Weeks after announcing it was poised to launch production of its multibillion-dollar satellite constellation, Telesat says it will partner with Elon Musk’s SpaceX to get the devices into orbit.
The Ottawa-based satellite communications firm said this week it has contracted 14 launches of its upcoming Lightspeed network on Space X’s Falcon 9 orbital rocket. Each launch will see the Falcon 9 deliver up to 18 of Telesat’s next-generation satellites into space.
Financial terms of the deal were not disclosed.
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The two companies have worked together before. Telesat previously launched its Telstar 19 Vantage satellite on the back of a SpaceX Falcon 9 rocket back in 2018.
And while SpaceX’s global Starlink communications network will also compete indirectly with Telesat’s new constellation, Telesat says it is going after enterprise customers such as airlines, cruise ship operators, governments and telecom companies rather than the direct-to-consumer market targeted by Starlink and other competitors like Amazon’s Kuiper.
“SpaceX has been a trusted and effective launch provider to Telesat on our geostationary satellite programs, and I am delighted that they will be supporting us with their highly reliable Falcon 9 rocket to deploy the Telesat Lightspeed constellation, the most ambitious program in Telesat’s 54-year history,” Telesat president and CEO Dan Goldberg said in a statement.
“Given the dedication and professionalism of the SpaceX team, and their outstanding track record of reliability and demonstrated high launch cadence, I have the utmost confidence that they will be an outstanding partner in helping us bring Telesat Lightspeed into service in a timely and low-risk manner.”
The agreement follows Telesat’s 2019 deal with Jeff Bezos’s Blue Origin to send the Lightspeed low-Earth-orbit satellites into space on the back of Blue Origin’s reusable, heavy-lift New Glenn rocket, which was originally slated for its maiden voyage in 2021.
The New Glenn rocket has yet to get off the ground. But Goldberg told CNBC this week the agreement with Blue Origin is still in place, adding he believes New Glenn will “in the fullness of time be a great launch vehicle.”
Telesat says the first Lightspeed satellites are expected to be deployed in 2026, with global service commencing in 2027. Lightspeed’s initial launch was originally targeted for next year but was delayed after supply-chain disruptions and rising material costs ratcheted up the estimated price tag, forcing the Ottawa-based company to delay production as it sought additional financing.
This week’s announcement comes less than a month after Telesat confirmed it was all systems go for Lightspeed following a deal with a new manufacturer that’s expected to save the Ottawa firm up to US$2 billion in capital costs.
Canadian aerospace firm MDA, which was already contracted to provide phased array antennas for Lightspeed, has agreed to build the entire constellation. The Brampton-based company, which was formerly known as MacDonald, Dettwiler and Associates and is best-known for creating the Canadarm, replaced European aerospace giant Thales Alenia Space as the lead supplier.
In a conference call with analysts last month, Goldberg said MDA’s cutting-edge digital beamforming antenna technology can deliver better signal quality than Thales Alenia’s system for a lower price because the Canadian-engineered satellites will be smaller and cheaper to manufacture.
The total capital cost of the Lightspeed project, which consists of 198 LEO satellites, is now expected to be in the range of US$3.5 billion.
In addition to the estimated US$2 billion in capital cost savings from switching to MDA, Telesat said it also expects “substantial savings due to significantly reduced financing costs relative to the company’s prior plan.”
Telesat said it has lined up about US$2 billion in funding from its federal and provincial government partners, financing that is contingent on conditions such as completion of due diligence and the conclusion of definitive agreements.
That money, combined with additional cash from vendors and its own reserves, will pay for the first 156 satellites, Goldberg said, enough to give the company “full global coverage.”
The remaining 42 satellites will be funded from existing cash flows once Lightspeed gets up and running at full speed, he added. The company expects to start launching the satellites in mid-2026, with global service scheduled to begin by the end of 2027.
The LEO satellites will be located about 1,000 kilometres above the Earth’s surface, much closer than traditional satellites. That will allow for lower latency, or lag time, which is expected to translate into better wireless service for customers in remote areas and mobile locations such as airliners and cruise ships.
Last month’s announcement of the new deal with MDA has sent Telesat’s stock price soaring.
Since closing at $11.39 on Aug. 10, the firm’s shares have more than doubled in value. They were trading at $23.16 on the Toronto Stock Exchange late Wednesday morning.
