Telesat close to securing government funding for Lightspeed

TAMPA, Fla. — Telesat expects to finalize government funding covering more than half of the $3.5 billion budget for its planned low-Earth-orbit (LEO) broadband constellation “in the next few weeks,” CEO Dan Goldberg said Aug. 14.

As Goldberg said during a press conference with investors on financial results, Canada’s leading geostationary satellite operator has good relations with the governments of Canada and Quebec and sees no major obstacles to completing the transaction.

In March, the federal government agreed to terms on a C$2.14 billion ($1.6 billion) loan to support the 198-satellite Lightspeed constellation being built by Canadian company MDA for SpaceX launches scheduled to begin in 2026.

Goldberg said he expects the Quebec government to finalize the C$400 million in financing by the end of the summer.

Another C$400 million is coming from a supplier that Telesat declined to name. Telesat plans to cover the remaining Lightspeed costs, worth about $1.3 billion, through equity in the company.

Spending at the speed of light

Telesat has invested C$980 million in Lightspeed since development began in 2020.

The company invested about C$334 million in Lightspeed in the first half of this year and expects to inject C$1.4 billion into the program by 2024 as it ramps up production.

The Lightspeed satellites “will be built in the coming months,” Goldberg said during an earnings conference call, after MDA secured 90% of its suppliers for the program.

Meanwhile, Telesat’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) fell 23% year-over-year to C$214 million in the first half of 2024.

Revenue fell 17% to C$305 million — after adjusting for currency — as Telesat’s geostationary business suffered from declining satellite TV viewership.

Goldberg said Telesat’s Nimiq 5 satellite capacity contract will be renewed in early October with Echostar, which is facing cost pressures following its merger with sister company Dish Network.

He added that the collapse of Canadian rural connectivity provider Xplore, a customer representing about 3.6% of Telesat’s C$1.1 billion contract portfolio, will also impact the company’s business.

Telesat still expects full-year 2024 total revenue to be between C$545 million and C$565 million, and adjusted EBITDA to be between C$340 million and C$360 million.

To bolster finances, Goldberg said the company is considering raising a small amount of revenue from the sale of what he described as “non-core businesses” this year.

The future at the speed of light

Goldberg pointed to about C$750 million in take-or-pay commitments from corporate and government customers to Lightspeed that Telesat does not include in its revenue portfolio.

“There is clear confirmation that the customer community is very receptive to LEO,” he added.

“We see how much popularity Starlink is gaining, and we think we’re bringing something really compelling to the market.”

Telesat says Lightspeed’s early focus on serving enterprise and government customers will help the company gain an advantage over Starlink, which is designed primarily for consumer broadband access, as well as OneWeb and other LEO constellations currently in the works.

Related