Telesat plans to decrease its Lightspeed broadband constellation by 100 satellites, CEO Dan Goldberg confirmed in an earnings call Friday (May 6).
Following on from warned costs and delays associated with the constellation caused Telesat to shift its planned order to just 188 satellites and 10 in-orbit spares, compared with initial plans to include 298 satellites.
Thales Alenia Space had told Telesat in late 2021 that supply chain issues will force a delay in launch by a year to at least 2026, and in March, Telesat had already said it was pondering different configurations for Lightspeed.
The change will allow Telesat to stay within its $5 billion budget amid a high inflation environment, Goldberg emphasized. The network will have “something like 10 terabits of capacity, compared with the original 15 – still far beyond what is available across all satellites in geostationary orbit,” Telesat said.
“We didn’t love the inflationary pressures that we’re seeing,” Goldberg said during the call, as he explained the rationale behind the changes. “But even with them, we think that what we’re bringing to market is going to be disruptive in terms of the quality of service and the price at which we can deliver it, still achieving the kinds of returns that that we need to achieve.”
Telesat already has $4.2 billion in place to fund the project from its own resources (as it has $1.5 billion in cash) along with various levels of Canadian government funding, including contributions from the federal government, Ontario government and Quebec government.
The company is negotiating with export credit agencies to cover CAD$2 billion and expects to provide an update on those discussions by the end of June, Goldberg said. He added that the funds had been almost secured last year, but acquiring them was paused in 2021 after Telesat decided to pursue updating its plans for the constellation.
The company otherwise showed financial consistency in its year-over-year results, noting that DISH Network agreed to renew at “a little more than half” its previous capacity, and most of the rest of the capacity DISH declined to renew will be taken up with a new agreement for cruise industry broadband service. Like many other companies, Goldberg said, such contracts have been disrupted and shifted due to the coronavirus pandemic.
“With the DISH renewal and the separate agreement for cruise services, we’re well positioned to deliver on our guidance for the year,” Goldberg said. The company still expects its full-year revenues to be between $720 million and $740 million and adjusted EBIDTA to be between $525 million and $545 million, assuming the exchange value of a United States dollar is $1.30 Canadian dollars.
The company’s consolidated revenue for the quarter ending March 31 was $186 million after foreign exchange fluctuations, just a slight decline ($4 million) from the same period in 2021. The company has seen more mobility services customers despite the Canadian government diminishing equipment sales and other customers (such as direct-to-home client) reducing service.
Adjusted EBIDTA was also consistent, at $146 million – just $6 million less than the year before – while net income rose to $61 million (compared with $41 million) principally because of variation “on changes in fair value of financial instruments,” the company said in a release.
Aside from the earnings announcements, the only other major contract disclosed in Telesat press releases this past quarter was a funded space agreement from NASA for $30 million USD for its U.S. subsidiary, Telesat Government Solutions (TGS). The agreement will see TGS demonstrate Telesat Lightspeed’s future capability in partnership with Planet Labs, running a Ka-band high throughput transmission on two Earth observation spacecraft.
NASA is asking several companies for technology demonstrations to replace its long-standing Tracking and Data Relay Satellite system, which services the International Space Station, the Hubble Space Telescope and several Earth-observation satellites such as Terra and Aqua.
TGS and Planet Labs are one of among six sets of contracts NASA is considering for TDRS replacement, with many of the companies direct competitors to Lightspeed service – Amazon’s Kuiper constellation, SpaceX’s Starlink, Inmarsat, Viasat and SES Government Solutions. The range of constellations considered, between these companies, include satellites operating in low-Earth, medium-Earth and geosynchronous orbits.