Canada Investing $1.44 Billion in Telesat for High-Speed Satellite Internet

The federal government says it will be investing $1.44 billion into Ottawa-based Telesat and its high-speed satellite internet solution, known as Telesat Lightspeed.

Telesat Lightspeed is the company’s low Earth orbit (LEO) satellite constellation, expected to provide broadband internet to rural areas of Canada, by supplying signals to commercial providers to then resell to consumers. This business model is unlike Elon Musk’s SpaceX LEO offering known as Starlink, which offers direct sales to consumers.

According to the federal government on Thursday, an agreement-in-principle will see financing to Telesat through a $790-million repayable loan and a $650-million preferred share equity investment, with dividend returns. The government 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.”

“With the funding announced today and other financing sources already in place, including the previously announced investment by the Government of Quebec, Telesat now has arrangements for approximately $4 billion in funding for the program. We expect to secure in the near term the remaining financial commitments required to fully finance Telesat Lightspeed,” said Daniel S. Goldberg, President and CEO, Telesat, in a statement.

Telesat Lightspeed is expected to bring broadband internet, along with LTE and 5G connectivity for rural areas starting in 2024, connecting nearly 40,000 households (at a cost of $36,000 per household). The federal government says it plans to connect all Canadian households with high-speed internet by 2030, including numerous Indigenous communities in the north.

Telesat says it will commit to investing in Canada, saying it will spend $3.6 billion in capital expenditures, over $1.6 billion in operating expenses over the next 15 years, maintain up to 700 jobs, while also support 100 co-op jobs for post-secondary students and also $800,000 in scholarships.

As for Telesat’s satellites, they won’t be made in Canada. The company previously announced its satellites would be made by French-Italian space hardware manufacturer, Thales Alenia Space, at a contract of $3 billion USD.

“Today’s announcement is about building a strong future for Canada. It strengthens our position as a global leader in the technologies of tomorrow and helps ensure that all Canadian communities have access to the critical infrastructure that is high-speed Internet,” said Chrystia Freeland, Deputy Prime Minister and Minister of Finance, in a statement.

So far, Telesat has two satellites in space, compared to the 1,700 Starlink satellites launched by SpaceX. Telesat satellites are larger and heavier (it will cost more to launch), plus will orbit higher above Earth versus Starlink satellites, servicing a larger area with a smaller constellation of 298 satellites.

Starlink plans to have up to 12,000 satellites in orbit, with frequent launches of 60 at a time thanks to parent company SpaceX’s rockets. Telesat has plans to launch its first satellites through Amazon’s Jeff Bezos and his rocket company, Blue Origin.

Earlier this month, SpaceX said it now has 90,000 customers in 12 countries, including Canada. The cost of Starlink is $649 CAD for a satellite dish and wireless router, plus a $129 CAD monthly service fee. Customers are seeing download speeds well over 200 Mbps.

If the federal government were to invest $1.44 billion into SpaceX’s Starlink, that would allow for 2,218,798 satellite dishes for homes at retail pricing, for a product that’s already in operation. But alas, SpaceX and Starlink are not based in Canada.

Here’s a good primer on Telesat versus SpaceX Starlink, despite both targeting different markets.

Last week, the federal government and Ontario announced a joint $148 million investment into Telesat Lightspeed to bring high-speed connectivity to Northwestern Ontario.