Support Local or Save a Billion Dollars – How Can SpaceX Pull off Telesat’s Goal So Cheaply?
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- Sep 21, 2024
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A Deeper Look at Telesat's $2.54 Billion Government Funding
Last week, the Canadian satellite communications company Telesat, with its headquarters in Ottawa,
secured investment agreements worth $2.54 billion
with the Government of Canada and the Government of Quebec. This funding, Prime Minister Justin Trudeau said, showcases the government's commitment to focus on Canadians in action.
“Designed, manufactured, and operated in Canada – the Telesat Lightspeed satellite network will be the largest in Canadian history – creating thousands of jobs, growing our economy, and getting high-speed internet to Canadians. We're putting Canada at the forefront of opportunity, with a fair chance for everyone to succeed.”
– Trudeau
For a clear picture, the Canadian government loaned Telesat $1.57 billion (CAD 2.14 billion), maturing it by 15 years. The government is also receiving warrants for 10% of the common shares of the company based on a $3 billion equity valuation of Telesat LEO, which is a Telesat subsidiary and the official borrower.
Meanwhile, the loan from the Quebec Government is for $294 million (CAD 400 million) with warrants for 1.87% of the common shares. According to Dan Goldberg, the President and CEO of Telesat:
“We are pleased to conclude these funding arrangements with the governments of Canada and Quebec as we make strong progress on the build-out of the revolutionary Telesat Lightspeed constellation, the largest space program in Canada's history.”
With this funding, Telesat has all its bases covered to pay for its $3.5 billion Lightspeed network, which includes satellites, launch vehicles, landing stations, and operational support systems. The launch of the company's first Lightspeed satellites, however, won't come until mid-2026, with 2027 as the go-live date.
The Lightspeed network of Telesat is made of 198 advanced Low Earth Orbit (LEO) satellites integrated with on-ground data networks and offers a very high level of flexibility in capacity allocation.
The next-gen technology used by Lightspeed Network involves hybrid orbits that provide complete global coverage with higher capacity where most of the world's population lives. Through optical inter-satellite links, a fully interconnected global mesh network is created to allow users to access the Network regardless of their location.
Each of the satellites here has phased array antennas with hopping beams that scan the earth to provide full coverage. Moreover, data processing occurs in space to offer higher capacity and flexibility.
Telesat Lightspeed, according to Goldberg, will “help bridge the digital divide in Canada and throughout the world.” It would also create thousands of high-quality jobs in the North American country, as many as 2,000 as per a news release from the Office of the Prime Minister.
The investment, according to Trudeau, is about enabling people in the remotest part of Canada, including indigenous communities, to connect with more reliable and cheaper internet with the help of Telesat's Lightspeed LEO broadband satellite constellation.
“Yes, it's about investing in satellites and space and all sorts of really cool stuff,” said Trudeau in an interview, adding, “But it's fundamentally about making sure that Canadians and people in more distant communities, in smaller northern communities and in remote parts of the world can be connected to the transformation and the progress that the world is seeing at increasingly destabilizing speeds.”
Moreover, the funding will spur domestic innovation and supply billions of dollars of investment in the local economy. All of these factors together will help put Quebec and Canada at the “forefront of the rapidly growing New Space Economy,” said the Telesat CEO.
Quebec Premier François Legault meanwhile emphasized the importance of the aerospace sector to the province, which has three of the world's biggest airplane manufacturers. However, planes are not the only element critical to the sector's future; rather, they increasingly rely on satellites. So, to become “the champion of aerospace, we have to be in satellites,” Legault said.
Aerospace technology firm MDA, meanwhile, has been contracted to build the 750-kilogram satellites in Ste-Anne-de-Bellevue, Quebec. The company announced separately that it had started work on a 185,000-square-foot expansion of this facility, which would double its capacity to “create the most advanced assembly line for satellites in the world” and meet future demand.
The road to gaining funding from the government hasn't been smooth for Telesat, though, as it involved years of negotiations as well as delays for the project. Initially, the project was actually planned to be larger and more expensive and was to be built by Thales Alenia Space before the pandemic caused disruption.
But now it has been secured, and over the past year, Telesat has increased its local workforce by about a third in preparation for spending CAD 1.4 billion on the project this year.
Telesat's commercial Lightspeed services, meanwhile, are due in 2027, which will put the company in competition with Starlink and OneWeb. Interestingly, Internet giant Amazon is also expected to launch its Project Kuiper this year.
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