Feds, Quebec Finalize $2.54B Loan to Telesat for Satellite Internet

Telesat has finalized $2.54 billion in funding agreements with the federal and Quebec governments for its Telesat Lightspeed Low Earth Orbit (LEO) satellite network.

The funding will support the global Telesat Lightspeed project, including satellite manufacturing, launch vehicles, ground stations, and operational support systems.

“Our government is focused on Canadians and today’s announcement with Telesat and MDA is our commitment in action. Designed, manufactured, and operated in Canada – the Telesat Lightspeed satellite network will be the largest in Canadian history – creating thousands of jobs, growing our economy, and getting high-speed internet to Canadians. We’re putting Canada at the forefront of opportunity, with a fair chance for everyone to succeed,” said Prime Minister Justin Trudeau in a statement on Friday.

The federal government is providing a $2.14 billion loan at a floating interest rate of 4.75% with a 15-year term. The loan includes warrants for 10% of Telesat LEO’s common shares, based on a $3 billion USD equity valuation. Quebec is contributing a $400 million loan under similar terms, with warrants for 1.87% of shares. This is money from taxpayers at stake right now.

“We are pleased to conclude these funding arrangements with the governments of Canada and Quebec as we make strong progress on the build-out of the revolutionary Telesat Lightspeed constellation, the largest space program in Canada’s history,” said Dan Goldberg, President and CEO of Telesat, in a statement to iPhone in Canada.

The feds say Ottawa-based Telesat will be investing $4.4 billion in Canada’s economy over the next 15 years, create 200 post-secondary co-op jobs and offer $1.6 million in scholarships. Telesat has construction underway on a 185,000-square-foot expansion at MDA’s satellite manufacturing facility in Sainte-Anne-de-Bellevue, Quebec.

Telesat plans to launch the first Lightspeed satellites in mid-2026, launched by SpaceX (which has its own Starlink satellite internet network). The company has increased its Canadian workforce by 33% in the past year and expects to spend up to $1.4 billion on the project in 2024.

Telesat’s journey has been ongoing, with the federal government investing $1.44 billion in 2021 through a $790-million repayable loan and a $650-million preferred share equity investment. Quebec also contributed $400 million to Telesat, originally a crown corporation before Bell acquired it in 1998. Bell sold Telesat in 2007 for $3.25 billion.

Now, Telesat satellite internet won’t be sold directly to Canadians like SpaceX’s Starlink. Instead, the service will be provided to companies to resell to consumers. Let’s see how this project goes, folks.