Telesat adds military Ka-Band to Lightspeed as GEO revenues slide

Telesat (TSX: TSAT) is pivoting its multi-billion dollar Lightspeed LEO constellation to capture a “generational increase” in global defence spending, announcing Tuesday that it will reallocate 25% of the network’s capacity to dedicated military Ka-band (Mil-Ka) spectrum to meet what CEO Dan Goldberg described as a “mission-critical strategic imperative” for allied nations.

The strategic pivot comes amid a challenging financial landscape for the company’s legacy Geostationary (GEO) business. Telesat reported a 27% drop in consolidated revenue for 2025, falling to $418 million from $571 million the previous year. Despite the revenue slide, the company managed to exceed its Adjusted EBITDA guidance through aggressive cost-cutting in its GEO operations, while the company’s aggressive push into the sovereign defence market—highlighted by a new U.S. Department of War contract—triggered a nearly 20% surge in its share price.

The Lightspeed defence maneuver

The headline of the quarter is the decision to integrate Mil-Ka capacity into the initial Telesat Lightspeed satellites currently under development by MDA Space.

“Telesat Lightspeed was designed from day one to provide such critical connectivity,” Goldberg stated, noting that the addition of Mil-Ka will significantly improve the capability available to government users for sovereignty and defence requirements. The company expects to launch the first two Lightspeed satellites in late 2026, with the new military integration expected to proceed without impacting the overall deployment schedule.

Goldberg added in the investor call, “Because Mil-Ka spectrum is adjacent to the commercial Ka-band spectrum used by Lightspeed, the change in frequency plan is a straightforward one, resulting in no adverse schedule impact and only a modest cost impact.”

Financial headwinds and GEO realities

While the LEO (Low Earth Orbit) segment represents the company’s growth engine, its traditional GEO business continues to face structural pressure.

• Revenue Decline: The 27% drop in annual revenue was primarily attributed to rate and capacity reductions by North American Direct-to-Home (DTH) providers and lower demand from enterprise customers in rural broadband markets.
• Net Loss: Telesat reported a net loss of $530 million for 2025, compared to a $302 million loss in 2024. This was driven by lower revenues, higher non-cash impairment losses in the GEO segment, and charges related to the increased value of LEO warrants.
• Backlog: The company ended the year with a GEO backlog of $800 million and a LEO backlog of $1.0 billion.

Operational milestones and partnerships

Despite the financial losses, Telesat hit several strategic marks in early 2026:

• U.S. Defense Success: Telesat Government Solutions was awarded a contract under the U.S. Department of War’s $151 billion SHIELD IDIQ program, which includes the “Golden Dome” initiative.
• Arctic Sovereignty: A strategic partnership with the Government of Canada and MDA Space was finalized to deliver MILSATCOM architecture for the Enhanced Satellite Communications Project – Polar (ESCP-P).
• Global Collaborations: The company signed a Memorandum of Understanding with Korea’s Hanwha Systems and a multi-year service agreement with Viasat to integrate Lightspeed into aviation and maritime portfolios.

2026 Outlook: Debt and deployment

Telesat’s focus for 2026 remains on the twin pillars of refinancing and construction. The company is currently in discussions with lenders to refinance $2.1 billion (US) in debt maturing between late 2026 and 2027.

For the coming year, Telesat anticipates GEO revenue to fall between $300 million and $320 million, with Adjusted EBITDA between $210 million and $230 million. Total spending on the Lightspeed project is expected to accelerate significantly, with a forecast of $1.0 billion to $1.2 billion in 2026 as the company moves closer to its first launch.