock. At four o'clock there will be closing arguments by TELUS, Rogers, Bell and Globalive.

989   I would now invite TELUS Communications Company to make its presentation. Appearing for TELUS is Mr. Ted Woodhead.

990   Please introduce your colleagues, after which you will have 30 minutes to make a presentation. Mr. Woodhead...?

PRÉSENTATION

991   MR. WOODHEAD: Thank you, Madam Secretary.

992   Members of the Panel and staff, I believe you have our presentation in front of you.

993   My name is Ted Woodhead, I am Vice President of Telecom Policy And Regulatory Affairs for TELUS.

994   On my immediate left is Stephen Schmidt. He is our Chief Regulatory Legal Counsel.

995   To my right is Michael Ryan, Partner, Arnold & Porter LLP. Mr. Ryan is head of that firm's telecommunications group and is a recognized expert in telecommunications law.

996   Mr. Ryan is also widely regarded and known as the author of "Canadian Telecommunications Law and Regulation" and has been professionally involved in numerous cases involving compliance with the Canadian telecommunications ownership and control requirements.

997   We are in receipt of the Commission's September 16 letter that outlines the issues that you would like us to focus on and we will deal with each of them in turn throughout this presentation and it is structured to address the specific issues.

998   We appreciate this opportunity that you have provided to us to give our views on this important matter and we would be happy to answer any questions you might have at the conclusion of the presentation or in the middle of it if you so desire.

999   At the outset it is important to reiterate that this proceeding is solely about Canadian law and its application. This is not a policy proceeding. This is about control in fact.

1000   With that understanding, TELUS views the entirety of the Globalive arrangement before you, an arrangement that includes a 65 percent equity interest in Globalive by non-Canadians and sees 98 percent of the debt of Globalive in the hands of Canadians, in other words, 82 percent of the capital structure of this entity in the hands of non-Canadians, to be noncompliant with the ownership and control requirements.

1001   Beyond those indicia of control, however, are a web of other connections, control points that exist and operate to the benefit of Orascom, Globalive's principal equity and debt-holder, that can lead to no other conclusion than that Globalive has yielded control to non-Canadians. On that basis, Globalive's arrangement is noncompliant and must fail.

1002   With that, I will turn the presentation over to Mr. Ryan, who will take you through the bulk of the deck that you have in front of you.

1003   MR. RYAN: Thank you, Mr. Chairman, and thank you, Commissioners.

1004   We have, as Mr. Woodhead has indicated, set out on slide 3 of the pack that we have handed to you a list of the issues as you identified them in your letter to parties dated 16 September. Each of these is, of course, important in its own way.

1005   The ones we think are key to this case, though, are the ones that tend to be towards the top of the list and it is on these that I propose to focus in my remarks, in particular, the financing arrangements and the level of Orascom's economic participation, which I propose to deal with essentially together.

1006   Next I will deal with the relative experience of the shareholders and then with liquidity rights and veto rights as time permits. I don't expect we will get much further than that.

1007   I am conscious of course, Mr. Chairman, that you have already had quite a good exchange on some of the key issues and it is evident that the panel is very familiar with the record, and for that reason I don't want to find myself making submissions to you concerning points that are already very clear to you. I am perfectly happy if you push me on my way when I tend to be dealing with something that is already clear to you.

1008   By the same token, we are, as Mr. Woodhead has indicated, happy to answer any questions at any point during our presentation.

1009   I will turn then to slide 4 and just revisit briefly something Mr. Woodhead has already said to you.

1010   The issue before you, of course, can be simply put: Is Globalive controlled in fact by non-Canadians?

1011   In a formulation of the National Transportation Agency in the Canadian Airlines case, control in fact means the ongoing power or ability, whether exercised or not, to determine or decide strategic decision-making activities of an enterprise. That is the test that you yourselves have adopted in the Bell Canada case recently and indeed in the Canwest case.

1012   What's important about it and why I take the time to draw it to your attention again is that it is essentially a question of fact. It is a question of fact to be determined in light of the evidence.

1013   It is not a question of policy and therefore, in my respectful submission, it is incorrect of Globalive to argue, as it did before you this morning and as it did in its reply document filed earlier, that the Commission has a substantial degree of discretion, as they put it, to determine where it considers there to be control in fact by a non-Canadian.

1014   Whether Globalive must fully comply with the control in fact requirement is not a discretionary matter. This isn't like a situation where you are deciding whether to give a licence or not and you can bring many discretionary factors to bear. You are essentially a tribunal that will make findings of fact and from those findings of fact, in my submission, the consequences will flow. It's not a question, therefore, of policy.

1015   Our position on the issues, turning to slide 5, is that the nature and extent of the ties between Orascom -- and many of these are depicted on the next slide -- the nature and extent of those ties indicate that Globalive and its Canadian investors have yielded a degree of influence over Globalive's affairs that compromises the management's ability to (off microphone).

1016   So Globalive is in fact controlled by persons that aren't Canadian and it is therefore ineligible as it is presently constituted to operate as a telecommunications common carrier.

1017   Now, that, of course, potentially puts the Commission in a difficult position but the question is nonetheless a straightforward one.

1018   Let me now turn to some of the facts that we have in the record before us -- in particular I'm at slide 7 -- and the level of Orascom's economic participation.

1019   As the document you yourselves circulated this morning makes clear, Orascom participates in the Globalive venture through two arrangements. One is its 33 1/3 equity stake in the holding company and the second is its 47.6 equity stake in the investment company. That 47.6 percent, of course, is composed of both voting and nonvoting shares. These two interests taken together translate into a 65 percent indirect equity stake in Globalive.

1020   Over and above, Globalive is also the lender of 99 percent of Globalive's debt, at least working from the material that we have on the public record available to us. Assuming a debt-equity ratio of 50/50, then Orascom's economic participation in the Globalive venture is 82 percent. Now, this level of economic participation in a Canadian carrier broadcaster, Mr. Chairman, is clearly unprecedented.

1021   There are three other cases in which the Commission has accepted arrangements where the foreign equity was in the 60 to 65 percent range, but the similarity between these cases and this one is superficial.

1022   The three cases I am referring to are the Persona case, which was a 2003 case which involved the acquisition of Quinte Cable; the second one is a Fundy Cable case of 1998 which involved a recapitalization of the cable company; and the third decision is Canwest itself, which was, of course, decided in 2007. That case concerned the acquisition of Alliance Atlantis.

1023   In all three cases the Commission approved arrangements under which foreign investors acquired more than 60 percent of the equity of a broadcaster. But there the similarity between those cases and the present case ends.

1024   Now, there are many distinctions between those cases and this one, but there are two that I think are critical and worth underlining for you.

1025   The first is that in none of these other cases was the party acquiring the equity interest also a significant debt-holder. In fact, the decision in Canwest makes it clear that if the foreign investor had also been a major debt-holder the transfer of control that was approved in that case might very well have gone the other way.

1026   I draw your attention to paragraph 52 of your decision in Canwest. It is just a couple of sentences and I will take the trouble to read it, if I may. You say:

"The Commission was concerned that if a Goldman Sachs & Co. entity..."

1027   Which was the foreign investor.

"...was the lead syndicator with respect to the debt or if it were the major debt-holder under any of the lending arrangements, this, together with Goldman Sachs' equity interest, could result in undue influence over the venture by a non-Canadian. However, in light of the evidence provided by Canwest, which clearly shows that Goldman Sachs is not the lead syndicator and is a relatively minor debt-holder rather than the single largest debt-holder, the Commission considers that its concerns in this area have been satisfied." (As read)

1028   And it is on the basis of that paragraph, Mr. Chairman, that I make the remark that I did, that if the foreign equity investor which held in the range of 60 to 65 percent of the equity had also been a major debt-holder, the decision might very well have gone the other way.

1029   Now, that's one distinction, the fact that the foreign investor is a financial institution -- I'm sorry, is not the holder of significant debts.

1030   The second distinction which I think is fundamental to those three cases and distinguishes them from the present case is that the foreign investor was in all three of these other cases a financial institution. It was not another broadcaster who would be involved in the active management of the broadcaster being acquired.

1031   Persona, Fundy Cable and Canwest were, like the ACE Aviation case decided by the Canadian Transportation Agency in 2004, about financial investors. The 2004 decision of the CTA is worth dwelling on for a moment.

1032   In that case -- that case was also a case of a carrier needing to be recapitalized, in that case Air Canada, and a significant part of the money for the capitalization was going to come from an American financial institution.

1033   The CTA decided that, since the source of the loans was a financial institution that had no intention of participating in management, there was no danger that Air Canada would be subject to foreign control.

1034   In the present case, the situation is quite the opposite. Orascom's business is to provide mobile telephone services. Mr. Sawiris said it several times this morning, he is not in the business of lending money.

1035   Orascom has acquired and operates mobile carriers in 14 other countries. It proposes to add Globalive to that list of carriers. The intention is clearly to run Globalive as an Orascom company, selling services under Orascom's brand, using Orascom-chosen technology, and with the active participation of Orascom at all levels of the carrier's activities. I don't think that is in dispute.

1036   The implication of Orascom's 65 percent equity stake for control of Globalive, and its very significant debt holding, is clearly different than if it was, for example, a Goldman Sachs that was making that investment.

1037   Both Mr. Lacavera and Mr. Sawiris, and later Mr. Campbell, were almost apologetic about the fact that Orascom is the largest shareholder and, essentially, the exclusive source of debt. They ask you to use discretion to let them proceed, on the understanding that they may rectify the situation later.

1038   I suspect that Industry Canada heard the same pitch at the beginning of this year when it issued the licences.

1039   The facts, Mr. Chairman, however, are what they are. They have not changed. Globalive is frank to admit that, despite persistent efforts, it has been unable to secure Canadian capital for this venture.

1040   By the way, however, it appears that other operators haven't been having the same difficulty in securing Canadian capital, so one has to ask oneself how flexible Orascom and Globalive have been about the terms on which that capital could be secured and, indeed, whether some of the terms and conditions that are already embedded in the investment documents aren't themselves inhibiting the attraction of additional capital from Canadian sources.

1041   That is all I propose to say about economic participation. I want to turn next to the relative experience of the shareholders.

1042   I am on Slide 8 at this point of my presentation.

1043   This is not, by any stretch of the imagination, a merger of equals. As the Financial Post put it in an interview with Michael O'Connor in April of 2008, Orascom's operations dwarf the Canadian market.

1044   The company has revenues of $5.3 billion. It has operations in 14 countries. It is no disrespect to Mr. Lacavera, who has obviously been very successful in earlier ventures, to make the point that he is not, and AAL is not, in the same league as Orascom.

1045   Neither Mr. Lacavera nor his company, GCC, simply, have experience in mobile telephony. They are looking to Orascom to provide them with that expertise.

1046   Their position is a very subordinate one, because of the difference in the relative sizes of the companies. GCC's annual revenues amount to about $125 million per year, which is only about what Orascom earns in a week.

1047   The Unitel case, for those that remember it, is an interesting point of reference on the issue of relative experience of the shareholders. You will recall, Mr. Chairman, that AT&T acquired a 30 percent stake in the Canadian carrier Unitel back in the nineties. AT&T is, of course, a formidable force, as is Orascom, in the telecommunications business, but its influence on the Unitel venture was counterbalanced by the fact that Unitel's two other investors were themselves major Canadian corporations, Rogers and Canadian Pacific. That transaction simply did not raise the same concerns about foreign control that arise in a case such as this, where there is such inequality between the two participants.

1048   It has to be said, Mr. Chairman, that there is no reason to think, in fact, that Orascom would have any interest whatsoever in partnering with AAL, or with GCC, except for the fact that they are Canadian, and, as Canadian entities, they bring that critical asset to the Globalive venture, the fact that they are Canadian.

1049   I would venture to suggest that there is nothing else that GCC or AAL brings to the party that Orascom could not replicate itself.

1050   The documents before you make it clear that AAL is, essentially, peripheral to this venture, and I say that for two reasons, which are reflected on Slide 9.

1051   The facts are changing as we speak, a bit, on the first point, but starting with the documentation as it existed prior to this morning, AAL has a unilateral right to put its shares to a third party. That provision would never have been agreed to, Mr. Chairman -- and it hardly matters whether it is still there or not -- if AAL were seen as bringing any vital skills to the Globalive venture apart from being Canadian.

1052   If I understood the new evidence this morning, that put option will not be exercised during the next three years, but it doesn't take the issue off the table.

1053   The second reason, stemming from the documents themselves, that I say Mr. Lacavera and AAL are expendable is that Globalive has the right to terminate the consulting agreement with AAL if AAL ceases to own 3 percent or more of Globalive -- in other words, if it were, essentially, to be an Orascom company.

1054   If AAL were seen, Mr. Chairman, as important to this venture, the consulting agreement would contain a term requiring AAL to continue to provide services, even if it ceased to be a shareholder, not the opposite.

1055   Let me turn next to the subject of liquidity rights. This is a subject on which there have been already some important exchanges this morning.

1056   You said, Mr. Chairman, that you were stunned by one of the terms that you found in the agreement, the "drag-along rights", and I have to say that TELUS shared your reaction.

1057   I would not be surprised to find in an agreement of this sort a provision allowing Orascom to sell its shares to a third party, or allowing Orascom to put its shares to other investors for purchase by them, in the event that it wanted to exit the business.

1058   It is reasonable for an investor to include provisions like that, which give it an opportunity to exit and to put its shares to other investors for that purpose, but this agreement goes way beyond providing Orascom with an exit strategy, it gives Orascom the right, acting unilaterally, to sell the entire company out from under the other investors, at a price of its choosing, at a time of its choosing, and, subject to compliance with the definition of "eligible person", to a person of its choosing.

1059   Let me be clear on this, Orascom not only has the right to sell its own shares, it can require all of the other shareholders to sell theirs as well.

1060   This is called a "drag-along right" for a reason, because, essentially, it would allow Orascom to drag along unwilling sellers to a closing.

1061   Nothing could say more clearly, Mr. Chairman, than this provision does about who is really in charge at Globalive. Globalive is, for all intents and purposes, an Orascom property.

1062   Orascom's rights do not stop there. Instead of selling the whole company, it can selectively require AAL to sell its shares to a purchaser of Orascom's choosing.

1063   Now, that is subject to the evidence we heard this morning, which I am still trying to assimilate, on that point.

1064   No other shareholder has anything resembling reciprocal rights.

1065   You should attach, in my respectful submission, a lot of importance to this configuration of obligations under the shareholder agreements.

1066   Let me come next to the question of vetoes. This is an area that has already been well canvassed. I want to make only a few simple points about these provisions that appear in an appendix to the two shareholder agreements.

1067   Under these arrangements, Orascom has, essentially, a lock on decision-making on all key issues. It can veto not only expenditures in excess of $5 million, as was pointed out this morning, or borrowing in excess of $20 million, it can veto any change to the business plan that would change projected revenues, expenses, capital or cash flow by more than 10 percent.

1068   Since the business plan is a document that was agreed by the shareholders as part of the arrangements that established Globalive, that business plan is in place and it puts management in the position that it can't vary from that plan, determined by the shareholders, by more than the indicated percentage without going back and securing Orascom's approval.

1069   Orascom also has a veto on the issuance of new shares. I appreciate, Mr. Chairman, that Orascom and the other parties are instituting a share option plan, or a stock option plan that would allow benefits to be given to senior executives, but the point is not whether there is a stock option plan or there is not a stock option plan, the point is that there can only be one if Orascom agrees to it.

1070   It has a veto over that, as well as any other issuance of new shares, such as, for instance, to a potential new investor.

1071   So if a Canadian investor were found, Orascom would have a veto over that party participating in this venture.

1072   In the same vein, it would have a veto over mergers.

1073   The $5 million limit, which has already been the subject of some discussion, is, I think, as the Commission has recognized, a very low limit for a capital-intensive business such as this one, just as the $20 million limit is a very low limit for borrowing, when you consider that the company has debts in excess of half a billion dollars.

1074   Even swapping that debt out for other debt would require the consent of Orascom.

1075   It is for this reason, and others related to the exercise of these vetoes, which go beyond the subjects that I have mentioned, that I say Orascom has a lock on decision-making.

1076   Let me also make a brief reference to the Trademark Licence Agreement. We don't know what the term of this agreement is. It has been suggested that the terms are very generous to the company.

1077   Commissioner Menzies asked questions about where the inspiration for adopting the Wind brand came from. The answer, essentially, was, from within Globalive. I think that leaves unanswered, however, whether it was the Orascom people within Globalive, at the Board level, that suggested it, or otherwise.

1078   In any event, if this is an agreement of short duration -- and we at TELUS simply don't know, based on what we have been able to see -- the CRTC has to be concerned.

1079   If it is less than five years, the CRTC should be very concerned.

1080   Globalive would be very vulnerable to the influence of Orascom, quite apart from any of the other factors that I have mentioned, if Orascom threatened to terminate the rights to the brand or not renew the Trademark Licence Agreement upon its termination.

1081   It is hard to think of anything more vital to the future success of the company than it being able to benefit from the investment that it is going to be making in the development of its own brand in the marketplace. So to have the potential, even if it's not exercised, for that to be pulled away from it is a very formidable threat.

1082   The last subject that I propose to address is the Advisory Services Agreement, and, again, I propose to be very brief.

1083   The Commission is onto this one. The Investment Agreement makes it a condition of the Orascom investment that Globalive should execute the Technical Services Agreement. It may be a good agreement, it may be very favourable to the company, it may be exactly what the company would want in all of its wildest dreams, I don't know, but the point is, whether it is a good idea or not, it is not at the choice of management that it has entered into this agreement, it has been dictated by Orascom at the shareholder level as a condition of its investment in the company.

1084   It is not so much what the content of the agreement is, in my respectful submission -- although it gives Orascom very extensive influence over a number of very important matters -- it is the fact that Orascom can insist that this agreement be executed that is important for your conclusion, at this stage of the proceeding, about whether Globalive is controlled, in fact, by non-Canadians.

1085   I think it was Commissioner Menzies, again, who noted that Globalive has to pay under the terms of that agreement, whether it uses the services or not. That, again, is an indication, I would submit, of the influence that Orascom is bringing to bear on this venture.

1086   To conclude, I would respectfully suggest that the CRTC has never endorsed an arrangement which gives a foreign entity such wide-ranging influence over the operations of a telecommunications common carrier, or, for that matter, a broadcaster. Taken in their totality, the nature and the extent of the ties created by the various arrangements that the parties have entered into indicate that Globalive and its Canadian investors have surrendered control of this company to a foreign company.

1087   TELUS respectfully submits that the evidence invites only one conclusion. And it is not a question, Mr. Chairman, about whether there should or should not be more competition in the wireless business. The government has decided that there will be more competition, and there will be competition whether there is a Globalive there or not.

1088   And it is not a question of whether Globalive is competent to provide that competition or not. I will assume that they are.

1089   The only question that needs to be decided is whether they are Canadian or not, and it is to that question, I suggest, that there is only one possible answer.

1090   Not being a Canadian company, the consequence is that they are not eligible to operate as a telecommunications common carrier, as they are presently constituted.

1091   Those are my comments.

1092   MR. WOODHEAD: That concludes our presentation.

1093   THE CHAIRPERSON: Thank you very much.

1094   Mr. Ryan, I would assume that you were here this morning when we had the presentation from Globalive, and you heard their counsel, Mr. Intven, expounding on the interpretation of "Canadian controlled". He put the word "demonstrably" in there, which is nowhere in the Act.

1095   Quite apart from that, he also puts in a little twist and suggests that it is not a question of whether it is controlled by Canadians, it is a question of whether it is not controlled by non-Canadians, and he makes a big deal out of that.

1096   What is your position on that?

1097   MR. RYAN: I think that Mr. Intven is quite correct in telling you that the test is whether the company is not controlled -- or is controlled by non-Canadians --

1098   I am getting lost in my double negatives, but Mr. Intven was right in the position he put to you in that respect, and I think the Commission said as much in the Unitel case.

1099   What the question is, really, is: What turns on that?

1100   THE CHAIRPERSON: That's exactly where I was coming to. In this case, what...

1101   MR. RYAN: In this case, the distinction between whether you frame it as a positive statement or as a double negative is insignificant, because this company is so far out of compliance with the requirements of the Act, that the answer is the same whichever way you formulate the question.

1102   THE CHAIRPERSON: You place great weight on the fact that they are so heavily indebted to the minority shareholder, who also is the main provider of technical advice and services.

1103   We heard this morning that that is really against their wishes. To quote them, they have better uses for their money than to lend it to Globalive. They are doing this out of necessity, not because they want to. Therefore, to say that this gives them an influence -- that at the earliest opportunity they will employ it more gainfully elsewhere.

1104   What is your position on that? Does that, in effect, have an impact on our determination?

1105   MR. RYAN: In my submission, Mr. Chairman, it can't have an impact on your decision.

1106   I think you put it quite correctly in your opening comments this morning. This company needs to always be in compliance with the foreign ownership and control requirements.

1107   It is not a question of having a reasonable plan for coming into compliance with those requirements -- although I would submit that they don't really have a plan at all, so much as an empty promise that they haven't been able to realize on up to this point -- Parliament has made it clear in section 16(3) that the requirement to be Canadian owned and controlled applies at all times.

1108   THE CHAIRPERSON: Yes, and, also, unless I misread the Act, there is no provision in the Act to give a temporary licence or a conditional licence, et cetera. Either you meet the test or you don't, there is not the ability for the Commission to say, "We will give it to you on the condition that in six months you will have a new Canadian partner," or anything like that.

1109   MR. RYAN: I agree with that, Mr. Chairman.

1110   And I didn't understand Mr. Intven to go so far as to suggest that, either. The company witnesses expressed the hope that they would be able to bring themselves into compliance at some future date, but there was no suggestion that the law gave you the authority to give them some sort of temporary exemption from the Act.

1111   THE CHAIRPERSON: Now, you mentioned the Unitel decision, and you said that it's not a precedent. That was primarily on the basis of what?

1112   That is the only one we have which is closest to this one, where there was a large foreign equity investment in the company.

1113   MR. RYAN: There was a 30 percent foreign equity investment, so about half the size of what you are faced with in this case.

1114   AT&T -- and I am sure that I recall correctly -- was not a provider of any debt, so --

1115   THE CHAIRPERSON: But AT&T was clearly a provider of technical expertise.

1116   MR. RYAN: It was, indeed, a provider of technical expertise, but in the context where the two other shareholders that were concerned were both very significant Canadian corporations, both notoriously Canadian owned and controlled, Rogers and Canadian Pacific, and they, I suggest, provided a significant counterweight to AT&T's potential influence.

1117   So long as that arrangement remained in place, the Commission did not express any concerns about the Unitel situation where foreign investment was concerned.

1118   It was only when, as a result of the financial difficulties of the company, the bank stepped in that the Commission investigated whether, in that context, AT&T had assumed control of the company, and found that it had not.

1119   THE CHAIRPERSON: On the Trademark Licence, you raised an interesting issue regarding the duration, which, of course, is confidential and I can't disclose it to you.

1120   You basically suggested that if it is five years we should be very concerned, if it is ten years we should be concerned.

1121   What would be the appropriate length? What do you think we should look at in saying "That's a reasonable term"?

1122   MR. RYAN: I am not a marketing person, Mr. Chairman, but I have had some experience of the reaction of people to trademark licence agreements of this sort, in this sort of context, and I would suggest that, quite apart from whatever term there is on the agreement, there would need to be in place some sort of period of time during which Globalive would be able to transition to another brand.

1123   It would have to be some time sufficiently generous to it that the prospect of the termination of the Trademark Licence Agreement wouldn't be an imminent threat to the survival of the business.

1124   THE CHAIRPERSON: Come on, that is undoubtedly true, but you can do better on the term.

1125   I mean, you can't tell me, "Worry about ten, worry very much about five," and not tell me what would be an appropriate term.

1126   MR. RYAN: I think, maybe, I am going to turn to Mr. Woodhead on this one.

1127   THE CHAIRPERSON: To your client.

1128   MR. WOODHEAD: What I think we were trying to impart there is that, if it's ten or more, you are fine. If it's below ten, you are not.

1129   The practical reality here, I think, to go to the point that was discussed earlier this morning about whether or not someone would do something, or influence in a negative way -- the fact of the matter is, when you are operating a wireless company, for example, at TELUS or at Rogers or at Bell, if after five years the owner of that brand, which you have spent five years building up, or using, comes along and says, "The brand is gone. All of your store signs are gone. All of your handsets marked with that mark are gone," I think that is a significant element.

1130   The long and the short of it is, to answer your question directly, at least ten years.

1131   THE CHAIRPERSON: On the Technical Services Agreement, before Mr. Intven suggested that we go in camera with the part that is on the record, which was confirmed by his client -- that there is a fee that is payable, regardless of what -- plus, there is a reimbursement for any services rendered. Obviously it is an incentive, then, to use this contract, rather than any other, because you are paying the fees in any event.

1132   I must say that I have never seen it contracted that way, it is usually -- what I am used to is that you pay for the fees, plus a percentage on top. It's the cost of rendering the service, plus 5 or 10 -- or whatever it is.

1133   Is this standard in the communications industry? Do you have contracts along those lines yourself at TELUS, or is this an exception?

1134   MR. WOODHEAD: No, that is an exception, and it is a very one-way contract.

1135   I don't know if Stephen wants to comment, or Mike.

1136   MR. RYAN: I can say from my own experience, Mr. Chairman, that I haven't seen anything like that before.

1137   THE CHAIRPERSON: Lastly, your own VP of Government Relations, Mr. Hennessy, was quoted in the paper as saying that, clearly, Globalive is here, it is not going away. That is obviously a reflection of how he sees the situation.

1138   Now, put yourself in my shoes for a second. You are here and you have heard the evidence. How would you deal with it?

1139   You said that they don't meet it. What do you suggest has to be done to meet it?

1140   MR. WOODHEAD: One of the things in thinking about this relates to that question. In my view -- and I will answer directly your question, but, in my view, this particular example is not like other ones that you have seen, where you could tweak a thing here or there and feel comfortable about it.

1141   This one, with the massive concentration of capital in Orascom, along with these, frankly, very unusual arrangements -- not to say that they are bad, from their perspective, but very unusual arrangements, I think requires a redo.

1142   I think they need to come back with something that passes muster.

1143   Now, your question is, what might that be, in our view.

1144   We have talked about some of these things, and I don't have redrafts of these things in front of me, but they have to deal with the drag-along right.

1145   I think they have to assure you that the brand is for an ample time for the company to utilize, as I have already discussed.

1146   Hugely, in our view, as you pointed out, and as I have just said, is the concentration of capital. They have to do something about the capital structure.

1147   They have said much about the difficulties they might have in floating that debt. There is no doubt that there has been an economic event here, but TELUS --

1148   We raised, what, $700 million or $800 million in the spring, in single digits.

1149   I can't say that they are incorrect, but I am just wondering how much they are trying.

1150   The fact is that -- yes, I can accept that the cost of capital might be an issue, but it is unclear to me that they have made a case as to the access to it.

1151   So those are the things: capital, veto rights, assure yourself on the brand agreement, liquidity, the drag-along rights.

1152   Those are the key ones.

1153   THE CHAIRPERSON: Okay. Thank you. Len or Peter?

1154   COMMISSIONER KATZ: I have one question.

1155   TELUS absorbed Clearnet a number of years ago but Clearnet faced the same thing in 1994, I guess, and we are reliving the situation where Clearnet came in as a new player in the game, needed to establish themselves, and somehow -- and I am dating myself here -- partnered with Motorola on equipment and infrastructure and everything else. They were a non-Canadian company.

1156   Do you have any views as to how that is a different situation than this?

1157   MR. WOODHEAD: Well, I actually went back and spoke to the people who were involved in that deal, directly involved in that deal, and in fact it wasn't non-- well, I mean it was not non-Canadian, it was not found to be non-Canadian.

1158   How I would answer you, Commissioner, is that if Globalive had followed the Clearnet playbook, we wouldn't be sitting here today.

1159   COMMISSIONER KATZ: So what is different? What did Clearnet do that you find different?

1160   MR. WOODHEAD: A lot of these covenants about spending limits. I don't believe there was a drag-along right or these liquidity rights in there. The ties between -- sorry, the actual -- Motorola in that example would not be -- and Madison Dearborn and some of the others who were involved in that were financial lenders, they weren't operators.

1161   There are a lot of differences, many, many differences.

1162   COMMISSIONER KATZ: Was the capital that Clearnet raised, to your knowledge if you do know, at rates that were similar to what we are seeing in this situation? They were greenfield, they were starting from scratch?

1163   MR. WOODHEAD: I have no idea, but I don't dispute the fact that -- I mean it makes logical sense that if you are a greenfield operation you are going to pay a premium, yes.

1164   THE CHAIRPERSON: Peter...?

1165   COMMISSIONER MENZIES: My first question is: If Globalive were to launch, has TELUS figured out what its impact would be on TELUS and how big would that be?

1166   MR. WOODHEAD: No. I mean they will be a competitor. They obviously -- you know, they have some of these things that they are talking about and we will compete with them.

1167   COMMISSIONER MENZIES: Put it this way, would TELUS make more money or less money if Globalive launched?

1168   MR. WOODHEAD: I don't know. You know, if there is another competitor, it depends on how they launch.

1169   COMMISSIONER MENZIES: Okay. I was just trying to figure out how much skin you have in this scheme.

1170   The other question is in terms of -- Mr. Ryan, you mentioned that other operators have been able to raise capital and how much -- can you give me some for instances? Mr. Woodhead just mentioned that TELUS was able to raise $700 or $800 million in the spring, but can you back your statement up with some for instances of companies in roughly similar circumstances to Globalive's that were successfully able to raise capital?

1171   MR. RYAN: What I was thinking of, Commissioner, was the fact that we aren't hearing the same complaint from DAVE and the other new licensee about their ability to launch being impacted by their inability to raise capital. As far as I can tell -- and I rely only on press reports in this respect -- they are not complaining that they haven't had -- that they have had difficulty securing Canadian capital to launch their businesses.

1172   COMMISSIONER MENZIES: So you don't know for sure if other people --

1173   MR. RYAN: No, I don't know more than that.

1174   MR. WOODHEAD: Well, I mean I would go further than that. Bragg, EastLink, it doesn't seem to have any problem. Vidéotron is building out a network across Québec. It doesn't seem to have a problem.

1175   COMMISSIONER MENZIES: So you see Globalive where it is today as roughly equivalent to Vidéotron and EastLink?

1176   MR. WOODHEAD: I think that it has an enormous world, the 15th largest wireless company in the world standing shoulder-to-shoulder with it.

1177   COMMISSIONER MENZIES: Because you are referring more to Orascom than you are to Globalive in that sense?

1178   MR. WOODHEAD: Yes.

1179   COMMISSIONER MENZIES: Okay. Thank you.

1180   THE CHAIRPERSON: Okay. Those are all our questions for you. Thank you very much.

1181   Madame la Secrétaire.

1182   THE SECRETARY: Thank you, Mr. Chairman. I would now invite Rogers Communications Inc. to come to the presentation table.

--- Pause

1183   THE CHAIRPERSON: We are ready when you are.

--- Pause

1184   THE CHAIRPERSON: We are ready if you are.

--- Pause

1185   THE SECRETARY: Thank you, Mr. Chairman.

PRÉSENTATION

1186   MR. ENGELHART: Thank you, Mr. Chair.

1187   Mr. Chair, Members of the Commission and Commission staff, we are pleased to appear before you today to discuss the ownership and control of Globalive.

1188   My name is Ken Engelhart and I am the Senior Vice-President Regulatory for Rogers Communications.

1189   To my left is Bill Linton, Executive Vice-President Finance and Chief Financial Officer.

1190   To his left is David Miller, Senior Vice-President and General Counsel.

1191   To my right is Lorraine Daly, Vice-President and Treasurer.

1192   And to Lorraine's right is Howard Slaughter, Director of Regulatory Matters.

1193   All of the levers of control available to an investor must be looked at together to determine whether an investor can exercise control in fact of a corporation.

1194   Orascom possesses certain rights, some of which on their own are sufficient to exercise control in fact. Taking these rights together Orascom has a dominant and determining influence over Globalive.

1195   Globalive attempts to minimize Orascom's control by addressing in isolation individual levers of control.

1196   In their reply comments, Globalive correctly pointed out that there have been cases in which foreign shareholders have owned 65 percent of the equity and the company was found to pass the Canadian ownership rules.

1197   They point out that there have been instances in which a foreigner held all or substantially all of the debt and the company was found to pass the foreign ownership rules.

1198   There have also been situations where a foreign shareholder was allowed to control the brand of the Canadian broadcaster or telecom carrier and/or provide strategic and operational advice.

1199   However, Globalive has failed to identify a single case where a single foreign partner filled all three roles, majority shareholder, majority debt-holder and strategic partner, where the carrier is dependent on the foreigner's brand and technological expertise.

1200   The pervasiveness of the levers granted to Orascom in the debt agreements, the shareholders agreements, the technology agreement and the trademark agreement is, to Rogers' knowledge, unprecedented in the context of companies that have been considered to be Canadian-owned and controlled.

1201   The net result of Orascom's tripartite role as majority debt and shareholder and strategic investor is that there is not a single significant strategic or operational decision that Globalive can make without Orascom's permission.

1202   Globalive seeks to avoid past precedents and the legal test for control by appealing to the policy objective of fostering increased competition in wireless markets. This would not be an appropriate modification of the legal test.

1203   There is only one policy governing this proceeding and that is the decision made 20 years ago by the Government of Canada that the telecommunications carriers must be owned and controlled by Canadians. This policy was enshrined in both the policy objectives and the eligibility requirements of the Telecommunications Act as well as the associated regulations.

1204   These rules bind Rogers and our competitors, whether incumbents or new entrants. Interpreting the Canadian ownership and control provisions differently for incumbents and new entrants, as Globalive proposes, would not be proper. In fact, it would be an error of law.

1205   The CRTC's decision in this proceeding will have ramifications beyond Globalive. It will reset the bar and establish the precedent for what constitutes Canadian ownership and control, not just for the new entrants but for all carriers, including Rogers, Bell, TELUS, Shaw and Quebecor.

1206   Precedents in the telecom sector will also have ramifications for the broadcasting sector, where the ownership and control regulations are very similar.

1207   If you determine that Orascom does not control Globalive, an international wireless giant like Verizon could acquire the same rights and interests in Rogers, Bell or TELUS as Orascom has in Globalive, without running afoul of the rules.

1208   As CIBC stated in a report released last week, letting Globalive in today could set an unintended but very important precedent for the future.

1209   If Orascom could create an ownership structure that gives it most of the upside that comes with the majority economic stake with call options, veto rights and indirect board control to protect itself from the local investors voting control, then other foreign players could do the same. Orascom would be effectively giving foreign telecom operators a blueprint to emulate someday.

1210   The Commission has endorsed the test for control in fact established by the National Transportation Agency in the Canadian Airlines case. Under that test, control is defined as the ongoing power ability, whether exercised or not, to determine the strategic decision-making activities of an enterprise or the ability to manage and run the day-to-day operations of an enterprise.

1211   A determination of control in fact rests on the accumulation of influence that can be exercised by an investor over the management or strategic decision-making activities of the company. While certain individual rights may not result in control, the totality of influence may translate into control. This was another key element of the NTA's formulation of the control in fact test.

1212   As discussed below, under the headings that the Commission has formulated, the facts before you in this case present a number of factors that individually give rise to a finding of control in fact by Orascom. Taken together they lead overwhelmingly to such a finding.

1213   Bill...?

1214   MR. LINTON: One of the key methods used by Orascom to exert control over Globalive is the $508 million in loans it has provided Globalive, which, according to Globalive's reply remarks, is the seed capital that has been invested in the company.

1215   While we understand that Globalive's landline business was rolled into the new company, nothing in the public record shows that any significant cash was invested other than through the Orascom loans.

1216   The loan covenants provide Orascom with control over both day-to-day and strategic decisions of Globalive.

1217   Some of the matters over which Orascom has a veto, and you have heard these before, are things like making capital expenditures or capital leases in excess of $10 million, changing of the business plan, borrowings in excess of $20 million, granting security over assets and making dividend payments.

1218   Now, the events of default under the terms of the loan provide Orascom with further control. Even if the loan's extension periods have already been exercised by Globalive, as claimed in their reply comments, the maturity of the loans is quite short.

1219   In any event, section 7.1(f) of the loan agreement allows Orascom to declare an event of default whenever, in its opinion, something adversely affects Globalive in a material way.

1220   Effectively, this means that the loan is almost callable by Orascom on demand. Now, this power provides Orascom with an enormous amount of control, even if it is just threat.

1221   You have also heard that the Orascom loans carry interest rates of up to 18 percent, which will result in the loan doubling in five years. This effectively adds an enormous economic burden to the venture, to the benefit of Orascom.

1222   So the magnitude of the loans and the interest rates, together with the loan covenants, permit Orascom to exercise control in fact over Globalive.

1223   In the ACE Aviation case, the CTA found that when the lender and the borrower are not operating on an arm's-length basis when the lender is not a financial institution, lender control is most likely to occur.

1224   Now, the CTA found that the restrictive covenants in General Electric's loan agreements reflected an arm's-length relationship and marketplace terms and conditions.

1225   Unlike Orascom's role in relation to Globalive, General Electric did not have veto rights over the appointment of officers, a voting stake in ACE Aviation, rights to approve ACE Aviation's business plans and control over day-to-day operations.

1226   In the Globalive case the loans are not at arm's length and the covenants contain significant approval rights. Orascom is the lender, has a voting stake and approved the business plans and veto some operational decisions.

1227   Moreover, Orascom is not simply the holder of the majority of Globalive's debt, it also owns the majority of Globalive's equity and is a strategic investor with the wireless expertise and the brand.

1228   The Commission has recognized that the combination of even two of these roles, majority equity and debt-holder, raises serious control in fact concerns.

1229   Canwest decision is a case in point. The facts of this case confirm those concerns.

1230   Now, the current economic structure which you have heard before and presented by Globalive has Orascom holding 65 percent approximately of the total equity. Now, these numbers are very high. Significantly, however, they do not appear to capture Orascom's full economic interest in Globalive.

1231   Orascom's $508 million worth of loans described in Orascom's reply comments as seed capital, in our opinion, should be considered additional equity and considered as part of the total economic interest.

1232   Orascom is contributing 100 percent of the risk capital and even if you assume that AAL's company that was contributed could be valued at $100 million, then Orascom's economic interest is 80 percent, and remember that it is growing at a rate of up to 18 percent or another $100 million a year. This is far higher than any previous precedent.

1233   David...?

1234   MR. MILLER: AAL does not have the right to appoint the majority of the directors. AAL holds two-thirds of the votes of the Globalive Holding Company, yet appoints the same number of directors as Orascom, who only holds one-third of the votes.

1235   Each company can vote to appoint two directors. A fifth director, effectively the tie-breaker or the swing vote, as Mr. Campbell described this morning, is appointed by a committee composed of one AAL appointee, one Orascom appointee and the President of Globalive's wireless company.

1236   A shareholder that truly controls a corporation controls the Board. If AAL truly controlled this company, AAL would appoint three directors and Orascom would appoint two.

1237   This means that AAL does not have any countervailing power through the Board to offset the overwhelming financial interest of Orascom and its many levers of control, not to mention its size and experience in the wireless sector.

1238   The shareholders agreements further confirm that Orascom is the investor with control in fact of Globalive. While AAL's presence may be both optional and temporary, Orascom, as you have heard, controls when to sell and who to sell to. Orascom can effectively sell the company out from under AAL and can force AAL out of the company. For its part, AAL can exit Globalive through its put rights.

1239   As filed, the shareholders agreements provide Orascom with a call right exercised in years 2 to 5, which allows Orascom to force AAL to sell its shares in Globalive at a price equal to the greater of fair market value in an undisclosed but presumably pre-established price. This means that Orascom can force AAL out of Globalive in this time frame at its discretion.

1240   We have heard this morning that this call right has now been replaced with a new dispute resolution mechanism, which we have not yet seen, and, of course, these types of provisions can still operate ultimately in the same manner basically as a put call.

1241   Subject to the rights of first refusal, Orascom also has the right to drag along AAL's shares in any sale to a third party that involves more than 51 percent of Orascom's shares. This means that if Orascom finds a buyer for Globalive, AAL must tender its shares as well, even if it does not want to.

1242   Moreover, Orascom has this right regardless of the number of shares it holds in Globalive. It can exercise this right by selling just 51 percent of its interest. This means that it could force AAL out and replace it with another shareholder while itself remaining a shareholder of Globalive.

1243   This is an extraordinary power for a non-Canadian to hold since the ability to require a sale of a company is a key attribute of control.

1244   Importantly, AAL has no corresponding call or drag-along rights. It has the right to exit the wireless venture at any time during the first five years and to leave the wireless business with Orascom, subject again to comments earlier this morning about proposed changes to the agreement, which we have not yet seen.

1245   But according to the agreements as filed, AAL could remove its landline business and exit its holding at any time up to March 2010 and then after that for the next four years there would be a put right. We are now told that that put right is exercisable on a one-time basis in 2013, but if the formula remains the same it would be at the greater of fair market value or an undisclosed but presumably fixed price.

1246   Now, normally it is the controlling Canadian shareholder or the controlling shareholder in any event that has the call and drag-along rights and the non-controlling shareholder has a put right. This was the case, for example, with respect to Goldman Sachs' investment in Canwest.

1247   In this case, the roles are entirely reversed. Orascom has the call and drag along that allow it to force the sale of AAL's shares in Globalive, while AAL has a put that appear to allow it to exit the business on an apparently risk-free basis.

1248   A non-controlling shareholder would never normally agreed to a buyout of a controlling shareholder at a fixed minimum price since the controlling shareholder could normally take steps that significantly affect the value of the company. Similarly, a controlling shareholder would never normally agree to give a non-controlling shareholder the right to push it out of the company or to sell the company out from under it.

1249   The reversal of the normal liquidity rights clearly shows that Orascom is in control. AAL, in contrast, appears to be along for what could be a risk-free ride with the apparent ability to exit at a pre-agreed price.

1250   As mentioned earlier, there are a number of veto agreements in the shareholders agreement at relatively nominal amounts given the size of the enterprise, $5 million for contracts, granting of security interest, debt in excess of $20 million and any change to the business plan that may affect projected revenues, expenditures or cash flows by more than 10 percent during the then-current period.

1251   These powers which are exercised by Orascom, and not by the directors appointed by Orascom, give Orascom effective control over the day-to-day operations of Globalive as well as its strategic decisions.

1252   A $5-million threshold for contracts is a trivial amount in the context of a national wireline carrier. Even a small handset order is likely to exceed this threshold.

1253   Second, any ability to veto the business plan gives rise to significant influence over a company. In this case, there is also no apparent mechanism to break a deadlock, meaning that if Orascom refuses to approve a change in the business plan, AAL has no option but to accede to Orascom's direction.

1254   We were advised this morning that there may be put call provisions in the shareholders agreement that would be added to resolve fundamental deadlocks. However, given the inequality of power as between Orascom and AAL, a put call would certainly not be an adequate remedy to resolve deadlocks over the business plan.

1255   Now, again, it is Orascom that exercises these veto rights, not the directors appointed by Orascom that have a fiduciary duty to act in the best interest of Globalive. Orascom is under no such obligation. Practically speaking, the Orascom veto rights ensure that there are few steps that Globalive can take without Orascom's blessing.

1256   As described, Globalive is not a simple financial investment made by a non-strategic financial institution. Orascom is a strategic investor with all of the economic clout, financial risk, wireless know-how and ownership of the WIND brand.

1257   As a strategic investor, Orascom actively participates at all levels of the management and operation of Globalive and has done so since the beginning.

1258   Globalive was established in the 2008 AWS auction. Contrary to the stories in the press, we understand that Orascom was solely in control of the auction process. According to the GIHC shareholders agreement, sole bidding authority during the auction was held by Michael O'Connor, at the time an Orascom employee.

1259   Furthermore, Orascom have the sole authority to order a windup of the entire project if it and not Mr. Lacavera felt insufficient spectrum had been acquired to meet Orascom's business objective of building out a wireless network in Canada. This, of course, is not surprising as Orascom had put up all the money to participate in the auction and it was only fair that they had all the decision-making power.

1260   Orascom has continued its control by ensuring that two top positions at Globalive Wireless have been filled by people it knows and trusts, namely, ex-employees of Orascom or its affiliates, and, in addition, has entered into technical services and brand license agreements with Globalive.

1261   Under the Technical Service Agreement, all the key functions can be outsourced to Orascom. The fees payable under this agreement apparently are payable whether or not Globalive expertise is actually retained. In addition, if there is a change in ownership of more than 51 percent of the company, then Orascom has the option to terminate the agreement.

1262   The ability of the company to terminate the agreement in this case, or rather the lack of the company to terminate the agreement in this case could very well be an impediment to any potential purchaser because of the guaranteed fee.

1263   Globalive, on the other hand, may become extremely dependent on the technology platforms and other expertise provided under this agreement. The agreement does provide that on termination all intellectual property must be returned to Orascom.

1264   Globalive's operational independence was further compromised when it accepted the WIND trade name. This will make Globalive even more reliant on Orascom.

1265   The agreement's termination rights, which we have not seen, could provide the trademark-holder with arbitrary power over the continued use of the brand. This could leave AAL and Globalive high and dry if Orascom ever leaves Globalive, since Globalive would lose all the goodwill it builds up in the WIND trademark in Canada.

1266   There is also no evidence of a cooling off period following termination, during which Orascom would be precluded from re-entering Canada and using the WIND brand or during which Globalive, on a transitional basis, could continue using the WIND brand. The only conclusion is that this concession was clearly reflective of the fact that Globalive accepted it because it is in fact controlled by Orascom.

1267   Thus, Orascom's power to terminate the use of the WIND brand could operate as a significant threat and lever of control given the significant cost and time required to launch a new brand, as recognized by the Commission in the ESPN decision.

1268   MR. ENGELHART: Orascom's rights and powers clearly give it the ability to exercise strategic and operational control over Globalive. Let's look at it from AAL's perspective.

1269   AAL cannot control the Board. It cannot authorize a change in the business plan by more than 10 percent. It cannot authorize the sale of the company. It cannot authorize any significant capital investments. It cannot authorize any significant purchases. It cannot authorize the distribution of any dividends.

1270   In each of the above instances, Orascom has the final say. Orascom holds the majority of the equity and the debt of Globalive and virtually all of the economic interest of the company. In contrast, AAL holds a minority equity position and virtually no debt.

1271   Orascom's vetoes over any purchases over $5 million, changes in the business plan in excess of 10 percent, capital expenditures in excess of 10 percent in additional debt effectively means that Orascom controls all material spending by Globalive and AAL must accede to Orascom's wishes.

1272   One question the Commission could ask itself is this: Does Globalive represent a Canadian company with a non-Canadian backer or a non-Canadian entrant using a Canadian company as a front or accommodation party?

1273   The following five factors clearly show that Orascom is the controlling shareholder of Globalive and AAL is simply an accommodation party.

1274   First, AAL surrendered its ability to appoint a majority of the Board of Directors. A controlling shareholder would insist on appointing three out of the five available seats on the Board and assert control over Globalive's activities.

1275   Second, in the documents as filed, during the first year of the venture AAL can exit the project, removing its original landline business intact. This demonstrates that neither AAL nor the Globalive landline business play an essential role within the new wireless venture. Both are replaceable. Now, they have informed the Commission this morning that they have waived that right.

1276   Third, AAL has a put option that permits it to force Orascom to find a purchaser for AAL shares at a guaranteed minimum price. Under the document as filed, AAL can ask Orascom to arrange the purchase of AAL shares at any time in years 2 to 5 and the presumably pre-established price means that AAL appears to be guaranteed a minimum return by Orascom for its role as the Canadian shareholder. We have been told this morning that the right cannot be exercised until 2013, but I think the point remains the same.

1277   Fourth, Orascom has a call option for AAL's shares that permits Orascom to force AAL to sell the shares. Controlling shareholders have call options. Controlling shareholders do not give non-controlling shareholders the right to evict them from the company they control. As Mr. Miller mentioned, they have apparently waived the call but will be replacing it with a dispute resolution mechanism which we have not seen.

1278   Fifth, Orascom can drag AAL's shares along if Orascom wants to sell out. AAL has no corresponding right. Controlling shareholders who lead ventures have drag-along rights. This allows them to decide when to sell the company and ensure the non-controlling shareholders comply. The fact that AAL does not have this right shows that they are just along for the ride. The fact that Orascom has a drag-along right shows that Orascom is in control.

1279   These five factors demonstrate overwhelmingly that AAL is an accommodation party that can be replaced at Orascom's will.

1280   Thank you.

1281   THE CHAIRPERSON: Thank you for your presentation. On that very last point of these five points that you so eloquently set out, if I turn it around to you and say, assuming they change all those five points, is Globalive then not controlled by Orascom?

1282   MR. ENGELHART: I think the main elements of control are still that they are the major shareholder and the major debt-holder. I think that is the killer. No matter how you slice it, all of the economic interest is controlled by Orascom. So I really think that has to be fixed.

1283   I also think that the level of the vetoes has to be fixed and then I think those five things have to be fixed. So I think if they weren't the major debt-holder and major shareholder, if their vetoes were reduced and those five things were fixed, I think that would do it.

1284   THE CHAIRPERSON: Peter..?

1285   COMMISSIONER MENZIES: Actually, speaking of the vetoes, I understand that on the one hand the vetoes can be looked at as interference in management's ability.

1286   I expect the argument on the other side, or at least one of them, could be that really I mean what is wrong with investors, business partners getting together and mutually deciding on the fences that they will build around certain areas? This is the pool within which our management works; right? How could you address that?

1287   I'm trying to see what is really wrong with business partners getting together and saying, okay, here is the agreed-upon terms of our association, and the CEO himself then has good role clarity, he knows what decisions he can make, what decisions he needs to consult upon. What is really wrong with that?

1288   MR. ENGELHART: I think you are right, Commissioner. These vetoes are a normal part of these types of transactions. It is the extent and the threshold of the vetoes that is worrying in this case.

1289   You have to give the management some latitude to make decisions, to make purchases, to make sales without one shareholder having the ability to veto that. So I'm not disagreeing with the concept of vetoes, I'm saying that in this case they are so pervasive and the financial thresholds are so low that it seems to us like an untoward influence by Orascom.

1290   COMMISSIONER MENZIES: Just to be contentious for the purpose of the discussion, wouldn't that be Mr. Campbell's choice? I mean if he wants to take the job, here are the terms and conditions of the job, are you comfortable that you have the preponderance of decision-making ability that you need to make within this?

1291   Why would we need to get into micromanaging how companies determine the role of their CEO?

1292   MR. ENGELHART: Well, I guess the thing that is telling here is that Orascom is doing the micromanaging. Orascom -- this is not a normal structure that you would see. This is another lever of control by Orascom.

1293   So in a normal business arrangement you would expect management to have more latitude and you would especially expect the controlling shareholder to have more latitude. Here the controlling shareholder has very little latitude about what can be done in the company and the non-controlling shareholder can interfere with fairly small decisions.

1294   COMMISSIONER MENZIES: Point taken. But just to push this on, on page 4 here, under the legal test, address the second definition, the ability to manage and run the day-to-day operations of an enterprise.

1295   Why do you suppose -- this is what I'm having difficulty with -- Orascom, Mr. Sawiris in Egypt, would want to get involved in doing Mr. Campbell's job for him on a day-to-day basis.

1296   MR. ENGELHART: I am going to let Mr. Linton add to it, but I think you heard Mr. Campbell say this morning that the decisions on the suppliers was made before he got there. So that was an Orascom decision. They decided who was going to build the network, they decided who the major vendors were going to be, and that is consistent with Orascom having a worldwide wireless company and Canada is one division of that.

1297   COMMISSIONER MENZIES: Sure. But their argument on that would be that, look, that is where their leverage point is, that is where the power of being involved with a partner like Orascom comes from, that they can make those.

1298   MR. ENGELHART: Oh, I'm not saying it's not good business, I'm saying that it is Orascom that is making all those decisions. It is Orascom that is in control.

1299   Bill...?

1300   MR. LINTON: Just to go back a bit, it is absolutely normal that the CEO would have a number of parameters by which he has to work, and over and above those thresholds he would have to go to the Board of Directors. Normal. We have that in our company and obviously there are different levels.

1301   The issue here is that it is not the Board of Directors, it is effectively one shareholder. The Board of Directors -- and you heard this today from Globalive and it is absolutely correct -- are there to represent all shareholders' interests, but I think whether you take the shareholders agreement or the loan agreement you will find that these veto rights accrue to an individual shareholder and that is what gives you the idea of control.

1302   As Ken says, it is just, you know, one of a whole series of items that added together, we think, you know, push this decision in one direction.

1303   COMMISSIONER MENZIES: Oh, I understand that argument.

1304   On page 6 of your presentation here you mention that section 7.1 of the principal loan agreement allows Orascom to declare an event of default and you go on to say, effectively, this means that the loan is almost callable by Orascom on demand.

1305   Why would they do that? We addressed that issue this morning and they essentially said they would be attacking their own best interest by doing that. Is there a scenario that we haven't thought of?

1306   MR. ENGELHART: Yes. I mean I would quote what the Chair said in referring to a different provision. It is a sword of Damocles. They are saying, look, as long as you don't step out of line everything will be fine here, but if you step out of line we can wind this thing up. So it means that they have the ability to terminate the thing at any time and it ensures that there will be compliance with their wishes.

1307   COMMISSIONER MENZIES: But that would go against their own best interests to do that, as we understand it right now. I'm trying to get a sense of -- I'm not disagreeing, I'm trying to get a sense of what the scenario might be when that would take place.

1308   MR. LINTON: I think this morning you heard a couple of real truisms and that is one, every loan agreement has a term on it, whether we like it or not. Every loan agreement has these provisions in it and when you are creating those loan agreements, it is the full intentions of the parties to repay those loans and be best friends and have a successful business. I think we have all been in situations where that doesn't work out.

1309   Absolutely, as we sit here today, you could easily make the argument that this would not be in one party's interest or another, but the fact that it's in these documents, the fact that it can be exercised is just another -- is another step and circumstances change drastically. You know, something might happen, you know, next year so substantial to the wireless industry that this may be an item that would be seriously looked at.

1310   COMMISSIONER MENZIES: Do you share TELUS' suspicions, I guess, is the -- I mean I don't want to put words in their mouth, but it's what I took from them -- regarding Globalive and Orascom's sincerity in seeking non-Orascom financing for its operation?

1311   MR. ENGELHART: I have a more fundamental concern than TELUS, and Bill will add, too.

1312   This is the seed capital we are talking about. They describe it as the seed capital in their reply comments. This is the equity. It is a debt instrument, but it is equity. They put in $500 million. That bought the spectrum. That was the first $60 million of operating.

1313   They got back essentially a debt instrument for $500 million and it appears -- I mean we don't see all the documents. It appears that they got back the 65 percent equity or shares for free, but the value, the grub stake, the initial money is that $500 million.

1314   That's not -- you can't call that a bridge loan. The person who has put in that first $500 million owns the company. You can't -- you can't bridge that loan to something else.

1315   A bank might loan you the second $500 million, but what you are really talking about, if they are saying they want to refinance that, they are talking about selling part of the company. Maybe they do want to sell part of the company but, as Mr. Ducharme said this morning, it is very hard to do that until you have subscribers and revenues and business coming in.

1316   So I don't see any realistic scenario, unless they find another sort of strategic investor who wants to take part of any equity, where you could consider this to be something that is going to be refinanced.

1317   COMMISSIONER MENZIES: With respect, you didn't answer my question.

1318   MR. ENGELHART: I think I can answer --

1319   COMMISSIONER MENZIES: You answered another one and it was a good answer, but what I was trying to get at was the availability of capital in the markets. I mean a lot of this is coming down to the fact that they are saying, look, we didn't want to do it this way but, as we are all aware, something happened last year and so we had to do it this way.

1320   This is a key factor in what has caught everybody's attention here, is this dual role of equity and note-holder essentially. So what I am trying to get at is, do you find -- let me try another way. Do you find that to be a credible argument?

1321   MR. ENGELHART: I will let Bill --

1322   COMMISSIONER MENZIES: Short answer.

1323   MR. ENGELHART: I will let --

1324   MR. LINTON: I think the evidence in the marketplace is that there is one other greenfield competitor who has publicly announced that they have financing. You know, DAVE Wireless put out an announcement that they got $50 million worth of financing from OMERS, which is the Ontario Municipal Employees -- public mobile, sorry. I got them mixed up. So that is on the public record or at least it was press released.

1325   I think the same organization put out a press release just this morning saying they received some venture capital financing, but I don't know if it was disclosed. So there have been other examples of new entrants getting some financing.

1326   COMMISSIONER MENZIES: Thank you.

1327   What would be the impact -- I just have two and I will try to make them quick. What would be the impact on Rogers of Globalive entering the market? A figure between 5 and 7 million subscribers, I think, was mentioned in conversations this morning. What would be the impact on Rogers?

1328   MR. ENGELHART: Well, I mean I'm sure Globalive will do a credible job. We face competition every day. We are going to face it with or without Globalive and I think the market will be very competitive with them and very competitive without them.

1329   COMMISSIONER MENZIES: So you are saying it doesn't have any impact on you?

1330   MR. ENGELHART: No. I mean I wouldn't say no impact. Obviously, every competitor is someone we take seriously, but it doesn't look to us like they are going to be anywhere near the force that, say, Videotron is going to be in the marketplace.

1331   COMMISSIONER MENZIES: The last question is I'm trying to get a sense here of -- and Konrad, the Chairman, kind of referred to it, is exactly what do you want us to do. I mean the jobs, we are talking about Canadian control, Canadian interest. There are about 300 Canadians, 230-240, somewhere between that, who are Globalive employees and they have quite a bit of stake in this.

1332   What are you looking for, this company to restructure, meet the rules, you are looking for the proposal to be shelved, killed right now? Other than the people in this room, there are a lot of people who have something at stake here.

1333   MR. ENGELHART: I would give the same answer I gave to the Chair. I think you have to reduce their role as a combined debt and equity holder because their economic interest is too overwhelmingly huge. You have to make the vetoes a little more reasonable and then those five other items that I identified which are just not consistent with Canadian ownership and control.

1334   COMMISSIONER MENZIES: Thank you.

1335   THE CHAIRPERSON: Len...?

1336   COMMISSIONER KATZ: Thank you, Mr. Chairman.

1337   Good afternoon. I want to come back to something that I think you said, Mr. Engelhart, about the auction fee should be seen as being seed money. I'm trying to understand how, if Orascom and Globalive decided to treat that as equity, it would change the situation. You seem to be implying that if it was equity and it was being borne by Orascom, it would all be fine. Why?

1338   MR. ENGELHART: I guess what I'm saying is it is equity. It may be captured in a debt instrument, but it is equity in the sense that one normally describes equity. It is super equity, if you will, because it not only has the first claim over all the assets, it not only has all the benefits of equity, it also pays a handsome 18 percent interest rate.

1339   So my point was, I don't think you can really view it as they are trying to portray it as some sort of temporary debt instrument that is going to be refinanced. That is just not a credible story.

1340   I think the reason they structured it this way is because -- we came up with around 83 percent. TELUS came up with around 82 percent. They appear to have something around 82-83 percent of the economic interest and if they took 83 percent of the equity, I think it would have not been approved. So they split it up this way between two instruments, between share instruments and debt instruments, to make it look like they hold less equity, but the reality is they hold at least 82 percent of the economic interest.

1341   COMMISSIONER KATZ: But you wouldn't say that a spectrum licence is not bankable?

1342   MR. ENGELHART: I would not say that. No, it is. I think it provides security, yes.

1343   COMMISSIONER KATZ: Okay. Just on that issue, you equally as well purchase spectrum as well. I saw yesterday you are going to recover that from your customers as opposed to your shareholder.

1344   MR. ENGELHART: We recover all of our costs from our customers. It's the nature of being in business. If you don't recover your costs, you are not in business.

1345   COMMISSIONER KATZ: But you do recognize, at this point in time they don't have the customers to recover it from, so it has to come from somewhere.

1346   MR. ENGELHART: I agree.

1347   COMMISSIONER KATZ: Okay.

1348   I want to come back to the issue of debt. We heard a lot about the fact that the markets are very tight these days, if they haven't dried up completely. I see Lorraine Daly off to your right who is the master -- I won't call you the mistress -- the master of raising money in all the years.

1349   You must have some idea of what the market is like today. Rogers has gone through some tough times in the past as well, where it had to raise money and it raised money at some pretty high rates as well. Can you shed some light as to where we have come from 12 months ago, where we are today and where we are heading?

1350   MS DALY: Twelve months ago the market was open to us and it was open to TELUS and companies of our stature, but it would certainly not have been open to a start-up like Globalive.

1351   Today, with absolutely no cash equity in Globalive, I think I agree with them, it's probably extremely difficult to raise money today on any terms they would be willing to accept. I think Ken raises a good point, this company needs some cash base before it can be looking for debt financing. That would be my opinion.

1352   THE CHAIRPERSON: Okay, thank you.

1353   Mr. Engelhart, in your remarks you pointed to a CIBC report from last week. What exactly is this?

1354   MR. ENGELHART: That was a CIBC report. It was one of the equity analysts. We can file that with you if you like.

1355   THE CHAIRPERSON: I would appreciate that.

1356   Okay, thank you, those are our questions.

1357   Let's take a 10-minute break before we listen to Bell.

--- Suspension à 1506

--- Reprise à 1518

1358   THE CHAIRPERSON: Okay, Madame la Secrétaire, let's go.

1359   THE SECRETARY: Thank you, Mr. Chairman.

1360   We will now proceed with the presentation by Bell Canada. Appearing for Bell is Mr. Mirko Bibic.

1361   Please introduce your colleagues, after which you will have 30 minutes for your presentation. Mr. Bibic...?

PRÉSENTATION

1362   MR. BIBIC: Thank you, Madam Secretary.

1363   Mr. Chairman, Commissioners, thank you for the opportunity to appear today.

1364   As mentioned, I am Mirko Bibic, I am Senior Vice-President of Regulatory and Government Affairs at Bell Canada.

1365   To my left is David Kidd of Blake Cassels and Graydon.

1366   To my right is Ruby Barber, Assistant General Counsel, Bell Canada.

1367   Before I dive into my presentation, Mr. Chairman, it is pretty obvious that Globalive has been amending some of its provisions on the fly and more will be revealed tomorrow, I suspect. It makes it difficult for all of us to comment on the fly.

1368   These are complex provisions and this is a type IV proceeding, so what I would like to do is respectfully ask for an opportunity to speak to the amendments, rather than in writing as contemplated in the procedure, in a continuation of this oral hearing.

1369   So I leave that with you, but that would be a preliminary request that I have.

1370   THE CHAIRPERSON: Let's stay on that for a second because we were just discussing it among ourselves. That is obviously an issue of concern. It is clear after this morning that there will be some amended document filed tomorrow.

1371   And also I get your point, you want to presumably just see the redacted version of the in camera sessions before you reply, because while you may not get the confidential information, you can certainly get some further submission, et cetera.

1372   So would it make sense if rather than doing this, we do the in camera tomorrow, we adjourn for a week and proceed with the public third phase a week from now, which would give you an opportunity to study the documents that will be filed tomorrow, us too, and will also give us the time to put out redacted records so that you can look at it?

1373   MR. BIBIC: That would work. That would give us time to consider the new documents and in reply address anything we wanted to address orally. That would work, thank you.

1374   THE CHAIRPERSON: Okay. If the other three parties are in agreement, I would propose we do that, so that we meet next Thursday morning at nine o'clock and do what I called the third phase in my introductory, because I think, out of fairness to everybody, we should have all the documents available before us before we hear the rebuttals by the interveners and the final presentation by Globalive.

1375   MR. INTVEN: Mr. Chairman --

1376   THE CHAIRPERSON: Microphone.

1377   UNIDENTIFIED SPEAKER: Hank, can you take a microphone and come to the front?

--- Pause

1378   THE CHAIRPERSON: Mr. Intven...?

1379   MR. INTVEN: I'm sorry, I apologize, Mr. Chairman. I will join my friends at Bell Canada here. I only have a few comments, Mr. Chairman. It is obviously your process, but I have two questions.

1380   The first is that Globalive was very pleased to see the Commission's commitment that it would be issuing a decision within 30 days of the hearing. Do you see that changing under this process?

1381   THE CHAIRPERSON: I am a man of my word. You shouldn't have to ask questions like that.

--- Rires

1382   MR. INTVEN: Thank you.

1383   And then secondly, I have to say just in terms of the expense of the hearing and everything, which is clearly greater on the part of a new entrant, is it really necessary to have -- I'm not sure what the magic is in having an oral proceeding. We would be glad if you would consider it appropriate to give the incumbents an opportunity to provide their written comments on any additional documents. Is it really necessary to bring everyone back to an oral proceeding?

1384   THE CHAIRPERSON: You should join my staff, they also seem to have a bias for written proceedings. I have a bias for oral proceedings. I want to hear from the people what they do and what they intend to do.

1385   But my colleague reminded me that a week from today is actually next Wednesday, not next Thursday. So next Wednesday. Let's do it next Wednesday at 9 o'clock then. Okay. Thank you.

1386   Okay, Mr. Bibic, proceed with your presentation.

1387   MR. BIBIC: Thank you, Mr. Chairman.

1388   BCE was recently the subject of an extensive foreign ownership review by the Commission, culminating in broadcasting decision CRTC 2008-69. The BCE decision, with which we have direct experience, is the single most important precedent guiding the Commission's review of Globalive's structure, even though it was under the Broadcasting Act. It is your latest significant pronouncement and, most importantly, Globalive relied on it in its filed materials.

1389   We appear here today, based on that experience, to offer the Commission a practical perspective on why Globalive's structure does not comply with Canada's foreign ownership rules. Indeed, the structure is so fundamentally contrary to the law that the Commission cannot let Globalive commence operations.

1390   Our opening statement starts by framing the discussion in terms of the law and policy on Canadian foreign ownership and then we explain the myriad of practical ways in which Globalive fails to satisfy the law as you must apply it.

1391   Commissioners, much of what is in this statement has already been discussed. I suppose that is the difficulty of going last. I will try to skip over or go quickly on those issues. Some of our perspectives, however, are different and I will, for those reasons, the fact that much of what we discussed has been said, I am going to deviate many times from the written text. So I hope you bear with me as I do that.

1392   So starting first with some comments on policy and legal context.

1393   Globalive invokes Industry Canada's 2008 AWS policy framework as a basis for the Commission to ignore the foreign ownership rules. Globalive urges the Commission to conclude that, one, the AWS auction was designed to facilitate its entry, and two, that somehow Industry Canada's decision to license Globalive trumps the Commission's jurisdiction to determine foreign ownership compliance under the Telecom Act. These are absurd positions which must be rejected.

1394   Globalive's entrepreneurial spirit and ambition and its desire to compete in Canada's wireless space is not the issue. That argument is a smokescreen.

1395   We all know, Commissioners, that section 16 of the Telecom Act is mandatory. We all know that Industry Canada has been clear all along during the AWS policy framework that your, the CRTC's, review process, continues to exist.

1396   We have outlined all the quotes from the Industry Canada documents in the next couple of pages. I won't propose to go through them.

1397   Mr. Chairman, at the beginning of your opening remarks this morning you indicated that your review under your Act is in a different context and a different focus. I will leave it at that. Our formal submissions are in this text and I will skip directly to paragraph 10, if you will allow me.

1398   THE CHAIRPERSON: Yes.

1399   MR. BIBIC: Our basic point on policy matters is this: If the Commission were to approve Globalive's structure, it would effectively gut the foreign ownership restrictions and signal that foreign investment in some Canadian carriers will be permitted.

1400   Commissioner Menzies, to the question you posed to both TELUS and Rogers, Bell -- much like Mr. Engelhart indicated for Rogers -- Bell is compared to compete with anyone. We are not here about Videotron, we are not here about Shaw, we are not here about EastLink, but what we do have a problem with is competing against players who get to operate under a different set of rules.

1401   This is a serious issue. It is not mere speculation or hearing hyperbole because I happen to have a microphone in front of me. Already, ALPINA Holdings has noted on the record of this proceeding that it is seeking debt and equity from a major international telecom operator. It sought to appear here today and to support Globalive in order to have the same flexibility to proceed with its own arrangements. So this will be a precedent.

1402   If the Commission were to ignore the law for the sake of competitive entry, as Globalive suggests, the Commission would grant certain carriers the advantage of access to foreign equity markets on terms and conditions potentially more advantageous than those available to other players in domestic markets. So long as the foreign ownership rules remain in place, they must be respected.

1403   At this point, I think I would like to pause to address one of Vice-Chairman Katz' questions to TELUS regarding Clearnet.

1404   I stepped out during that exchange to ask somebody who is very familiar with Clearnet what happened there and the short answer is that non-Canadians had very little by way of governance rights in the Clearnet structure and very little capital. In fact, in the early days Madison Dearborn had two of 10 Board seats in Clearnet and much, much less than 50 percent of the capital.

1405   For the first few years of Clearnet's existence, what it sought was to build up spectrum positions and it was founded by the Simmons family, Canadian. Mr. Sirois was an investor, Canadian. It was a private placement with OMERS, again a Canadian. And then at some point later on, MDP, Madison Dearborn, became an investor before it was public.

1406   Then in 1994 there was an IPO, which was probably the largest IPO at the time for a telecom start-up and that's when Clearnet became a wireless carrier offering services to consumers. It's then that Motorola and Nextel became partners in the IPO, but again with very little capital.

1407   So I hope that assists in your consideration of how Clearnet is not an appropriate basis of comparison to Globalive.

1408   I am now at paragraph 13 of the opening statement and it brings me to the central issue in this proceeding and that is whether Globalive is controlled in fact by Orascom. We say yes, and Mr. Sawiris' testimony this morning about how he intends to use his influence and knowledge establishes this, in our view.

1409   Let's start first by discussing or examining Globalive's financing.

1410   By following the money, the Commission will derive significant insight into who owns and controls Globalive. The source of funds, debt and equity is the most important factor in this assessment.

1411   Our strong submission this afternoon is that the assessment cannot take place in a narrow, incremental fashion by just looking at the Board composition in isolation or just looking at the vetoes in isolation, et cetera. One has to take a step back and look at the entire context of financing and the operations.

1412   Decisions have already been made and they cemented -- those decisions that have already been made have cemented Orascom's control already and those decisions cannot be undone. I will address that in a moment, but for now I want to focus on the funds.

1413   Orascom, as you have heard, has provided all of the funds, both debt and equity. This is to be contrasted with the BCE case where none of the investors would have held any debt and where none of the debt-holders would have had any governance rights such as board seats.

1414   Orascom's role also stands in marked contrast with that of Goldman Sachs in the Canwest decision, which Mr. Ryan for TELUS and Rogers already addressed. So I will skip over that.

1415   Those with the most skin in the game will always ensure that their investments are protected. Via the shareholders agreements Orascom has secured significant protections and control mechanisms, including a veto over any material contract entered into by Globalive with a value greater than $5 million -- and this is important -- whether within or outside the ordinary course.

1416   Globalive, of course, also has a veto over expenditures or liabilities greater than $10 million.

1417   By way of the debt instruments, Orascom also has additional vetoes, which, among other things, restrict Globalive's ability to sell any assets outside the ordinary course of business exceeding 5 percent of the net asset value.

1418   There is also security over all of the assets.

1419   While one could argue that some of these protections are not unusual for a lender of such magnitude, the fact is that this particular lender is not a bank. Orascom is the major financial and major strategic investor.

1420   The structure has been designed to protect Orascom from the very beginning. During the spectrum auction, Mr. O'Connor was an employee of Orascom when the bidding began. He was the only designated bidder for Globalive in the auction.

1421   You have heard this from Rogers, in their earlier testimony.

1422   It is evident that Orascom took the lead from the outset, continues to take the lead, and can dominate and determine future decisions.

1423   Let's now turn to the debt.

1424   Globalive acknowledges that Orascom holds all of Globalive's debt, and I can kind of predict what will happen tomorrow in the in camera session. Orascom will say: Please give us regulatory approval, so that we can actually get financing, and don't put a time limit on when we need to get that financing, because that would put a gun to our heads in our negotiations with the financial institutions.

1425   I predict that's what will be said tomorrow.

1426   By doing that, Globalive brushes the concerns aside and tries to characterize their debt as bridge financing, to be replaced with independent third party financing as soon as possible. But they provided no evidence indicating that it has arranged third party financing or that such financing is imminent.

1427   At no time has Orascom indicated that its debt financing is temporary. The Commission cannot grant approval to this structure without third party financing in place, which is unlikely to happen, it appears.

1428   The ownership rules do not grant new entrants grace periods during which they are permitted to be controlled by foreigners to facilitate their entry. To grant such a grace period would be exceptional, would lead to the need for ongoing Commission oversight, and, inevitably, to request extensions. And the longer this goes on, Globalive will have built more of its network, will have hired more employees, will be closer to launch, and the greater the pressure will be not to enforce the rules against them.

1429   The time to put a stop to this is now, before Globalive makes further investments and publicly launches its service.

1430   What we heard this morning is that there can be no time limit on refinancing. In other words, conditional approval is unacceptable to Globalive. This makes the situation black and white: either the CRTC blesses the current, highly aggressive financial structure with no conditions, or it rejects the structure.

1431   In our view, you cannot possibly accept a structure when a non-Canadian holds all the equity, all the debt, and all the expertise.

1432   I turn now to the equity.

1433   Globalive's equity structure is equally a concern. First, as you know, Orascom has put up all of the cash equity necessary to finance the business.

1434   AAL's sole contribution of any significance is its wireline assets, and since both businesses will not be operating as one, as Mr. Lockie conceded this morning, the contribution of the wireline business should not be considered in assessing the relative equity positions of Orascom and AAL.

1435   You will recall, Commissioners, in a Canwest decision, in deciding that Goldman Sachs' equity position would not give them control in fact, you considered that Canwest was contributing its properties and would operate them and the acquired Alliance Atlantis properties as one business, thereby allowing Canwest's contribution of assets to count as common equity.

1436   Even if you count the value of the wireline business in this case, since AAL's equity investment is fixed at the value of that business, any additional equity will come from Orascom, suggesting that its economic interests will rise over time.

1437   Even though Mr. Sawiris has said that he would welcome Canadian equity, his customary approach, as revealed by examining his comments at an investor conference, which I quote at the top of page 6 -- Mr. Sawiris states that his strategy has always been to expand his ownership and not to sell down to others.

1438   He later said:

"We would like to keep as much equity as possible, because our experience has shown us that we usually regret if we didn't buy minority interests or exclude minority interests from the very beginning." (As read)

1439   He kind of repeated that today, as well.

1440   So while Globalive this morning said that the shareholder agreements contemplate more Canadian equity, you revealed in your questioning, Mr. Chairman, that Orascom has a veto over the issuance of new securities and that Mr. Sawiris wants to keep at least 51 percent of equity at all times.

1441   I may not have a firm grasp of all of the agreements, but I don't actually think that AAL has a similar veto right.

1442   While Globalive refers to precedent where the Commission approved foreign equity investment at the 65 percent level, we know of no precedent where a non-Canadian provided all of the equity and all of the debt and secured significant voting rights.

1443   Mr. Intven, this morning, in his submission, argued that the foreign ownership rules don't apply until a business is launched. This is artificial in the extreme. This pretends that pre-launch decisions don't affect actual operations. This is what I would like to explore now, and I will start first with network and technology.

1444   It is apparent that Orascom had control over virtually every key decision that Globalive made in commencing operations and will continue to make in conducting day-to-day business.

1445   Mr. Sawiris indicates that one of his conditions to invest was his ability to leverage his industrial advantages without the Canadian partner making life difficult for him.

1446   That is one of the reasons he got along so well with Mr. Lacavera, including their entrepreneurial ambition, et cetera.

1447   Let's start with the Globalive technology and network design decisions. They are the foundation of a wireless business. They drive handset selection, network costs and efficiencies, and determine future opportunities for strategic alliances.

1448   No decision on these important questions can be made by Globalive without Orascom's approval.

1449   First, the TSA effectively allows Orascom to dictate all technology, network and other operational decisions. Notably, unlike the Advisory Services Agreement in the BCE case, the scope of Orascom's advice is all-encompassing.

1450   Globalive's claim that its arrangement with Nokia Siemens Networks somehow proves that the TSA is not all-encompassing lacks merit. The fact that Globalive has this arrangement proves only one thing: Orascom is satisfied with the selection of Nokia Siemens Networks.

1451   In any event, the Board and management of the operating carrier will not be in a position to ever reject Orascom's technical advice. First, Orascom has the expertise.

1452   Second, it appears that Globalive is paying significant fees for this advice, and will thus be motivated to take advantage of it.

1453   Let me pause here for a moment and go back to the BCE situation. We would have had, had that deal gone through, an Advisory Services Agreement with the non-Canadian investors, and you may recall, Commissioner Katz and Mr. Chairman, that we would have been required to pay fees under that agreement in any event, whether advice was given or not.

1454   I believe that we indicated to you during the hearing, being quite open, that the fact that we had to pay fees, regardless, we would take advantage of that advice. We absolutely would.

1455   The point was that it wasn't all-encompassing, it was related to financial matters, and you imposed a couple of filters to make sure that you were satisfied with the questions of control.

1456   So I think the fact that fees are being paid here, and that will be the motivation to take advantage of the advice, is fairly significant.

1457   Third, Orascom's veto over contracts and expenditures ensures that no technology and network decisions can be made without approval, as I have said.

1458   Consider the following. In a September 11th Globe and Mail article, Mr. Lacavera estimated that Globalive needs 500 to 600 towers to launch service in Toronto and Calgary. We believe that approximately 450 cell sites are required to cover the GTA alone. It can cost between $250,000 and $500,000 per cell site, depending on its location, so that could be up to $225 million for Toronto alone, well above the $5 million veto threshold.

1459   So Orascom has a veto over all those bills.

1460   All the construction vendors and infrastructure equipment vendors you would need to build a network would have contracts above the $5 million. That's a veto.

1461   Cell sites need to be maintained. That is well over $5 million a year. That's a veto.

1462   Domestic backhaul arrangements with terrestrial carriers for Globalive's wireless traffic will cost more than $5 million. Veto.

1463   Outbound roaming agreements will also be greater than $5 million. Veto.

1464   Now, one could say, "Let's bump up the threshold to above $5 million." The point is, these decisions, or most of these decisions, have already been made.

1465   So tinkering with the veto by increasing the monetary threshold will not alter the fact that Orascom controlled all of these decisions, thus far, decisions which have set Globalive irreversibly down its operational path, a path charted by Orascom.

1466   Let me now turn to other day-to-day operational decisions that a wireless business needs to deal with. They shed more light on control.

1467   Handsets -- for an operation like Globalive's, using a conservative average cost of about $200 per handset, the purchase of a mere 25,000 units would trigger a veto.

1468   However, Globalive projects 1.5 million customers within three years of launch, which would mean a capital expenditure of at least $300 million by Year 3 on handsets.

1469   Conservatively assuming that customers will upgrade handsets every three years on average, Globalive would spend in excess of $100 million on handsets each year, and even more as its business grows.

1470   So unless that veto threshold were bumped up to $100 million, you get a veto.

1471   Billing systems -- $5 million to $10 million.

1472   The cost of an enterprise resource planning system would be in the same range, and IT maintenance and support would likely exceed $5 million annually.

1473   Orascom controlled every one of these decisions. Since they have already been made, or are likely very imminent, Orascom effectively cemented its control well prior to this Commission review.

1474   Now let's look at marketing.

1475   Having decided on network technology and arranged for handsets, billing systems and other back-office systems, you need to distribute and market your services to be successful.

1476   Consider this: the launch of Orascom's Wind brand nationally could exceed $20 million. To launch the brand in Toronto alone would exceed $5 million.

1477   Advertisements and campaigns for discrete product launches would easily exceed $5 million.

1478   Distribution agreements with national retailers, such as Best Buy or Glentel, could be in excess of $5 million each, before a single handset is placed on the shelves.

1479   Again, tinkering with the governance arrangements will not change the fact that the brand has been chosen, and advertising programs and distribution arrangements are likely well underway, if not already finalized. They, too, cannot easily be cast aside.

1480   In the case of the brand, this clearly won't be cast aside. We were told this morning that the trademark licence is on favourable terms. Having to re-brand at market cost would be daunting, indeed.

1481   I now turn to employees, who are always critical to the success of any business. And in this case, the CEO of GWMC, and potentially others, has past ties to Orascom.

1482   I would turn the Commission's attention to the following points.

1483   Orascom has a veto over any remuneration calculated by reference to income or profits, which would capture commission-based sales programs, which no one has pointed out today.

1484   Orascom has the ability to veto the issuance of stock options, and there has been a lot of discussion on that today, so I won't spend too much time on it. The point in the questions, Mr. Chairman, that you were asking Mr. Campbell was not whether there will be a stock option program, clearly there will be. That's not what was asked. The question was really around what kind of influence Orascom would have over the managers, and stock option programs have significant influence over managers.

1485   Every aspect of Globalive's business and operations to date has been controlled, and will continue to be controlled, by Orascom. While we have placed emphasis on the vetoes, even if their monetary thresholds were increased to $500 million, Orascom would still significantly influence and control Globalive's decisions with respect to handsets, technology and networks.

1486   Orascom can exercise its influence positively by making decisions, or negatively by exercising veto rights or other threats. This allows Orascom to determine strategic decisions, whether within or outside the ordinary course, as well as day-to-day business decisions. In the words of the NTA's Canadian Airlines decision, Orascom is able, on its own volition, to unilaterally determine or decide the strategic decision-making activity of Globalive on an ongoing basis. In fact, the decisions made to date have charted Globalive down a path which cannot be reversed, even if the Commission were to modify the structures at this time.

1487   Having discussed operational matters, I would like to turn now to additional governance issues, starting with Board composition.

1488   I think where we all should start in looking at the Board composition is what the Commission said in BCE: Canadian control involves not only having a majority of Canadians on the Board, but ensuring that Canadian investors can exercise effective control through director representation.

1489   Globalive's three boards fail this standard.

1490   I will start first with CIHC. You know the facts, it's two nominees for Orascom, two for AAL, and a third independent.

1491   AAL, obviously, can't exercise effective control.

1492   Contrast that with the BCE situation, where Teachers -- the Canadian investor -- would have had twice as many Board seats as the largest non-Canadian investor, and more seats than all non-Canadians combined.

1493   Paragraph 36 is the way in which the fifth director is appointed. You questioned Mr. Campbell extensively and Mr. Lacavera extensively on that. We share the concerns with respect to how the fifth director is appointed.

1494   I will jump now to GCHC.

1495   GCHC is where Mr. Lacavera will now be chairman, but Mr. O'Connor will now be vice-chairman. I'm not at all clear what it means to be vice-chairman, and I think it will be important to examine whether or not vice-chairman has any powers or there's any importance to that.

1496   There are seven directors in this lower holding company. Now, Orascom nominates directly three of the seven, even though it only has one-third of the voting shares. The other four directors are nominated by GIHC. The three Orascom nominees will clearly vote together on all matters. Contrast this with BCE, where 5 of the 13 directors would have been nominated by three separate and distinct non-Canadian investors who wouldn't necessarily vote as a block.

1497   A key point, as well, Commissioners, is that Orascom has as much of a say as AAL, if not moreso, in appointing GIHC's four nominees to the GCHC Board.

1498   So you have got Orascom appointing directly three and having as much of a say as AAL in the appointment of the other four. That's control.

1499   And I struggled with why there's this second holding company. First I thought maybe it's for tax reasons. And I know nothing about tax, so I asked, and I was told, and superficially: Look, if you are going to have an enterprise that's going to create losses -- and we heard this morning that Globalive clearly will suffer losses at the beginning -- you want as flat an org structure as you can possibly have so you can flow those losses up to a higher entity. So it can't be a tax reason.

1500   So I don't understand why, then, the select-and-hold code, which is rather unconventional -- and I don't think there was a decent answer to the question this morning -- I'm beginning to think it was done so as to allow Orascom to completely control the operating company at the bottom of the structure.

1501   Because at first, when you look at the Board structure of GCHC, the second holding company, it looks benign: you have four directors and three directors, until you realize, as I said, that Orascom has a direct or indirect saying in appointment of all seven.

1502   Then you see what's going on: that allows Orascom to completely control the operating entity. Because if you took the second holding company out of the equation and insisted that there would be only one holding company, and at that one holding company level there was a majority of directors appointed by AAL, suddenly Orascom can't exercise control over the appointment from the Board.

1503   I may be wrong as to why this was done, but that's my suspicion, and there was no other reasonable explanation given this morning.

1504   So now I turn to the Opco GWMC. It has seven directors, all are appointed by GCHC, and over which Orascom exercises control, as I said several times now. And Orascom put Mr. Sawiris on this Board precisely to provide direct input into Opco's operations.

1505   Now, there are also issues with the Board quorum rules. At GCHC there were two co-chairs, but now there's a chair and a vice-chair. We submit it's all merely window dressing. What's the purpose of a vice-chair?

1506   More importantly, the vice-chair remains on Orascom nominee.

1507   Even more important than that, under the current GCHC quorum rules, a quorum of five directors -- two Orascom nominees and three GIHC nominees -- could include the vice-chair, Mr. O'Connor, but not Mr. Lacavera.

1508   In the BCE decision, the Commission didn't allow a non-Canadian to appoint the chair. In this case it appears from the government's documents that the Board appoints the chair, and this needs to be changed because Orascom has as much of a say in the appointment of all these directors.

1509   At GIHC, which is the top holding company, a Board quorum can consist of the following three members: Monsieur Ducharme, Mr. Lacavera and Mr. Farid, who is an Orascom nominee.

1510   Mr. Ducharme holds the swing vote and is associated with Mr. Campbell. Given the influence of Orascom over Mr. Campbell, and all other members of the management team, it is yet another factor establishing that Canadian investors do not control the GIHC Board, which is the top holding company.

1511   I now move to the definition of "independent Canadian". In the BCE decision, the Commission imposed a definition of "independent director" to ensure that the independent director is not beholding to any investor.

1512   The definition of "independent Canadian" in the Globalive Shareholders Agreements includes the requirement that:

"The independent Canadian has no other relationship or characteristic that could reasonably expect it to compromise his or her independence." (As read)

1513   Globalive suggests that Mr. Campbell's independence is not compromised because his prior relationship with Orascom occurred outside the two-year limit embedded within the definition.

1514   In taking issue with Globalive's definition of "independent Canadian", and in asserting more generally that Mr. Campbell will be under the significant influence of Orascom, we are not attacking Mr. Campbell's integrity.

1515   Rather, the Globalive management team will inevitably be significantly influenced by Orascom and Mr. Sawiris, given Orascom's position as lender, has control over every facet of the operation, and for the stock option reasons and compensation reasons we have mentioned.

1516   For this reason, the standard for assessing independence of directors and the management team should be set very high.

1517   In reply comments, Globalive compared this situation to the appointment of CRTC commissioners with past associations with companies regulated by the CRTC. There is no analogy. The commissioners do not take their instructions from those they regulate, nor are they paid by them.

1518   I turn now to shareholder vetoes. In the BCE case, the non-Canadian investors' approval rights were limited to matters of indebtedness, prepayment of debt, acquisitions or sales of assets, and strategic alliances and joint ventures. These were outside the ordinary course.

1519   And this is a significant point, Commissioners. It's not just the monetary threshold that's important, but it's the nature of the veto that's important. So even if you were to raise the vetoes to the 5 per cent standard, and you didn't carve out operational matters -- and those would be significant, I spent half my opening statement discussing them -- Orascom would remain in control.

1520   I now turn to for sales, which are an additional cause for concern, as the Commission noted this morning.

1521   Shareholders typically seek contractual protection in the event they do not wish to continue in business together. These provisions are designed to break deadlocks, ensure smooth transitions of ownership, and provide liquidity to both minority and controlling shareholders.

1522   A controlling shareholder typically seeks to prevent a minority shareholder from blocking a sale of the company to a third party by inserting a drag-along provision or by having a call right on the minority shares. A minority shareholder usually seeks to ensure it receives the same price for its shares as the controlling shareholder by inserting a tag-along or by having a put right.

1523   Apparently, there have been changes here, and we will need to examine the documents -- and we will come back next week if we comments -- but even with the changes, because Orascom is the controlling investor, it still will have controlling shareholder rights.

1524   Orascom has the ability to force AAL to sell its shares if Orascom decides to sell 50 per cent or more of its own shares. Orascom can remain in the business, but force out AAL. It appears that this provision would still remain in the governance agreements.

1525   Globalive does not explain why the drag-along rights exist in the hands of the purported minority investor and why the purported majority investor has no such rights. Globalive also fails to explain how these rights do not give Orascom undue influence over AAL.

1526   I will turn now to stand-still and then go straight to my conclusion.

1527   Shareholder agreements typically provide that the parties will not exit the business for a certain period of time. The Globalive Shareholder Agreements contain no such stand-still. While apparently AAL no longer has the right to withdraw from the wireless business in the first year, what Globalive didn't say this morning is what will happen to a related veto, which is in the agreements.

1528   In the agreements, AAL actually has a veto power over any material changes to the non-wireless business plan. That's the pre-exist business Mr. Lacavera brings to the table. This is unequivocal evidence that AAL does not control the GIHC Board. If AAL did control that Board, AAL would not need such protection over the pre-existing business it brings to the table.

1529   Now, what has happened to this veto? Is it still there?

1530   AAL also has the option to sell its shares in year three to an eligible purchaser of Orascom's selection. This still demonstrates a lack of commitment by the Canadian investor purportedly in control of the wireless business. We are not aware at Bell of any precedent with this type of exit provision for the Canadian investor who claims to be in control.

1531   So the conclusion.

1532   Globalive's structure does not meet the foreign ownerships laws and this cannot be remedied by imposing modifications to the structure as the Commission did in the BCE decision. Unlike the BCE situation, where decisions had not been made any non-Canadian shareholders, decisions made under Orascom's control cannot be undone.

1533   Globalive's structure does not compare to that examined in BCE. In the BCE decision there was never any question that the majority of the financial investment would be in Canadian hands. As such, the Commission focused on governance arrangements not on the source of funds. In contrast, Orascom will not limit itself to being an owner, but will act as a majority equity holder and operator. To allow this structure is to say that our foreign ownership rules permit non-Canadians to own it all.

1534   Orascom has supplied 100 per cent, or close to 100 per cent of the risk capital. Mr. Sawiris would not have made what he, himself, this morning called a "crazy investment" without being satisfied that he is in control. Control is the logical business outcome given the extent of Orascom's investment and involvement. That's why this can't be fixed. If Orascom agrees to any changes you seek to impose, it is because it will be satisfied it remains in control.

1535   As the Globalive structure is irretrievably broken, Globalive cannot be permitted to operate as a Canadian carrier.

1536   Mr. Chairman, you asked Telus and Rogers, when they appeared, what would they do in your shoes? The answer lies in Industry Canada's own AWS Policy Framework. Industry Canada contemplated this possibility and provided the way forward: the spectrum is to be forfeited and returned to Industry Canada.

1537   The AWS Auction Framework contemplates licence forfeiture in the event a bidder turns out to be ineligible to hold the licence. This is what should happen here. Industry Canada would then reauction the returned spectrum.

1538   In the case of the set-aside spectrum purchased by Globalive, that auction could be restricted to new entrants who participated in the 2008 auction, provided they were eligible. If no new eligible entrant steps forward to bid for the set-aside spectrum, Bell Canada is prepared to buy up to 50 per cent of it for up to 50 per cent of the price paid by Globalive.

--- Rires

1539   MR. BIBIC: Mr. Intven laughs, however, I think the reason this is in is we predicted that Mr. Sawiris would come here today and plea for dispensation for the rules on the basis that his significant investments would otherwise be down the drain, and what we are saying in this last paragraph is that may not be the case. There can be an auction, and if at the end of the day no one steps forward, we will solve part of the problem making sure that the investment doesn't go down the drain.

1540   Thank you for providing us with an opportunity to make these submissions, and we look forward to your questions.

1541   THE CHAIRPERSON: Thank you.

1542   Let me take you back to paragraph 17 of your presentation.

1543   I don't know what to make out of it. This is slightly different from the evidence I heard this morning. I heard this morning that Mr. Lacavera was the one who was going to bid on the spectrum when they found Orascom as a partner and to put, sir, together a credible bid -- bid.

1544   You here suggest that actually Michael O'Connor, an employer of Orascom, started the process and then AAL came on board only later on as a Canadian front?

1545   MR. BIBIC: No. I don't dispute that AAL went out before the auction and sought out some foreign partners, and eventually reached an agreement with Orascom. I'm in no position to dispute that testimony. I'm sure it's completely true.

1546   The point is that during the auction it is an employee of Orascom who dictated the auction strategy and who had all the decision-making authority over what to bid, where to bid, when to bid, when to pull out, and whether or not to stay in. And Rogers mentioned the same thing in their testimony. And this is all straight out of the investment agreement.

1547   THE CHAIRPERSON: Okay. Thank you.

1548   The other business, the point you have raised, this is outside the ordinary cost of business, you are absolutely right that's -- in the BCE case, with the vetoes that we discussed, were only for something that's done outside the ordinary business. So if you were to reword this agreement to make it so the veto rights to apply only outside the ordinary cost of business, then the various decisions that you walked up through, like selecting your handset supply also there, would they be in the ordinary cost of business or outside?

1549   MR. BIBIC: I would consider them to be within the ordinary course. The bind we are all in here is that even if you were to impose a change that said: Okay, the veto threshold will be increased, and now the vetoes will only apply to out of ordinary course matters, Orascom's cemented its control. It's dictated the technology, it's dictated, you know, handset supplier --

1550   THE CHAIRPERSON: Yeah.

1551   MR. BIBIC: -- in fact it wants to, we heard that, and it's dictated the brand, dictated the cities in which towers will be built. How does one undo all these decisions that have already been made?

1552   But putting that aside for a moment, technically speaking, the future for future similar decisions, there would be no veto over those, I would imagine.

1553   THE CHAIRPERSON: Okay. Thank you.

1554   Len?

1555   COMMISSIONER KATZ: Thank you, Mr. Chairman.

1556   Good afternoon.

1557   I'm not where you are yet when you state in the last paragraph, "...Globalive's structure is irretrievably broken", in fact, I'm a long way from it. But, at the same time, there are issues, obviously, and we talked about a lot of them, and we heard from Globalive on a lot of them, as well.

1558   I want to come back to the three pillars, as I think you called them, and I think Rogers earlier, as well, as a tripartite reference, and that is equity, debt, and some degree of operating influence, as well.

1559   Let's start with the debt. The fact that Orascom currently holds that debt is the concern that you have raised, and others have raised it, as well. But if that debt gets distributed, I'm assuming you would not have that problem.

1560   MR. BIBIC: And when would that take place? Would it take place before you provided approval?

1561   COMMISSIONER KATZ: No

1562   MR. BIBIC: Would it take place at some indeterminate future time?

1563   I think the longer this goes on, the more control there will be. So to say: Well, it will get fixed at some point in time, I don't think is an answer. It appears that it's going to be a struggle to get it fixed at some point in time, on top of that.

1564   COMMISSIONER KATZ: But if it got fixed, that would alleviate your concern, regardless of who owns that debt?

1565   MR. BIBIC: Well, it wouldn't be regardless of owned the debt, but if it was --

1566   COMMISSIONER KATZ: If it was a third party outside of Orascom's influence, I suppose.

1567   MR. BIBIC: Well, you would have to look at: Are there conversion rights in the debt? What kind of vetoes would the new financing institution have? There's a whole bunch of questions that the Commission would have to explore. So, in the abstract, I can't say that it necessarily would be satisfactory.

1568   COMMISSIONER KATZ: But the issue you are suggesting right now is there's 60-odd per cent of the equity, and some number significantly north of that on the debt, but if that debt was held by some other foreign entity or Canadian entity, subject to the concerns of control, obviously, as well, you would have less of a problem?

1569   MR. BIBIC: Right. If there had been third-party financing from the outset, we wouldn't be raising this issue today, you know, assuming that there weren't some nasty provisions in the debt instruments.

1570   COMMISSIONER KATZ: Okay. The fact that the equity is in the order of 60-odd per cent, is that a concern for you?

1571   MR. BIBIC: Well, I think the equity is 100 per cent, for the reasons I stated. Using the Commission's own precedent, CanWest, I think you have to give zero value. I don't say in a business sense, obviously, a value. Yak is obviously a valuable business. I say in the context of assessing the relative equity positions, the AAL wireline business ought to count for zero.

1572   So it's 100 per cent equity for the purposes of assessing foreign ownership in Orascom's hands. Now, if it was truly 65 per cent, I have seen situations with 65 per cent.

1573   COMMISSIONER KATZ: Would you not agree that, to the extent that Mr. Lacavera has signed the bond, that basically puts his ownership of that component in the hands of the enterprise, basically commits his personal wealth in there?

1574   MR. BIBIC: For the purposes of the way the Commission and CanWest went about assessing the relative equity positions, that wasn't the factor. The factor is: will those businesses truly be operated as one? And here they clearly won't be. In fact, there are mechanisms to ensure that they are kept separate.

1575   COMMISSIONER KATZ: There were but -

1576   MR. BIBIC: It's just an opportunity to say: Let's put the wireline business in, we will say that it's worth 35 per cent of the value of the entire enterprise, and we will say that the money that Orascom has put in is worth 65. That's all that happened here.

1577   COMMISSIONER KATZ: Okay.

1578   MR. BIBIC: It was an independent evaluation, as I understand it, the wireline business, and then whatever the number the independent evaluation spit out, it was deemed to be 35 per cent of the overall equity position of the entire structure.

1579   COMMISSIONER KATZ: Okay.

1580   The Chairman raised with you the reference to the "ordinary course of business" and, basically, I think I heard you say, that towers and network infrastructure will be part of the ordinary course of business.

1581   What would you consider to be not in the "ordinary course of business"?

1582   MR. BIBIC: The items that we indicated, for example, from the BCE situation: prepayment of debt, joint ventures, strategic alliances, those kinds of matters.

1583   COMMISSIONER KATZ: But anything to do with the day-to-day operations of the wireless infrastructure would not be a concern?

--- Sans microphone

1584   COMMISSIONER KATZ: Oh, yeah, we did. Okay, so it has been defined already, you are right, Mr. Chairman, okay, albeit in the broadcasting sense.

1585   Can you remind me what the conditions were on the option with regard to new entrants being able to sell their holdings in the spectrum that they acquire?

1586   MR. BIBIC: There was a five-year moratorium on selling spectrum to incumbent carriers.

1587   COMMISSIONER KATZ: Anything else? That was it?

1588   MR. BIBIC: I think that was it. Certainly, the forfeiture provision was contemplated in the event there was ineligibility. I believe new entrants are able to dispose of their spectrum to anyone other than incumbents, and it was a five-year moratorium on selling to incumbents. I don't know if that's what you are getting at. I can't remember all the rules.

1589   COMMISSIONER KATZ: I just wanted to know what they were, because I needed to be reminded. I'm sure our staff can do it as well, but I'm sure you are well aware of it, as well.

1590   MR. BIBIC: Well, those are --

1591   COMMISSIONER KATZ: Yeah.

1592   MR. BIBIC: That's what I remember.

1593   COMMISSIONER KATZ: Okay. I had one more question.

1594   There was a reference that you made to employees, on page 8, where you said that Orascom has a veto on remuneration of employees. Can you expand upon where you found that?

1595   MR. BIBIC: Sure. It wasn't on remuneration of employees, per se, but on remuneration calculated by reference to "income of profits". Those are the words in the documentation. We will find it.

1596   MS BARBER: It's in Schedule A, Part 2, subparagraph (e), which is the material contract provision, which reads:

"Enter into any material contract or arrangement with a value in excess of $5 million, or whereby any person would or might receive remuneration calculated by reference to income or profits of a Corporation." (As read)

1597   And it goes on.

1598   COMMISSIONER KATZ: Does the $5 million kick in for there, as well, or is that...?

1599   MS BARBER: I would read it that where the "or" is, it's "$5 million or where any person". So it's $5 million or if your remuneration's calculated by reference to income or profits.

1600   COMMISSIONER KATZ: Okay. Thank you.

1601   MR. BIBIC: Mr. Vice-Chairman, now, other elements that relate to employees, and I didn't put it in, but, for example, extended health and dental insurance contracts for up to 2,300 employees, which is what Globalive projects, would be over $5 million/$10 million. So conceivably there would be a veto there. I didn't bother putting it in for the sake of brevity, but there's another example where a veto might kick in with respect to employee matters.

1602   COMMISSIONER KATZ: Again, as long as it's outside the ordinary course of business, which this would not be. If it's employees, it's part of the business.

1603   MR. BIBIC: Well, under the structure currently drafted, it would capture this.

1604   COMMISSIONER KATZ: Yeah.

1605   My last question is on page 5 of your submission.

1606   You suggest in paragraph 20 that the only additional equity that will be coming in will be through Mr. Sawiris, since, you are saying, AAL is putting in their business -- and that's what they are putting into this thing -- so any additional equity will come from Mr. Sawiris. That presupposes that no other Canadian partner or entity would come in and invest in this enterprise.

1607   MR. BIBIC: That's one presupposition. The other one is that Mr. Sawiris would allow another Canadian investor to come in.

1608   Given the statements that I quoted at the top of page 6, one has to question whether or not there would be a willingness to do that. Don't know. Maybe there would be, but one has to question.

1609   COMMISSIONER KATZ: Thank you.

1610   Those are my questions, Mr. Chairman.

1611   THE CHAIRPERSON: Thank you.

1612   COMMISSIONER MENZIES: I'm a little perplexed by your comment regarding the fact that this was broken and it can't be fixed because they have already done what you view as bad things.

1613   I'm sure they can speak up for themselves, but it seems hyperbolic to me to say that, so help me understand where you would come from on that. Because they had spectrum, which they bought legitimately. They had approvals that were given legitimately to act the way they did. So where are you coming from on that? Or are you just using hyperbole to make a point?

1614   MR. BIBIC: No, I'm trying to make a serious point.

1615   Take the technology. A particular technology was chosen, and a particular vendor was chosen, Nokia Siemens. Perhaps AAL or Globalive actively sought out and chose Nokia Siemens, but, in that case, Orascom clearly had a veto. And if they didn't veto, it's because they were satisfied.

1616   Well, perhaps in this case it was Orascom who suggested Nokia Siemens. In which case, it's, you know, Orascom who positively decided that it would be Nokia Siemens.

1617   In either event, the technological path that this enterprise is down is fixed. Take the brand. Those decisions have been made. Orascom has a significant influence. Well, then, we are not going to undo or -- you know, Globalive is not going to undo the choice of brand because the Commission changes a veto structure or Board composition, that's what I'm trying to say.

1618   COMMISSIONER MENZIES: Okay. So what?

1619   MR. BIBIC: Well, this is the "so what?". Let me put it another way, maybe it will help.

1620   Orascom's put in absolutely all the money. Mr. Sawiris, as experienced as he is in business affairs, would he put in all the money in a venture as risky as this -- not my words, it's his words -- unless he were satisfied that he controlled, you know, that investment?

1621   Perhaps modifications will be imposed by the Commission, it's the typical way things are done, and I wouldn't be surprised if it were done here. What I'm suggesting is, if, after deliberating over those changes, Globalive comes back and accepts them, it's because Orascom is satisfied that it remains in control, even with the changes that the Commission has imposed.

1622   COMMISSIONER MENZIES: So the only decision we can make is to basically shut them down, that's your position?

1623   MR. BIBIC: Orascom and Globalive pursued this venture knowing from the very beginning that there was an eligibility issue, and if they turned out to be ineligible, the spectrum would be forfeited. The rules aren't being made after the fact --

1624   COMMISSIONER MENZIES: Okay, I just need you to -- how do you know that they knew from the very beginning?

1625   MR. BIBIC: Because in the AWS Policy Framework document issued by Industry Canada before the spectrum option was commenced, all the rules I'm mentioning were laid out.

1626   Every bidder was told that there would be an Industry Canada review of foreign ownership, as well as a CRTC review of ownership, and if a bidder who won and paid for a licence turned out to be ineligible, the licence would be forfeited.

1627   It's right there in the documents that were issued in 2007. It's page 29 of Industry Canada's "Licensing Framework for the Auction for Spectrum Licences for AWS and Other Spectrum". And I quote, Commissioner Menzies, page 29:

"In the event that a provisional licence winner does not, in the opinion of the department, comply with the Canadian ownership and control requirements, the department will require that the provisional licence winner make changes in order to become compliant." (As read)

1628   COMMISSIONER MENZIES: Right, that's Industry Canada.

1629   MR. BIBIC: No, but if the provisional winner fails to comply, then the licence will be forfeited.

1630   And elsewhere it says, and I quote it in my opening statement, at paragraph 6:

"The licensing regime recognizes the complementary nature and the division of responsibilities among Industry Canada, CRTC and the Competition Bureau." (As read)

1631   And then, in an Industry Canada circular, dated August 2007, page 4, section 8:

"Applicants are reminded that the CRTC has its own mandate under the Telecom Act in relation to Canadian ownership and control requirements for Canadian carriers." (As read)

1632   It was all there from the beginning.

1633   COMMISSIONER MENZIES: I see.

1634   I don't think I have any more questions.

1635   THE CHAIRPERSON: Thank you.

1636   My staff reminds me that I may have spoken a bit too hastily by suggesting we will meet next Wednesday, because we are to get the transcript of the in camera hearing, get it redacted and out to you, et cetera. I don't know what the time period is there.

1637   So let us think overnight, and tomorrow, at the end of the in camera hearing, we will announce and we will put it on the web as to when the date of the resumption is. Okay?

1638   I don't want to mislead anybody. We may have some technical problems, so let's work those out.

1639   So thank you very much, everybody. We will resume tomorrow morning in camera here at 9 o'clock.

1640   Thank you.

--- L'audience est ajournée à 1614, pour reprendre à huis clos le jeudi 24 septembre 2009 à 0900

   STÉNOGRAPHES

____________________      ____________________

Kristin Johansson      Jean Desaulniers

____________________      ____________________

Sue Villeneuve         Sharon Millett

____________________

Monique Mahoney

Date de modification :

2009-09-24