Telesat on track to secure financing for multibillion-dollar Lightspeed project, CEO says

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

Telesat is making “tangible progress” in its bid to raise additional funding for its multibillion-dollar low-Earth-orbit satellite program, its CEO told analysts Tuesday.

Dan Goldberg said the Ottawa-based company’s plan to deliver 188 LEO satellites plus 10 backups remains on track despite economic headwinds such as soaring inflation and supply-chain disruptions that have delayed production on the $5-billion project, dubbed Telesat Lightspeed.

“We remain extremely bullish about the opportunity Telesat Lightspeed gives us to grow our business,” Goldberg said on a conference call to announce the company’s third-quarter financial results.

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Telesat continues to work on deals with a pair of export credit agencies, Export Development Canada and Bpifrance, to provide critical financing for the project, which was previously priced at about $6.5 billion but was scaled back earlier this year.

Goldberg said he expects to have a clearer sense of where the financing stands by the end of December, adding the company has had a “lot of engagement” with potential lenders.

Telesat’s state-of-the-art LEO constellation is designed to orbit about 1,300 kilometres above the Earth – far closer than traditional satellites – and provide internet connectivity to remote areas as well as non-terrestrial customers such as cruise ships and airliners.

Launch delayed

While the company’s first LEO satellites were originally expected to make their way into orbit in 2024, Goldberg told analysts in March the constellation likely wouldn’t launch until the following year.

Analysts questioned Tuesday whether that delay would hamper Telesat as it battles for market share in the burgeoning low-Earth-orbit satellite sphere, which includes big-name competitors such as Elon Musk’s SpaceX, Jeff Bezos’s Amazon-backed Project Kuiper and U.K.-based OneWeb.

But Goldberg said he remains confident, explaining that competitors such as OneWeb have faced their own delays and telling analysts the market continues to respond favourably to Telesat’s plan.

He also previously pointed out that Telesat is targeting different customers than Project Kuiper, which is aimed at the direct-to-consumer market. Lightspeed, meanwhile, is designed to provide backhaul coverage to internet service providers, meaning its satellites will send signals from remote sites to central hubs run by the likes of Rogers and Verizon.

“We’re not seeing anything out there in terms of the competitive environment that makes us think differently about our ability to be successful with Lightspeed,” Goldberg said Tuesday.

“We continue to see a huge amount of enthusiasm from the customers about the value proposition that we’ll be bringing with Lightspeed. There’s nothing that we’re seeing that changes our thinking about that.”

The Ottawa-based firm, which went public on the Toronto Stock Exchange and the Nasdaq last November, posted revenues of $180 million for the three-month period ending Sept. 30, down six per cent from $192.3 million a year earlier.

Telesat attributed some of that decline to a reduction in sales to longstanding direct-to-home customer Dish Network, which inked a new deal last spring that will see it use just half its previous satellite capacity for at least the next two years.

Cruise ship, airline gains

But Goldberg said the firm has been making significant strides in the airline and cruise industries, which use Telesat’s satellites to deliver internet service on ships and planes. He noted those sectors are experiencing a renaissance as travel resumes with a vengeance after two-plus years of COVID restrictions.

“It was predictable that those sectors would come back, but they came back probably even stronger than we expected,” Goldberg said.

Buoyed by that boost, Telesat reiterated it expects to generate revenue of between $740 million and $750 million in 2022, up from earlier projections of $720 million to $740 million.

Telesat posted a net loss of $229 million in the third quarter, compared to a loss of $52 million a year ago. The company said the increase was largely due to a higher non-cash foreign exchange loss arising from the translation of Telesat’s U.S.-dollar-denominated debt into Canadian dollars compared to the same period in 2021.

Telesat’s stock was up $1 to $11.80 in late-afternoon trading on the TSX. The share price has fallen more than 75 per cent since the firm’s initial public offering almost 12 months ago amid widespread selloffs that have battered tech stocks.

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