Telesat Q3 2026: Lightspeed global service slips to mid-2028

Telesat pushed back the start of global service on its Lightspeed constellation by three months on Thursday, to the end of the second quarter of 2028, as it reported third-quarter results with five weeks left to refinance the first $2.4 billion of debt coming due in its older geostationary (GEO) satellite business.

Telesat told SpaceQ last December that it expected to launch its first two satellites in December 2026. They are now scheduled no earlier than June 2027. Even so, chief executive Dan Goldberg said the Arctic service for Canada’s military will still start on time, at the end of the first quarter of 2028, because Telesat has changed the order in which it deploys its satellites so the far north is covered first.

Telesat GEO, which runs the geostationary fleet, still brings in nearly all the revenue and owes all the debt coming due. Telesat’s total revenue fell 20 per cent to $80.6 million, and the company reiterated its full-year guidance for the fleet.

Telesat LEO is building the Lightspeed constellation with its own financing. Telesat has spent about $3.1 billion on the constellation so far, according to its quarterly report, $368 million of it in the third quarter.

The launch schedule

MDA Space is still assembling the first two satellites, which Telesat calls pathfinders. Telesat needs them in orbit to prove the spacecraft and the network work before it starts launching in bulk.

The pair will ride along on another customer’s Falcon 9 no earlier than June 2027. Telesat had planned to launch them this December, to check that everything works, including the laser links between satellites, before the main launches began. The two satellites use only a small part of a Falcon 9’s available mass, too little to justify a dedicated launch.

“Given the very tight launch vehicle market, we are loath to use one of our valuable Falcon 9 launch slots to launch just two satellites,” Goldberg said.

Telesat plans about 60 days of testing before the first batch of 15 production satellites flies, no earlier than September 2027, with a launch roughly every three weeks after that. Goldberg said about 45 satellites, three launches, are enough to serve the high latitudes.

Scotiabank analyst Maher Yaghi asked whether the later date was a launch-logistics decision rather than a production delay. Goldberg said the satellites are not ready yet. MDA Space still has hardware to finish and software to deliver, and Telesat has its own software to complete.

“If the launch vehicle were available today, we would not be ready to put those first two satellites on it,” he said. He added that the company never expected to launch them now, and that all 225 satellites should be in orbit by the end of 2028.

Telesat has 14 Falcon 9 launches under contract, each carrying 15 satellites, and has agreed on terms with SpaceX for a 15th that it has not yet finalized. With the two pathfinders, that comes to 227 satellites. “We will have 227 in orbit,” Telesat told SpaceQ on Friday. The pathfinders won’t have the 10-year operational life of the 225 that follow, the company said, and it will keep describing the constellation as 225 satellites.

Telesat cut this year’s Lightspeed spending forecast to $1.1 billion to $1.3 billion, down from the $1.3 billion to $1.5 billion it forecast in August. The release attributes the cut to the timing of satellite and launch payments. Goldberg linked it to the later start of global service.

ATB Cormark analyst David McFadgen asked whether a late start on the Arctic service would cost Telesat anything under the military contract. “Zippo,” Goldberg said. Revenue would simply start later.

The geostationary numbers

Telesat’s geostationary fleet shrank about as management expected. Segment revenue fell 21 per cent to $78.9 million. Broadcast revenue dropped 26 per cent after a contract was not renewed last year and another customer cut its capacity this year. Enterprise revenue fell 18 per cent. Fleet utilization slipped to 59 per cent, from 60 per cent in June.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a rough measure of cash from operations, fell 74 per cent to $12.1 million for the whole company, a figure that includes Lightspeed’s operating costs. The fleet’s own adjusted EBITDA fell 43 per cent to $36.4 million. It carried $25 million in refinancing costs, against $16 million a year earlier. Strip those out and the fleet’s margin was 78 per cent, close to last year’s 79 per cent.

Telesat reiterated guidance that leaves the fleet plenty of room. It has earned $242.7 million in nine months against a full-year target of $300 million to $320 million, so it needs $57 million to $77 million in the fourth quarter after taking in $78.9 million in the third. On the earnings target, which excludes refinancing costs, it needs $30 million to $50 million after producing $61 million.

Goldberg expects geostationary revenue to keep falling next year. Bell’s contract on the Nimiq 6 satellite comes up for renewal in mid-2027, and he expects Bell to renew, “likely to come at a lower rate.”

The paper loss

Telesat lost $157.2 million, nearly twice the quarter’s revenue. More than half came from re-valuing warrants the governments of Canada and Quebec received for financing Lightspeed. Accounting rules make Telesat record any rise in their value as a loss.

Ottawa’s warrants were worth $1.19 billion at Sept. 30, up from $701 million at the start of the year. They become exercisable on Nov. 15, but Telesat says in its quarterly filing that it is “highly unlikely” the two governments will exercise them in the next 12 months, because the partnership units they would receive are illiquid and hard to sell. CIBC analyst Erin Kyle asked what drove this quarter’s increase. Chief financial officer Donald Tremblay said the value rises as the program advances and its risk comes down.

December’s debt

Telesat GEO owes about $2.4 billion in December on a term loan and secured notes, the first of three debt maturities. The other two come in June and October 2027. The notes to the financial statements again warn that the three maturities cast “substantial doubt” on Telesat GEO’s ability to pay its debt as it comes due, wording the company has carried since at least May.

Telesat held $813.8 million in cash at the end of September, up from $383.2 million in June, mainly because $510 million in Arctic contract prepayments arrived during the quarter. That money funds Lightspeed. Telesat GEO and its subsidiaries held $286.7 million. Of that, $105.9 million was held by Telesat GEO itself and the subsidiaries that guarantee its debt, the companies the lenders can look to for repayment.

The lenders offered a $3.2-billion rescue package earlier this month. Yaghi asked Goldberg about a settlement proposal that the plaintiffs in the lenders’ lawsuit made Oct. 23. He would not discuss it.

“Trying to conduct these refinancing engagement through the newspapers doesn’t seem like a good idea to us,” Goldberg said. His advisers “continue to seek good faith engagement” with the lenders, he said, and the company is weighing other options.

More customers abroad?

Two Canadian government deals make up most of Telesat’s $5.6-billion LEO backlog, revenue under signed contracts: the Arctic contract worth up to $2.7 billion with options, and a 10-year, $600-million arrangement for rural broadband. Goldberg said nearly all of it is take-or-pay.

Goldberg pointed abroad for the next contracts. Recent events involving SpaceX in Ukraine have “animated various governments,” he said, and he expects “meaningful opportunities” with governments to close mostly over the course of next year.

What to watch

The shares closed at $59.48 on Thursday, down 7 per cent on the day. They have lost about 30 per cent since closing at a 52-week high of $85.14 on Aug. 12, the week after the Arctic award.

Telesat GEO’s first debt payment falls due Dec. 6, and Telesat sets its 2027 guidance early next year. The next Lightspeed milestone is the June pathfinder launch. Goldberg said the schedule after that depends on MDA Space delivering the satellites and software on time.