Ottawa-based Telesat revealed in its annual report this week that its Lightspeed satellite constellation project has been significantly delayed, potentially jeopardizing its authorization to operate in Canada and the United States.
The company has not yet secured the necessary financing for the satellite network, which aims to provide internet connections for commercial customers.
Back in August 2021, the Canadian government announced a $1.44 billion investment into the Lightspeed project. The agreement-in-principle resulted in financing to Telesat through a $790-million repayable loan and a $650-million preferred share equity investment, with dividend returns.
The Liberal government said at the time it will also receive “warrants that can be converted into common shares in Telesat so that Canadians can share in the financial upside from Telesat Lightspeed.”
Telesat Lightspeed is a plan to bring broadband internet to commercial operators to re-sell to customers, along with LTE and 5G connectivity for rural areas starting in 2024, connecting nearly 40,000 households (works out to $36,000 per household). But that timeline announced nearly two years ago appears to be in jeopardy.
Originally, Telesat had planned to secure funding for a scaled-back version of the constellation by the end of 2022, but the COVID-19 pandemic disrupted its agreement with prime contractor Thales Alenia.
CEO Dan Goldberg expressed optimism during an analyst call, stating that progress was being made with various parties and that they hope to provide clarity on the Lightspeed financing situation soon, reports The Logic.
However, Telesat’s Lightspeed project has missed crucial regulatory milestones, which mandate the launch of specific percentages of satellites by certain deadlines. Currently, the company has only one prototype satellite in orbit.
In contrast, Elon Musk’s SpaceX has launched 4,217 Starlink satellites into space to date, with 3,914 currently in low-Earth orbit, according to astrophysicist and satellite tracker Jonathan McDowell. Starlink satellite internet is available directly to customers and currently, there’s a 50% off hardware sale for Canadians.
According to its annual report released on Wednesday, Telesat will not meet the required milestones in Canada and plans to request an amendment.
In the United States, Telesat has permission for 117 satellites under its original plan, but now seeks approval for launching 1,671 satellites. The company anticipates that the approval for the additional satellites will depend on the performance of the initial batch.
Telesat requires the Federal Communications Commission (FCC) to approve its amended plan, grant a waiver for an extension, and approve its plan for the enlarged constellation. If Telesat loses its authorization and is denied access to the US market, it could be prevented from offering its services in the country, disclosed the company in its annual report.
Despite booking an operating income of over $296 million in 2022, Telesat reported a net loss of more than $80 million after interest, taxes, and foreign-exchange impacts. This contrasts with the company’s net income of $155 million in 2021 and almost $245 million in 2020.
