Telesat (TSX:TSAT) has successfully finalized government funding agreements for its Telesat Lightspeed Low Earth Orbit broadband satellite constellation project. These agreements, closed with the governments of Canada and Québec for C$2.14 billion and $400 million respectively, secure the necessary financing to fully support the global Telesat Lightspeed network. This network encompasses satellites, launch vehicles, a terrestrial network of landing stations, and business and operational support systems.
The Government of Canada loan details are as follows: an amount of C$2.14 billion, with a floating interest rate set at 4.75 percent above the Canadian Overnight Repo Rate Average (CORRA), a maturity period of 15 years, and interest payments structured to begin with in-kind payments during construction, followed by a 10-year sculpted amortization. Additionally, warrants for 10 percent of Telesat LEO common shares are included based on a US$3 billion equity valuation.
The Government of Québec loan details include an amount of C$400 million, with terms similar to the Government of Canada loan, and warrants representing 1.87 percent of Telesat LEO common shares. These loans are extended to Telesat LEO Inc., a subsidiary of Telesat.
The Telesat Lightspeed network is designed to bridge the digital divide by providing high-speed broadband connectivity to unserved and underserved communities in Canada and globally. Additionally, it aims to modernize satellite communications technology for governments, including supporting NATO and NORAD modernization efforts to enhance defence capabilities for Canada and its allies.
Telesat has increased its Canadian workforce by approximately 33 percent over the past year and anticipates capital expenditures for the project ranging between C$1 billion and C$1.4 billion in 2024. The first Telesat Lightspeed satellites are scheduled for launch in mid-2026, with MDA Space Ltd. as the prime satellite manufacturer.
With all financing secured, Telesat looks forward to the advancement of its Telesat Lightspeed project, promising growth and innovation in the satellite communications sector. This endeavor holds the potential for significant contributions to global connectivity and defence modernization. Telesat’s Lightspeed network will consist of 198 low-Earth orbit satellites, offering high-speed broadband tailored to enterprise needs, including gigabits-per-second speeds and dynamic bandwidth allocation at a cost-effective rate.
Telesat is a leading satellite operator with a strong history of addressing complex communication challenges to drive growth and operational improvement. Telesat Corp. stock (TSX:TSAT) closed at C$16.42 per share, marking a 15.39 percent increase post announcement. The stock has seen a 15.72 percent rise since the beginning of the year.
