Reversing an earlier CRTC decision, the federal cabinet has ruled upstart cell phone player Globalive Communications meets Canadian foreign ownership rules.

Industry Minister Tony Clement decided to ‘vary’ an October CRTC decision to deny Globalive a domestic carrier licence over its Egyptian financial backing.

Clement argued that, despite Cairo-based phone giant Orascom Telecom Holding controlling most of Globalive’s equity and debt, its corporate organization chart complies with domestic foreign ownership rules as Canadians control 66 2/3% of the holding company’s voting shares and the Egyptian parent nominated only four or 20% of its board members.

‘All we have done is, we believe, interpreted the law in the appropriate and proper, correct, way, that Globalive, when you look at the facts on the ground, Globalive meets those Canadian ownership and control requirements,’ Clement concluded.

To get a green light from the federal cabinet, Globalive was not compelled to dilute Orascom’s ownership or have the Egyptian parent withdraw. Clement instead ordered no changes to Globalive’s corporate structure and shareholder agreement with the Egyptian parent.

The decision to let Globalive launch its Wind Mobile branded service in Canada has the potential to rewrite domestic ownership rules for Canadian phone, broadcast and cable companies, industry players warned.

‘We do have concerns about the precedent that might be established here, and are clearly not pleased that this seems to have a foreign ownership implication,’ Stephen Waddell, national executive director of ACTRA, said Friday.

The federal ruling, while guided by the Telecommunications Act, has potential spillover implications for the broadcast sector as Canwest Global Communications Corp. will apply to the CRTC to enable U.S. bondholders to swap debt for equity in the restructuring broadcaster.

Canwest Global faces a similar foreign ownership test to that placed on Globalive as it attempts to convince the regulator it will remain in Canadian control as its destiny falls into the hands of U.S. bondholders after it defaulted on its debt.

Canada’s three incumbent wireless providers, Rogers Communications, Telus Corp. and Bell Canada, which strongly opposed the Globalive bid to enter the Canadian market, were cautious in their responses to the decision, especially as it aims to spark competition and lower prices for consumers.

Bell in a statement expressed disappointment, stating ‘we think Globalive quite clearly does not meet the requirements for Canadian control.’

Telus regulatory affairs chief Michael Hennessy went further on his Twitter page: ‘If Wind is Canadian, then so was King Tut.’

Globalive, for its part, was ecstatic over the fed’s ruling.

‘Wind Mobile will change the shape of the industry in Canada,’ Globalive chairman and CEO Anthony Lacavera told a Toronto press conference Friday.