Last week satellite operator Telesat reached agreement with the Canadian government for $1.15 billion (USD) to build its low Earth orbit (LEO) broadband constellation. Under the terms of the agreement, the financial deal is a combination of straight loan and preferred stock and will be granted in exchange for Telesat continuing to create STEM jobs and stimulating domestic investment and exports in the aerospace industry.
Canada will provide nearly $600 million USD as a loan while another $519 million will be provided in exchange for preferred stuck in the company. Telesat agrees to “make certain minimum capital and operating expenditures” in Canada and create hundreds of “high-quality, full time jobs and co-ops” in the nation along with providing academic scholarships. In total, Telesat’s Lightspeed program is expected to generate over 1,500 Canadian jobs, most of them STEM.
“The Government of Canada’s investment in Telesat Lightspeed underscores the program’s transformational ability to bridge the digital divide, position Canada at the forefront of the burgeoning New Space Economy, and deliver sustained and high-quality job creation and economic growth in Canada,” said Dan Goldberg, Telesat’s President and CEO. “We applaud the Government’s recognition of the importance and promise of Telesat Lightspeed. With the funding announced today and other financing sources already in place, including the previously announced investment by the Government of Quebec, Telesat now has arrangements for approximately $4 billion in funding for the program. We expect to secure in the near term the remaining financial commitments required to fully finance Telesat Lightspeed.”
The Telesat Lightspeed LEO broadband constellation will initially be made up of 298 satellites delivering multi-gigabit speeds and low-latency connectivity everywhere in Canada and across the globe. To date, the company has raised around $4 billion in commitments for the $5 billion project with substantial funding coming from the Canadian government and the local governments of Ontario and Quebec. Telesat plans to put in $1.4 billion of its own cash into the project while negotiations for the remaining funding are taking place with export bank agencies.
Canada’s financial support of Telesat is understandable for both economic and national security reasons. Increasing affordable broadband access to remote regions is one of the government’s primary goals while the Canadian military and its allies require high-speed low latency broadband in the polar regions.
But Telesat won’t be alone in offering LEO broadband to remote areas. OneWeb recently put enough satellites into orbit to provide services to the poles while SpaceX is continuing to launch Starlink satellites into polar orbits.