Telesat, Canada’s leading geostationary satellite operator, is on the brink of securing significant government funding to support its ambitious low Earth orbit (LEO) broadband constellation, known as Lightspeed. CEO Dan Goldberg announced on August 14 that the company expects to finalize agreements for funding that would cover more than half of the $3.5 billion budget for Lightspeed within the next couple of weeks.
Strong Government Support
The Canadian federal government has already shown substantial support for the Lightspeed project, agreeing to terms in March for a loan worth 2.14 billion Canadian dollars ($1.6 billion). This funding will contribute to the deployment of 198 satellites being built by Canadian manufacturer MDA, with launches scheduled to begin in 2026 via SpaceX. Additionally, Goldberg anticipates that the government of Quebec will finalize an additional 400 million Canadian dollars in funding by the end of the summer.
An unnamed vendor is set to provide another 400 million Canadian dollars, bringing the total government and vendor support to about 2.94 billion Canadian dollars. Telesat plans to cover the remaining $1.3 billion through company equity.
Investment and Production Ramping Up
Since initiating development in 2020, Telesat has already invested 980 million Canadian dollars into the Lightspeed project. In the first half of 2024 alone, the company injected approximately 334 million Canadian dollars, with plans to invest up to 1.4 billion Canadian dollars throughout the year as production accelerates. Goldberg confirmed that the Lightspeed satellites are set to begin production in the coming months, with MDA having secured 90% of the necessary suppliers for the program.
Financial Performance and Strategic Adjustments
Despite the progress with Lightspeed, Telesat’s financial performance has faced challenges. The company’s adjusted EBITDA dropped 23% year-on-year to 214 million Canadian dollars in the first half of 2024, while revenues declined 17% to 305 million Canadian dollars when adjusted for foreign exchange rates. These declines are attributed to the struggles of Telesat’s geostationary satellite business, which has been impacted by the shrinking satellite TV market.
Looking ahead, Telesat faces potential challenges with a contract renewal for broadcast capacity on its Nimiq 5 satellite, set for early October with Echostar. The recent collapse of Canadian rural connectivity provider Xplore, which accounted for about 3.6% of Telesat’s 1.1 billion Canadian dollar contractual backlog, is also expected to affect the company’s business.
Nevertheless, Telesat projects total revenue for 2024 to be between 545 million and 565 million Canadian dollars, with adjusted EBITDA between 340 million and 360 million Canadian dollars. To strengthen its financial position, Telesat is considering selling a “non-core business” this year, which could provide a small but valuable influx of capital.
Competitive Positioning and Market Potential
Goldberg emphasized that Telesat’s Lightspeed project has garnered approximately 750 million Canadian dollars in take-or-pay commitments from enterprise and government customers, reflecting strong market interest in LEO technology. He noted that while competitors like Starlink primarily target consumer broadband, Lightspeed’s focus on enterprise and government customers from the outset provides a strategic edge.
Goldberg expressed confidence in Lightspeed’s potential, citing the increasing traction of LEO constellations and the compelling value proposition Telesat brings to the market. With government backing and strategic positioning, Telesat is poised to be a significant player in the evolving LEO satellite broadband landscape.
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