Telesat Expects Lightspeed Announcement by End of Summer

Telesat will have news “in the next couple of weeks,” or shortly afterwards, on government funding for the Lightspeed constellation that is still slated to launch in 2026 following delays.

CEO Dan Goldberg told investors during an Aug. 14 phone call that the company still expects to have an announcement by the end of the summer, maintaining guidance from the first quarter results of 2024.

“I’m happy to say that we’ve had good and sustained engagement with government representatives and we are optimistic that we remain on track to achieve this timing,” he said. “We will make a separate announcement once definitive funding agreements are concluded.”

While negotiations are ongoing with the federal government and provincial government of Quebec, “I don’t see any significant impediments or obstacles in getting this done in the coming weeks,” Goldberg added. “It’s a big funding arrangement with multiple agreements and we’re just working through all that, but there’s nothing extraordinary about what remains to get done.”

Goldberg said part of the complexity comes from blending vendor agreements with the government pacts, and noted that as a lawyer by training he would not be comfortable in saying definitively that the funding is secured – but all indications remain positive with weeks to go.

“Our suppliers need the money. They’re ordering equipment right now,” he noted, saying that their vendors are looking for secured funding to proceed further along in the project. “Don’t forget, we’re launching satellites two years from now, which means that those satellites are going to be getting built in the coming months.”

Goldberg also noted “strong progress executing on the Lightspeed program,” especially with regard to prime satellite contractor MDA Space. MDA Space has said it onboarded 90 percent of its supply chain for Lightspeed, and Goldberg added Telesat has increased its headcount in fiscal 2024 by nearly 20 percent for the ramp-up to the program.

Telesat’s second quarter results, reported to June 30, were also made available to investors on Aug. 14 and shows falls in key metrics that the company expects to redress once Lightspeed services are available.

“We’re hugely bullish on our prospects in the market, as well as our ability to deliver an extraordinary value,” Goldberg said of Lightspeed. He added that in the short term the company would seek to “manage its cost structure” in geostationary activities to deal with that business line’s revenue declines. Additionally Telesat will focus on closing funding agreements on Lightspeed, which will be in low Earth orbit.

Revenue fell 15% to $152 million year-over-year, due to service reductions and a lower rate of renewal from a North American direct-to-home television customer, among other factors. Operating expenses were $56 million, roughly 10% more than last year, due to matters such as higher wages and costs with consulting contracts.

Adjusted EBITDA fell 25% to $103 million, while net income considerably dropped to $129 million (from $519 million). The net income fall was mostly due to C-band clearing income recognized in 2023, however, although it was partially impacted by foreign exchange rates.

More positively, Telesat’s backlog stands at $1.1 billion excluding revenue commitments associated with Telesat Lightspeed. The company also maintained its full-year guidance with revenues of between $545 million and $565 million, and adjusted EBITDA between $340 million and $360 million.

While Goldberg said maintaining costs is a short-term consideration, the overall results this quarter showed consistency with the guidance: “Another quarter unfolded like we expected.”

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Correction: We incorrectly stated Telesat had onboarded “90 suppliers,” they have onboarded “90 percent of its supply chain.”