The Defence Investment Agency awarded a $2.3-billion initial contract to Telesat on Tuesday to deliver the first phase of the Enhanced Satellite Communications Project-Polar (ESCP-P). Telesat isn’t the only beneficiary as MDA Space also received a follow-on manufacturing contract worth $474-million.
ESCP-P is designed to provide wideband and narrowband connectivity in the Arctic and aims to strengthen Arctic security. The government also said the project “demonstrates Canada’s commitment to modernizing military capabilities, supporting NATO and NORAD priorities.”
Under the agreement, Telesat will increase the Lightspeed constellation from 156 to 225 satellites. MDA Space, acting as the prime manufacturer, adds 27 satellites to its existing Lightspeed production order of 198 satellites to accommodate the expansion. The new satellites will be built at the company’s manufacturing facility in Montreal. MDA Space expects the majority of the $474-million contract value increase to enter its backlog in the third quarter of 2026.
Additionally, and importantly, the DIA said ESCP-P will also require a distinct medium-Earth orbit constellation operating on secure UHF and X-band frequencies. The government picked MDA Space as the prime contractor for end-to-end mission delivery on this secondary phase, with Telesat serving as a subcontractor. Negotiations to finalize the parameters of the medium-Earth orbit services are currently underway.
To meet the requirements of the Canadian Armed Forces, all satellites currently in production will undergo a payload modification. The design will integrate 500 MHz of military Ka-band spectrum, which replaces an equivalent amount of commercial Ka-band capacity. This capability provides secure connectivity across the Canadian Arctic for defence operations, situational awareness, and search and rescue missions. The $2.3-billion initial contract for Telesat includes two subsequent option periods valued at approximately $214 million and $218 million.
“By partnering with Canada’s space industry, we are delivering critical capabilities to the Canadian Armed Forces while strengthening Canada’s sovereign industrial base,” said Doug Guzman, Chief Executive Officer of the Defence Investment Agency. “This investment will help drive innovation, support high-value jobs, and build the resilient industrial capacity needed to meet Canada’s defence and security priorities for years to come.”
The procurement announcement arrives days before both companies release their quarterly earnings. MDA Space reports its financials on Friday, August 7, followed by Telesat on Thursday, August 13.
Update: We had the wrong date for Telesat’s earnings. This has been corrected.