Telesat ‘making headway’ on financing for Lightspeed LEO satellites, CEO says

Dan Goldberg Telesat
Dan Goldberg is CEO of Ottawa-based Telesat. File photo

Telesat chief executive Dan Goldberg says the Ottawa firm is still in talks with export credit agencies aimed at securing financing for its next-generation communications satellites.

“I think we’re making headway,” Goldberg told analysts Thursday morning on a call to announce the company’s first-quarter financial results.

Questions about the future of the project, dubbed Telesat Lightspeed, have increased in recent months as supply-chain disruptions and soaring costs forced the company to revise its timeline for launching the low-Earth-orbit (LEO) satellites.

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When the project was originally unveiled more than two years ago, Telesat said it expected the first Lightspeed satellites to be launched in 2024. 

On Thursday, Goldberg suggested the launch might not happen until 2026 as Telesat negotiates with a pair of export credit agencies, Export Development Canada and French agency Bpifrance, to land the necessary funding to cover the project’s estimated price tag of US$5.5 billion.

Telesat has said it has about US$4 billion in financing already in place.

Meanwhile, Goldberg said Telesat is not seeing any “incremental inflationary pressures” that could further drive up Lightspeed’s costs. 

Goldberg added that the company is still “working closely” with prime contractor Thales Alenia Space, the Franco-Italian manufacturer that is building the constellation, but said Telesat is open to switching to other suppliers should rising prices prompt a review of expenditures.

“Equally, we’ve said that we’re not bound to Thales,” Goldberg said. “We have, as you would expect, continued to think about alternative ways that we could deploy our constellation in a way that allows us to meet all of our objectives.”

Telesat trimmed about US$1.5 billion off its original budget for the Lightspeed project and reduced the constellation from 258 satellites to 188 plus 10 spares amid supply-chain issues that hindered its efforts to close financing.

Ongoing financing and production delays mean Telesat is in danger of falling behind in a fiercely competitive space that includes big names like Elon Musk’s SpaceX, Jeff Bezos’s Amazon-backed Project Kuiper, and U.K.-based OneWeb.

Still, Goldberg says he remains bullish on the project, telling analysts in March the firm has already received $750 million in advance orders for the LEO service and suggesting that customer interest in the constellation is strong.

Telesat recently announced that vice-president Erwin Hudson, the executive responsible for overseeing the LEO program, is planning to retire soon. 

In response to an analyst’s question about whether Hudson’s departure would affect Lightspeed’s rollout, Goldberg said Telesat has “an embarrassment of riches in terms of super-smart, capable, experienced technical people” to carry on the project.

“It’s not something that is a concern in terms of our ability to move forward with the program,” he said while praising Hudson as “a total rock star” who has been “a great colleague and has provided great leadership.”

Telesat, which keeps its books in Canadian dollars, reported revenues of $183.4 million in the first quarter ending March 31, down from $185.8 million a year earlier.

The firm posted net income of $28.6 million, a 52 per cent drop from a $60.6-million profit the previous year. Telesat attributed the decline to the gain on extinguishment of debt in the first quarter of 2022, combined with higher interest expense and lower foreign exchange gains in the first quarter of 2023.

The company said it continues to expect revenues of between $690 million and $710 million for fiscal 2023.

Telesat’s share price was unchanged at $11.64 on the Toronto Stock Exchange late Thursday afternoon.

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