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Telesat zeros in on Gatineau space for LEO satellite operations facility

April 1, 2024

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Telesat is close to finalizing a lease on a new facility in Gatineau that will employ more than 300 people and serve as the operations centre for its next-generation Lightspeed satellite constellation, the firm’s CEO says. In an interview with Techopia on Monday afternoon, Dan Goldberg said Telesat has zeroed in on a location across the Ottawa River from its Elgin Street headquarters. Telesat will be the sole occupant of the space, which will operate 24 hours a day as the control hub for the company’s low-Earth-orbit satellite network. “We’re negotiating with the owners now,” Goldberg explained. “We expect to have that done pretty quickly.” The first satellites in the constellation, dubbed Lightspeed, are expected to start undergoing beta testing in June 2026 and enter full service toward the end of the following year. It’s the latest signal that work on the US$3.5-billion project is shifting into high gear as Telesat tries to play catchup in the burgeoning low-Earth-orbit (LEO) satellite space. The firm’s LEO satellites, which will be manufactured at a Montreal-area facility by Canadian aerospace giant MDA, will orbit about 1,000 kilometres above the Earth’s surface, much closer than traditional satellites. That allows 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. However, Lightspeed is just one of several LEO projects now on the go as competitors such as SpaceX’s Starlink network and Amazon’s Project Kuiper – backed by billionaires Elon Musk and Jeff Bezos – are also jostling for pole position in the race to become the market leader. Starlink is already in operation, and Kuiper Systems launched two prototype satellites last fall. Telesat, meanwhile, stumbled out of the gate with its own LEO initiative. When the project was unveiled more than three years ago, the company said it expected the first Lightspeed satellites to be launched in 2024. But pandemic-fuelled supply-chain disruptions and soaring costs forced the company to revise its timeline, and Telesat struggled to secure financing for the project, which then had an estimated US$5.5-billion price tag. Telesat changed course last year, severing ties with its original partner, Franco-Italian manufacturer Thales Alenia Space, and turning to MDA to manufacture the satellites in a move that’s expected to save the company US$2 billion in total capital costs.

Feds to ante up $2.14B

But there was still the question of funding – an issue that now also appears to be resolved. On Monday, Telesat announced the federal government has agreed to lend the company $2.14 billion in Canadian currency, or about US$1.6 billion, to help cover Lightspeed’s costs. Telesat will match those funds, with about US$300 million coming from vendors to help finance the balance. Goldberg said the Quebec government is also expected to chip in additional capital. Meanwhile, the senior lenders that were part of the conditional financing arrangement when Thales Alenia Space was the lead contractor – Export Development Canada and French export credit agency Bpifrance – are no longer involved. Goldberg called the new deal with the federal government a “genuine win-win-win,” noting it’s expected to save Telesat hundreds of millions of dollars over the life of the project. “Even in a higher interest rate environment, we’re still saving $750 million U.S. dollars in borrowing costs,” he said. “It’s a great outcome.” With the money and manufacturing blueprint now in place, Lightspeed appears ready for takeoff. Goldberg told financial analysts last week Telesat intends to add more than 240 workers to its 500-person head count in 2024, with most of the new hires devoted to the LEO project. On Monday, the company said the “vast majority” of the additional employees will be located in Ottawa as Telesat “significantly” expands its technical facilities in the National Capital Region.

Revenues projected to fall in 2024

Goldberg understands what his company is up against battling the likes of SpaceX and Amazon for market share. Telesat said last week it expects its revenues to fall by about 20 per cent this year compared with 2023 as more customers jump ship to Starlink when their existing contracts with the Ottawa firm expire. “We’re later than we wanted to be (with Lightspeed),” Goldberg conceded on Monday. “COVID was a real kick in the teeth for us, but it landed us I think in a better place at the end of the day because we regrouped and ended up with MDA and this $2.7 billion US in savings. “But the market needs Lightspeed today for sure. Will it need Lightspeed when we’re in service? We’re convinced that it will, which is why we’re doing it. But we’re definitely feeling some competitive pain from Elon and Starlink because there is this migration (to LEO).” Still, Goldberg says he remains bullish on Lightspeed’s long-term prospects. He told analysts last week Telesat’s technology will offer customers such as airlines and cruise ships more “flexibility” and the “ability to concentrate capacity at ports and on key shipping lines.” On Monday, the CEO reiterated his belief that there will be plenty of space in the LEO orbit for Telesat and its competitors. “The market’s huge and it’s growing fast,” he said. “No one is going to dominate this entire market. Enterprise customers in particular want a diversity of suppliers. I think all of those things give us great confidence that we’re going to be really successful.”