Feds spending $1.44B on Telesat’s advanced low earth orbit satellites

The federal government is planning to pour $1.44 billion into Telesat Holdings Inc., it announced Thursday, which intends to connect Canadian communities to broadband internet using an advanced low earth orbit (LEO) satellite constellation called Telesat Lightspeed. Through the combination of a $790 million loan with a 20-year term and a $650 million preferred share equity investment -- through which it will receive a dividend and warrants that can be converted into common shares -- its investment will support “the future of connectivity for rural and remote communities,” the government said in a release. The money “will help give all Canadians access to high-speed internet and maintain Canada’s leadership in the new space economy.” Telesat Lightspeed bills itself as the “largest space program ever conceived in Canada.” Its network will initially comprise 298 “highly advanced satellites with next-generation technologies to deliver multiple Gbps speeds and fibre-like connectivity everywhere in Canada and across the globe,” the company said in a separate release. “The Government of Canada’s investment in Telesat Lightspeed underscores the program’s transformational ability to bridge the digital divide, position Canada at the forefront of the burgeoning New Space Economy, and deliver sustained and high-quality job creation and economic growth in Canada,” Telesat president and CEO Dan Goldberg, stated. Telesat Lightspeed is expected to connect 40,000 households in rural and remote regions to broadband internet and LTE and 5G starting in 2024, according to the government’s announcement, helping the feds reach their goal of connecting all homes in Canada to high-speed internet by 2030. Telesat expects to be able to provide capacity to Canada’s far north in 2024, the government release stated, noting that LEO technology “is expected to be the only economical way to provide advanced high-speed broadband and LTE and 5G connectivity to the hardest-to-reach rural and remote communities in the next several years.” The government said better service offerings made available in other regions as well, “where current speeds struggle to meet the demands of an increasingly digital world, and it will improve the company’s service for business clients in industries like air transport and shipping.” Thursday’s announcement makes for total funding arrangements of approximately $4 billion, the company said, adding that it expects to secure, “in the near term,” the rest it needs to fully finance Telesat Lightspeed -- which it anticipates will come primarily from debt financing “from certain export credit agencies, with whom Telesat is in advanced discussions.” That $4 billion includes roughly $1.7 billion of cash from Telesat itself and $400 million from Quebec. Last week, the province of Ontario announced a five-year partnership with Telesat worth $109 million, providing for a dedicated capacity pool at reduced sale rates for internet service providers (ISPs), including Indigenous-owned and operated ISPs, and mobile network operators. In July 2019, the Liberal government announced an earlier spending commitment to Telesat, being an investment of $85 million. At the time of that announcement, it was said Telesat should be serving the far north by 2022, according to a memorandum of understanding (MOU) with the company -- which is not legally binding -- and providing service to “all of Canada” from its constellation by mid-2023. Telesat, which announced in November 2020 it was restructuring and going public, then formalized a $600 million deal with the federal government as well -- previewed in a memorandum of understanding in 2019. As part of the new $1.44 billion investment deal, the government said Telesat has committed to investing $3.6 billion in capital expenditures in Canada, spending over $1.6 billion on Canadian operating expenses over the next 15 years, maintaining up to 700 jobs, and offering 100 co-op jobs and $800,000 in scholarships to post-secondary students with a focus on women in STEM programs. Telesat brokedown the capital expenditure promise further, saying it will commit to spending $1 billion in Canada for its initial Lightspeed constellation at the lesser of $2.6 billion or 50 per cent of certain capital expenditures for its subsequent constellation, “with incentives for additional Canadian investment in the subsequent Lightspeed constellation.” In February, Telesat announced it’s partnering with French-Italian company Thales Alenia Space as its prime contractor for the build of its constellation looking to a 2023 launch date. If Telesat can meet certain operational performance goals, it may benefit from incentives such as unspecified loan forgiveness under the new investment, a spokesperson said during a technical briefing held by the department of Innovation, Science and Economic Development (ISED) following the announcement Thursday. Telesat is not the only company working to connect industry workers and communities in Canada, particularly in the north, to broadband internet. On Wednesday, London, England-based LEO communications company OneWeb and BCE Inc. subsidiary Northwestel -- said to be northern Canada’s largest telecommunications provider -- announced they’ve signed a memorandum of understanding to connect remote mines, businesses, and governments throughout the north with OneWeb’s LEO backbone. In 2020, Northwestel launched a three-year initiative to improve broadband services for residents, governments, and businesses using fibre-to-the-home and LEO technologies through funding from the CRTC and its own investments. Telesat had reportedly bid to acquire OneWeb at one point in 2020, supported by the Canadian government, but was beat by a consortium including the U.K. government and Indian mobile network operator Bharti Global Limited. Reporting by Hannah Daley at hdaley@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca

Feds spending $1.44B on Telesat’s advanced low earth orbit satellites

News | August 12, 2021

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Feds spending $1.44B on Telesat’s advanced low earth orbit satellites

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