The Canadian Radio-television and Telecommunications Commission ruled today that aspiring wireless carrier, Globalive, does not meet the legal requirements to provide cell phone services in Canada.

In making its decision, the CRTC looked at the influence of Egypt-based Orascom Telecom Holding, which owns a 65.1% stake in Globalive. The Telecommunications Act provides that a telecom carrier may not operate in Canada unless it is controlled, in law and in fact, by Canadians.

“Despite the fact that Globalive made significant structural changes to reduce its dependence on Orascom, there were other factors that, taken together, led the Commission to conclude that Globalive does not meet the statutory test,” the regulatory body said in a statement.

In addition to holding a majority stake in Globalive, Orascom owns the ‘Wind’ brand name that the new carrier intends to use, and holds the overwhelming majority of Globalive’s debt.

The CRTC did set out a list of theoretical changes the company could make to bring itself into compliance with the Telecommunications Act rules. These could include changes to the board of directors, liquidity rights, and the threshold for veto power.

Globalive has already invested heavily in the Canadian market and will almost certainly try to overcome the regulatory barrier, according to telecom analyst, Carmi Levy.

“They will look at re-jigging their organizational structure, possibly seeking additional Canadian-based investment and re-approaching the CRTC at some future point in time,” he said.

In the mean time, Canadians will have one less choice in terms of wireless providers. So much for the plan to increase competition.