Have you seen the latest news about Elon Musk, SpaceX and Starlink? What about Telesat? Hmm. Since it’s last earnings call in November Telesat has signed a number of deals, but the cloud hanging over the company persists.
The cloud hanging over Telesat is about its debt and the bet it made on Lightspeed, it’s low Earth orbit (LEO) telecommunication satellite constellation. Lightspeed, the biggest project in Telesat’s history and which it bet its future on, and which seemed assured just two years ago, has been delayed by the pandemic at first, then supply chain issues and now financing issues. While competitors SpaceX roll-out services and OneWeb begins launching its satellites anew, Telesat’s constellation, if built, won’t be deployed until 2026.
Last month a headline in the Globe and Mail read “Future of Canadian space company Telesat uncertain as concerns rise over ability to pay off debts,” ouch. While Telesat maintains a positive outlook, clearly the sentiment in the community is mixed. The Globe spoke with S&P analyst Madhav Hari who commented on Telesat’s downgraded credit rating saying that such a rating (CCC+) “suggests a 50-per-cent chance of default.”
Going back to the November earnings call, CEO Dan Goldberg said more information was coming in December. And indeed Telesat did have news. It announced that Spacecom, an Israeli satellite service provider had successfully completed testing using Telesat’s LEO demonstration satellite. Telesat also announced it signed a Master Service Agreement with Artel for Lightspeed LEO services. While this was good news, there was still no word on finalizing financing for Lightspeed through export credit agencies.
Telesat has also made other deals since the November earnings call including a 5-year deal with Sencinet for HTS capacity on the Telstar 19 VANTAGE GEO satellite. And today they announced a ground-station infrastructure deal with Anuvu.
Telesat also recently made an important personnel move hiring Philip Harlow as President of Telesat Government Solutions, it’s U.S. corporation which is focused on “providing secure satellite solutions to the U.S. Government and allied nations.”
So while Telesat continues to make small incremental moves which would normally signal progress, time is working against them. Last August Goldberg said “my expectation is, we get this financing going late this year. Once that’s done, we’re rolling.”
While Telesat’s stock has gained a little momentum since its low in December, they will shortly be announcing their Q4 2022 and year end results. And while no date has been announced yet, there is anticipation on what will be said regarding financing. The biggest question is will Telesat close its financing for Lightspeed between now and then. And if they don’t, what does that mean for its outlook?