OTTAWA - The federal government is appealing a court finding that it illegally intervened to overrule a regulatory body's decision to block the startup of the Wind Mobile service because of its extensive financial backing by a foreign company.

The announcement Tuesday by Industry Minister Tony Clement is something of a reprieve for Globalive, which had been given 45 days to comply with Cqanada's foreign ownership requirements after a Feb. 4 ruling by the Federal Court.

The court ruled that the federal cabinet had overstepped its powers when it overruled the Canadian Radio-television and Telecommunications Commission in late 2009.

The CRTC, a semi-autonomous federal agency, had ruled Globalive didn't meet Canada's requirement that telecommunications companies be Canadian controlled. Clement says the government disagrees with the CRTC's conclusion.

"Based on our interpretation of the Telecommunications Act, Globalive is Canadian, it is managed by Canadians, its day-to-day business operations are managed by Canadians, its board of directors is Canadian enough," Clement said in making the announcement.

"We believe this is not a case of allowing a foreigner in to compete."

Clement said the government will likely seek an extension of the 45-day grace period if necessary while the appeal process is ongoing.

The issue of Globalive was thrown into limbo earlier this month after the court ruled the government lacked the basis in the telecom act to overrule a decision by the CRTC that the company was essentially foreign owned and controlled.

The Toronto-based upstart is largely financed by Egypt-based Orascom directly and through loans, but the company has said its ownership structure and other criteria will prevent control of Globealive by a foreign company.

Clement said Tuesday the appeal of the latest decision will allow Globalive to keep operating.

Anthony Lacavera, chairman of Globalive, said he was pleased with Clement's move.

"It obviously brings certainty to our operation. We are still assessing what action, if any, Globalive will take. We're not clear on that. This is a very unusual situation, obviously."

Lacavera said Orascom owns 65 per cent of Globalive and holds the majority of Globalive's debt but that the company will enhance competition in the Canadian wireless communications market.

"We continue to believe it's the ambiguity in these rules that is really costing Canadians a lot. It discourages investment," Lacavera said.

The government indicated two years ago it intended to allow greater foreign competition into Canada's telecom sector, which would have allowed new players like Globalive greater access to start-up capital from foreign sources.

But so far the Conservatives haven't acted to change the foreign-ownership restrictions in the telecommunications act and Clement insisted Tuesday that his actions on Globalive has nothing to do with the broader policy direction.

He said he performed a "rigorous review" of Globalive's structure, capitalization and operations and came to the conclusion it qualifies as Canadian under existing law.

NDP critic Brian Masse said that patently was not the case, blaming the government for creating a situation where the issue may take years to resolve, as appeals stretch all the way to the Supreme Court.

The legal limbo makes it less likely that competition will flourish in Canada, he said, defeating the government's stated motivation of creating greater choice and lower costs for customers.

"There's was no good solution after the minister overturned (the CRTC)," he said.

"What's going to happen now is there's going to be a cloud over this industry and all the competitors until the situation reaches another legal hurdle, and I'm not sure consumers are going to benefit at all."

With more than 250,000 Canadians signed on to Wind's cellphone service, the government should have asked Globalive to restructure its ownership structure, Masse said.

Clement said he has not rejected the idea of opening the entire industry up to foreign investment, but said the government wasn't yet ready to outline its plans.

Last May, the minister outlined three options open to the government -- removing all restrictions, increasing the limit of foreign investment from the current 20 to 49 per cent or lifting restrictions for carriers with less than 10 per cent market share.

Though initially an Egyptian company, Orascom itself has seen a shift in the nationality of its ownership. Last October, Russia's second-largest wireless provider, VimpelCom Ltd., and Weather Investments, majority owner of Orascom, announced a merger that would see the combined company become the world's fifth-largest mobile telecommunication service provider.

Weather, the investment company headed by Egyptian telecom mogul Naguib Sawiris, owns 51.7 per cent of Orascom Telecom and all of Italy's Wind Telecomunicazioni SpA, both of which are headed by Sawiris.