A rendering of Telesat’s Lightspeed constellation. Photo: Telesat/Thales Alenia Space

Telesat leadership did not have an update on financing for the Lightspeed constellation in its full year financial results, but confirmed the company is optimistic and confident the project will go ahead, answering a gauntlet of questions on the company’s investor call on Wednesday. 

Telesat is still in discussions with various parties to cover the increased cost of the program, but CEO Dan Goldberg did not have the financing update he previously said would be ready by the end of 2022. 

“We continue to make progress with the various parties we’re engaged with and we remain optimistic that we’re going to secure the financing we need to move forward with the program, recognizing of course that there’s no assurance that we’ll ultimately get there,” Goldberg said on a March 29 call with investors. “We know well that investors and others want clarity as to where we stand on Lightspeed financing and we hope to be in a position to provide that clarity soon.” 

“Bringing this all to a close has definitely taken longer than I anticipated,” he added, saying he hopes Telesat can share more “in the near term.” 

Lightspeed is Telesat’s planned Low-Earth Orbit (LEO) constellation of 188 satellites with 10 in orbit spares to supply broadband connectivity to fixed and mobile network operators, aeronautical and maritime users, enterprise customers, and governments. It will be a competitor to SpaceX’s Starlink, OneWeb, and Amazon’s planned Kuiper constellation. 

As previously stated, Goldberg reiterated Telesat is looking for equity investors specifically into the Lightspeed LEO project, which would be subordinate to other funding sources including Bpifrance export credit agency and the governments of Canada and Quebec province. He did not share further insight into who the potential financiers are.

“There’s a lot of interest in LEO right now, and there are a lot of parties that share our vision that there’s a big opportunity there,” Goldberg said. “There aren’t that many LEO operators out there … that you can put money to work with.” 

Goldberg pointed to the momentum on the program — $4 billion in financing commitments, roughly $750 million in backlog, and strong support from the Canadian government and Telesat’s customers and board as evidence the program will move forward. 

“There’s no legal compulsion where Telesat has to move forward with Lightspeed. We’re focused on Lightspeed because we think it’s a great commercial opportunity. We think it’s a great way to grow the business and to create a lot of equity value for our shareholders,” Goldberg said. “It’s taken us longer than we originally anticipated, but I continue to believe that the original investment thesis is totally intact. There’s a huge market for a well engineered, well executed, enterprise-grade LEO constellation.” 

Telesat is currently spending money OpEx on the constellation and its cash flow investment guidance takes into account the investment Telesat is making into the program. For 2023, Telesat expects its cash flows used in investing activities to be in the range of $40 million to $70 million, pending more Lightspeed updates. 

Goldberg did say Telesat has been exploring potential tweaks to the constellation design, particularly for potential investors with specific market focuses, but the fundamental design remains intact. In addition, Goldberg said Telesat is comfortable that the price from manufacturer Thales Alenia Space will remain in line with the changes to the constellation plan made last year. 

The operator disclosed in filings to the Securities and Exchange Commission (SEC) that will not be able to meet some of the regulatory milestones under its spectrum authorizations, particularly the milestones under its U.S. first round market access grant. However, Goldberg said he is “confident” Telesat will have regulatory rights needed when it is ready to move forward.

Response to SES and Intelsat Talks 

Goldberg also addressed Wednesday’s news that SES and Intelsat are confirmed to be in talks for a potential merger, commenting it’s neither new nor surprising. The consolidation cycle, with Eutelsat and OneWeb and Viasat and Inmarsat is a good thing for the industry, Goldberg said. 

“It’s something that we’ve been anticipating for a while and I think it’ll help rationalize the supply-side of the equation,” he said. 

“There are headwinds in the satellite world right now and we’ve been seeing that on the DTH [direct-to-home] business. There’s a massive opportunity on global broadband connectivity. If you look at where our industry is growing, it’s those markets,” Goldberg said. “If [Telesat] gets that right, bringing an advanced state of the art infrastructure to meet the customers’ requirements, I think we should be good. Does that mean that we would be closed minded about inorganic opportunities? No. That’s how we think about it.” 

2022 Financial Results 

Telesat outperformed its financial guidance in 2022, reporting $759 million Canadian dollars ($560 million) in revenue, stable compared to 2021. Adjusting for changes in foreign exchange rates, revenue declined 2% compared to 2021.

Telesat saw lower revenue for reduced renewal of a long-term DTH customer agreement, and short term services provided to another operator in 2021 that did not recur in 2022. At the same time, the company saw higher revenue from aero and maritime customers as well as an equipment sale in 2022 to the U.S. Defense Advanced Research Projects Agency (DARPA). 

Net loss in 2022 was CA$80 million ($59 million), compared to net income of CA$155 million ($114 million) in 2021. Telesat explained the negative variation with negative non-cash foreign exchange impact on the conversion of its U.S. dollar denominated debt, combined with Phase I accelerated clearing payments for the C-band in 2021. 

The company’s backlog, excluding Lightspeed, stands at CA$1.8 billion ($1.3 billion). Fleet utilization is at 89% — up from 81% fleet utilization at the end of 2021. 

Most of Telesat’s revenue — 82% — is from North America, followed by Latin America at about 7%, Asia and Australia at 6%, and the EMEA region at 5%. 

Providing guidance for 2023, Telesat expects its full year 2023 revenues to be between CA$690 million and CA$710 million ($509 million to $523 million).