TAMPA, Fla. — Telesat has the funding to move forward with plans for a low Earth orbit (LEO) broadband network after saving $2 billion by pivoting to smaller satellites from MDA following production delays at Thales Alenia Space, the Canadian operator said Aug. 11.
MDA is building 198 satellites for Telesat’s Lightspeed constellation under a contract worth 2.1 billion Canadian dollars ($1.6 billion), with launches slated to start in the middle of 2026.
Weighing 750 kilograms each, Telesat CEO Dan Goldberg said the satellites are 75% smaller than earlier versions planned by Thales Alenia Space, but would have the same performance by using digital beam-forming array antennas instead of the analog terminals MDA was due to supply as a subcontractor.
Goldberg said Telesat has funding commitments for the 156 satellites it would need to provide initial polar and global services from late 2027.
The extra 42 satellites to complete the constellation would be funded through revenues Telesat expects to gain from providing initial services to enterprise and government customers.
Telesat expects the total cost for 156 satellites to be around $3.5 billion, when factoring in launches and other expenses, including the ground systems and user terminal technology that would also be used for the 42 follow-on satellites.
Around $1.6 billion of this cost would be funded by Telesat equity, Goldberg said during the company’s earnings call, and $2 billion would come from Canadian federal and provincial financing.
The operator also has “some hundreds of millions of dollars” in financing from an undisclosed vendor that he said was not MDA.
The MDA contract includes options for an additional 100 satellites to expand the constellation to 298 satellites.
Telesat initially planned to launch 298 satellites in 2020 for commercial services starting in 2021.
However, the company held off picking a prime contractor until 2021 to get a better deal on parts, only for Europe’s Thales Alenia Space to run into pandemic-related supply chain issues that led to the constellation being downsized a year later to 198 satellites.
“It’s been a long road, Goldberg said during the earnings call, “Covid and the supply chain constraints and inflation that Covid brought represented real obstacles.”
Glenn Katz, Telesat’s chief commercial officer, told SpaceNews the company has contracted all the launch vehicles required to complete the 198-satellite constellation, but declined to disclose details.
The company has previously announced plans to use rockets still under development by Blue Origin and Relativity Space.
Goldberg said during the earnings call that Telesat had passed on an opportunity years ago to use MDA’s digital beam-forming technology because the technology was too immature.
However, following further investment by MDA, “we came to the conclusion that it was now sufficiently mature,” he said “and that not only could we leverage it but that we had to, given the massive efficiencies it delivers.”
Integrated with digital processors, he said the technology enables Telesat to triple the number of beams per satellite, while improving link performance and the overall efficiency of the planned network.
While the old satellite design required each satellite to have two pairs of analog beam-forming antennas, he said only a single pair of digital antennas would be required to deliver Telesat’s capacity target.
He said this enables the satellites to be smaller while enabling the same amount of performance for the constellation, around 10 terabits per second (Tbps) of capacity. The design life for each satellite also remains unchanged at 11 years.
Telesat originally aimed to provide 15 Tbps with earlier plans for a 298-strong constellation.
But while Telesat had announced it selected Thales Alenia Space as prime contractor for the constellation, the companies did not have a manufacturing contract in place.
Telesat will instead be the anchor customer for MDA’s software-defined configurable satellite design, MDA CEO Mike Greenley said Aug. 11 during the company’s separate earnings call.
Greenley said MDA’s high-volume manufacturing facilities in Montreal could churn out two satellites a day after getting up to speed, “helping dramatically to reduce production costs and schedules for our customers.”
While Telesat is the inaugural customer for the company’s integrated digital satellite product, MDA vice president of corporate communications Amy Macleod said the foundational technologies have previously flown in space.
It is MDA’s second contract for a LEO constellation in 18 months after Globalstar picked the company last year to build its Apple-backed third-generation satellites.
Katz said Telesat has reached a spectrum coordination agreement with SpaceX’s Starlink LEO network for its revised constellation, and has another in place for the LEO satellites Amazon is planning for Project Kuiper. Spectrum coordination talks are ongoing with British LEO broadband operator OneWeb.
Telesat’s LEO deployment delays mean the company will need to secure regulatory extensions to retain its priority Ka-band spectrum rights, and Katz said the company recently filed for one from the International Telecommunication Union (ITU), an affiliate of the United Nations.
Government-funding commitments for Lightspeed are also subject to due diligence and the conclusion of definitive agreements that the company expects to wrap up later this year.
The cash Telesat is injecting into the constellation includes nearly $350 million Canadian dollars it is due to get in December from clearing C-band spectrum in the United States for terrestrial 5G telcos.
Telesat is targeting a 30% return on investment from Lightspeed, which is seeking a slice of an enterprise and government connectivity market the company estimates would be worth about 200 billion dollars around 2025.
The company reported revenues of 180 million Canadian dollars for the three months ended June 30, down 6% compared with the same period last year when adjusted for changes in foreign exchange rates.
The decrease was partly driven by a reduction in revenues from one of Telesat’s satellite TV broadcast customers in North America.
However, Telesat said an increase in revenue from LEO satellite-to-satellite communications work with NASA helped partially offset its overall sales decline.
Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, fell 8% to 139 million Canadian dollars.
Rocket Lab launched the latest prototype for Lightspeed July 17 after LEO 1, which launched in 2018, ran out of fuel amid the constellation’s protracted delays.