Telesat Canada today announced it plans to become a public company after coming to an agreement with its two largest shareholders, U.S. based Loral Space & Communications and Canada’s Public Sector Pension Investment Board (PSP Investments). The move which was expected comes at a time when two of its competitors are poised to begin rolling out their full services months, if not a year before Telesat is ready.
What happened today
Today’s announcement will see Telesat Canada and Loral become subsidiaries of a new company, Telesat Corporation. The new company will become a publicly traded Canadian incorporated and controlled company with majority of the board being Canadians and be based out of Ottawa. Once the deal gets regulatory approval, which is expected in Q2 or Q3 of 2021, the new Canadian company will be first listed on the Nasdaq Global Select Market. Telesat is also considering cross listing on a Canadian exchange after the transaction closes.
“Today’s announcement rationalizes our corporate structure and is another important step in our efforts to execute our exciting growth strategy, deliver the most competitive and innovative services to our customers, and create value for our shareholders and other key stakeholders,” said Dan Goldberg, Telesat’s President and CEO. “Following the closing of the transaction, Telesat will have access to the public equity markets, providing increased flexibility and optionality to support our promising investment opportunities, including Telesat LEO, which will bridge the digital divide both at home in Canada and around the world, and give our customers the competitive advantage they need to be successful. We look forward to engaging with our expanded shareholder base as we implement our growth plans with a focus on generating strong equity returns.”
So what does this mean for Telesat’s low Earth observation (LEO) satellite internet constellation? There was little in the way of new information on this front other than the company stating that it would be able to capitalize the markets for projects like Telesat LEO.
Here’s what we know with respect to the Telesat LEO consumer and enterprise market opportunities.
The consumer market
Telesat has made no secret that the consumer market for satellite internet is secondary to its enterprise customers. This has no doubt pleased SpaceX’s Starlink, and fresh out of bankruptcy, OneWeb, the two competitors which will offer services to Arctic customers before Telesat does.
And let’s not forget that Telesat and the Government of Canada just signed an agreement valued up to $600 million over 10 years which will see Telesat offer government subsidized pricing to qualifying Internet Service Providers (ISP’s) in rural and remote areas so they can offer cheaper satellite broadband to consumers. But here’s the catch, Starlink will be offering full service direct to consumer and possibly through third parties before Telesat does. Starlink is already in very limited beta in Canada with some 50 users reporting receiving invitations. Some of those have reported back to SpaceQ that they are pleased with the beta test so far.
While OneWeb may not be as formidable as a competitor post-bankruptcy, the same can’t be said of Starlink. It’s unclear how much market share Telesat will get in the consumer market. And to be clear, SpaceX thinks the consumer market is substantial and wants to dominate it. Another potential significantly player going forward is Amazon’s Kuiper.
The enterprise market
So what about the enterprise? Clearly Telesat is comfortable with dealing with this market and has had a long successful history in it. But those competitors in the consumer market, SpaceX, OneWeb, and Amazon are also after the enterprise market. Will Telesat’s history help it out in securing enterprise customers? Certainly the reports from its one LEO satellite tests seems encouraging.
The long wait
In 1996 Telesat was the first company to provide satellite internet service to ISP’s in Canada. But does that history and legacy matter today?
It’s a tough business world out there. Telesat has history on its side. But companies like SpaceX are being very aggressive. While it’s still very early, SpaceX and Starlink have the narrative on their side, at least the consumer narrative. Go to Reddit and everyone is talking about Starlink, not Telesat.
The agreement announced today is good. But it’s going to take time. The regulatory issues mean the deal won’t be concluded until Q2 or Q3. If it goes into Q3, that’s a long time from now. Is Telesat going to announce the builders of its constellation this year? And get production going in the New Year?
We’ve said before Telesat is moving methodically, and at its own pace as dictated by its business and finances. But, it seems that perhaps time is running out on executing its business plan.
There’s going to be winners and losers in the LEO constellation marketplace, and it’s unclear if Telesat will be a winner.