Telesat mulls downsizing delayed LEO plan as costs mount

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TAMPA, Fla. — Telesat is considering ordering fewer satellites for its planned low Earth orbit broadband constellation as inflation and supply chain woes drive up the price tag and push out its completion to 2026. 

During a March 18 earnings call about Telesat’s 2021 results, CEO Dan Goldberg told analysts, “we either need to raise more money, or we need to descope the constellation” to keep it within a previously projected $5 billion budget. 

Telesat chose Thales Alenia Space of France and Italy in February 2021 as prime contractor for the 298-satellite Lightspeed constellation. By late last year, Thales told Telesat it had run into pandemic-related production delays. 

“There’s supply chain issues which are causing delays, and there are inflationary pressures just across the entire economy right now, and we’re getting bitten by kind of both of those things right now,” Goldberg said on the earnings call.

He said it was too “early for us to say which direction we’re going to go here,” but Telesat has “a lot of scope” to “downsize the number of satellites” on order for Lightspeed.

Goldberg said Lightspeed could reach global coverage with 188 of the envisioned 298 satellites. The first 78 would be deployed to polar orbits and another 110 to inclined orbits. “Then we were going to supplement it with another 110” to reach the 298 satellites that Lightspeed needs to provide 15 terabits per second (Tbps) of capacity worldwide, he said.

“Even with 100 less satellites, for instance, we’ll still have terabits and terabits of capacity and a very capable global constellation that … we feel good about,” he added.

Goldberg said he expects to have “a real good sense” for “what the constellation is going to look like” and where Telesat stands in discussions with debt lenders for financing the rest of the project by the end of June.

Telesat, which became a public company in November, has received commitments for about two-thirds of the LEO network’s projected $5 billion cost, including about $1.15 billion from Canada’s government.

Goldberg told analysts March 18 it “feels like” Lightspeed is “going to be about a year late” to enter global commercial service.

“If things unfold the way we think they will right now, we’ll be launching in 2025 and entering service in 2026,” he said.

Telesat announced separate contracts with Blue Origin and Relativity Space in 2019 for an unspecified number of New Glenn and Terran 1 launches for Lightspeed. Neither rocket has flown, but debut launches are planned for sometime this year.

“I will say we’re not the only guys getting delayed right now,” Goldberg said, adding that “in OneWeb’s case they’ve now got this launch issue which I’m sure is going to be kind of schedule impacting for them in terms of when they can enter service.”

OneWeb entered 2022 expecting to reach global coverage by August. However, Russia’s invasion of Ukraine put the kibosh on the six Soyuz launches the London-based LEO broadband constellation operator was counting on for its remaining satellites.

Goldberg also said he has heard of at least one other LEO constellation, which he did not name, “that is backed up because of supply chain issues.” 

While SpaceX continues to launch a fresh batch of Starlink satellites every week or so, chip shortages have slowed its delivery of Starlink user terminals

Telesat reported 758 million Canadian dollars ($602 million) in revenues for 2021, a decrease of 4% compared with 2020 when adjusted for foreign exchange rates.

The company said the decrease was mainly driven by a reduction of service for one of its DTH customers in North America, and contracts not being renewed for certain enterprise services in part because of the pandemic.

Net income for 2021 fell to 158 million Canadian dollars compared with 246 million Canadian dollars for 2020.