|09 Feb 2021
Telesat-Lightspeed (LEO Broadband Satellite Constellation)Development Status References
February 9, 2021: Telesat with HQs in Ottawa, Canada, one of the world’s largest satellite operators, announced today that it has entered into an agreement with Thales Alenia Space to be the prime manufacturer of Telesat’s global LEO constellation, Lightspeed, initially comprised of a fleet of 298 next-generation satellites integrated with an advanced ground network. Lightspeed is the most innovative, cutting-edge broadband satellite network ever conceived. Thales Alenia Space and its affiliate Telespazio have made a Lightspeed capacity commitment in connection with the agreement. 1)
Telesat and Thales Alenia Space have engaged in substantial and sustained collaboration on Lightspeed’s innovative design. Specifically, Lightspeed has been optimized to serve the fast-growing broadband connectivity requirements of fixed and mobile network operators, aeronautical and maritime users, enterprise customers and governments. Operating under Telesat’s global Ka-band priority spectrum rights, the first Lightspeed satellites are expected to be launched in approximately two years, with customer beta testing beginning shortly thereafter and commercial services commencing in the second half of 2023.
“We are very pleased to be moving forward with Thales Alenia Space on Lightspeed, the most advanced and capable LEO network in the world,” stated Dan Goldberg, President and CEO of Telesat. “As the world’s leader in manufacturing and implementing cutting edge global satellite constellations, Thales Alenia Space is the right industrial partner to deliver Lightspeed, a fully integrated global communications network that will revolutionize satellite-delivered broadband and give Telesat and its customers a decisive competitive edge in this high growth market.”
Goldberg added: “The name Lightspeed underscores the essential speed advantages inherent to Telesat’s LEO design. Lightspeed is the most technologically capable satellite communications network in history and exploits the latest advances in space-based data processing, laser communications, digital antenna technology and machine learning.”
Lightspeed will provide fibre-like connectivity across the entire Earth at price points that allow network operators to efficiently and economically enhance their network coverage, performance and profitability. Designed with a deep understanding of the bandwidth intensive applications and cloud-based network connectivity that users require, Lightspeed will eliminate the hurdles that telecommunications service providers face today when incorporating satellite into their networks.
Operating roughly just 1,000 kilometers above Earth in LEO, Lightspeed will be free from the long latency delays and capacity limitations that are inherent to satellites in geostationary and medium Earth orbits. In addition, Lightspeed satellites incorporate leading-edge technologies and features, including:
• Sophisticated phased array antennas on each satellite that are combined with advanced beam hopping technology to create approximately 135,000 beams that can dynamically focus multiple Gbit/s of capacity – an order of magnitude higher than any other system – into demand hot spots like remote communities, large airports or major sea ports;
• Nearly 1,200 high capacity optical links – four on each satellite – that combine to create a first-ever, highly resilient, flexible and secure space-based IP network, moving data across the network and around the world at the speed of light;
• Data processing in space, including full digital modulation and demodulation on the satellite, coupled with a revolutionary end-to-end network operating system, that improves link performance and gives customers unprecedented flexibility for routing traffic across the globe, eliminating gateway hops for the fastest, most secure, end-to-end delivery of data; and
• A patent-pending architecture for the constellation of satellites, which features satellites operating in both polar and inclined orbital planes. This results in true pole-to-pole global coverage, concentrating capacity in areas where it is most needed to maximize network efficiency and achieve superior unit cost economics.
Telesat is developing affordable end-user terminals, with a range of antennas and modems optimized for each of the market verticals Lightspeed will serve. In addition, Lightspeed leverages industry-wide network interface standards to enable simple, seamless integration with customers’ terrestrial networks, without the need to integrate proprietary hardware or software.
Under the terms of the Agreement, the parties have provided for the advancement of the program while the financing for the project is being finalized. The commencement of full construction activities and the final constellation deployment schedule are subject to, and conditional upon, the progress of the financing for the program.
As a responsible owner and operator of space assets for nearly 50 years, Telesat has designed and will operate the Lightspeed satellites in a manner that ensures that LEO orbits are safely available for other users and that the night sky is safeguarded for astronomical observation.
Development Status and Events
• June 24, 2022: Telesat has applied for a U.K. license to connect broadband terminals with Lightspeed satellites it plans to start deploying in 2025 to low Earth orbit. 2)
- The Canadian operator’s application says the first of 198 Lightspeed satellites will be launched in the third quarter of 2025, British telecoms regulator Ofcom (Office of Communications, London, UK) said June 24.
- This is a narrower launch window than Telesat has previously outlined since supply chain issues forced it to downsize plans for the constellation by a third earlier this year.
- Initial services in the United Kingdom are slated for 2026, about a year later than Telesat had planned before it was hit by the pandemic-related supply shortages.
- Ofcom said it is due to announce a decision on Telesat’s request to connect user terminals, via a non-geostationary satellite Earth station network license, Sept. 12 following a public comment period.
- LEO broadband megaconstellations Starlink and OneWeb already have licenses that give them permission to connect satellites to user terminals in the U.K.
- Starlink and OneWeb use Ku-band spectrum to connect to users and Ka-band frequencies for gateway Earth Stations, which link their constellations to the internet or a private network and require a separate U.K. license to operate.
- Telesat’s planned terminals and gateways operate in Ka-band, and Ofcom said the company has not yet applied for permission to operate Earth stations in the United Kingdom.
- SpaceX’s Starlink recently applied for permission to add six more gateways in England to improve services in the region, which is also subject to an Ofcom consultation.
- Starlink said it needs the extra ground stations to meet user demand as it rapidly expands the constellation toward global coverage.
- “We’re going to be in service with global coverage, 24/7, by the end of next year,” said Maurizio Vanotti, OneWeb vice president of space infrastructure development and partnerships.
- Ofcom says Telesat has yet to reach a spectrum coordination agreement of the kind Starlink and OneWeb agreed on earlier this month.
- In a document Ofcom published June 24 to invite comments on Telesat’s license application, the regulator said Telesat has not reached coordination agreements with other licensed non-geostationary operators in U.K.
- However, Ofcom said Telesat told the regulator that its Lightspeed satellites can avoid interference by dynamically assigning capacity where and as required.
- This includes “through the selection of the satellite chosen to deliver the service, of the size and steering of satellite spot beams, and of the amount of spectrum and power allocated to them.”
- Ofcom said its preliminary view is “Telesat Lightspeed should be able to coexist with existing NGSO licence holders with the approach described.
- “However, we encourage all parties to continue coordinating in good faith between now and the launch of the Lightspeed constellation.”
- Ofcom added it “wants to enable as many NGSO systems as possible, to provide services and increase choice for people and businesses in the UK.”
- Telesat has so far secured about $3.3 billion of Lightspeed’s anticipated $5 billion cost.
- The company needs to secure the rest of the funds before Europe’s Thales Alenia Space can move forward with plans to build the satellites.
- Telesat announced May 8 that it has selected South Korean antenna maker Intellian to design and supply dual-parabolic reference user terminals for the LEO constellation.
- Intellian is also providing antennas for OneWeb and SES’ medium-Earth orbit O3b mPOWER broadband constellation.
• May 19, 2022: Telesat said May 18 it demonstrated high-speed connectivity in India last month using a four-year-old prototype satellite. 3)
- The so-called Phase 1 satellite connected through a teleport operated by local satellite communications provider Nelco, which is part of Indian conglomerate Tata. South Korea’s Intellian supplied the 85-centimeter parabolic antenna used in the April 25-29 demo.
- According to Telesat, the prototype demonstrated fiber-like 35 millisecond roundtrip latency at speeds fast enough to support applications including video conferencing and streaming.
- The Canadian operator’s Phase 1 satellite was launched to LEO in January 2018, and has been helping the company configure its delayed Lightspeed constellation.
- Plans for Lightspeed were recently downsized by a third to 198 satellites following supply chain issues that have pushed out the service’s debut a year to 2026.
- Telesat has so far secured about $3.3 billion of Lightspeed’s anticipated $5 billion cost.
- Dan Goldberg, Telesat’s CEO, said May 6 the company is close to securing the remaining funds that it needs before it can sign an order contract with Thales Alenia Space to build the satellites.
- Telesat announced plans to partner with Nelco in September 2020, and other satellite operators have since made similar alliances with other local companies as the country looks to ease protectionist measures to encourage foreign investments.
- SES said Feb. 14 it has formed a joint venture with Jio Platforms Limited, the holding company for the country’s largest telecoms operator, to provide multi-orbit connectivity there.
- A month earlier, LEO startup OneWeb said it signed a distribution deal with India-based Hughes Communications India Pvt Ltd, a joint venture between U.S.-based Hughes Network Systems and Jio’s Indian telecoms rival Bharti Airtel.
- Bharti Airtel is part of the Bharti Global Indian conglomerate that is U.K.-based OneWeb’s largest shareholder, and Hughes is a minority investor in the LEO startup.
- SpaceX’s LEO network Starlink ran into trouble with India’s telecoms regulator late last year when it took deposits from potential customers before getting a license to operate in the country.
• May 6, 2022: Increasing costs and delays have forced Telesat to downsize plans for 298 low Earth orbit satellites by a third to keep within its $5 billion budget (see Figure 6 for an image of a Lightspeed satellite). 4)
- The Canadian satellite operator plans to order just 188 satellites plus 10 in-orbit spares from Thales Alenia Space, Telesat CEO Dan Goldberg said during the company’s May 6 earnings call.
- That is still enough for the Telesat Lightspeed network to provide “something like 10 terabits of capacity” globally, according to Goldberg, which is more capacity than all current satellites in geostationary orbit combined.
- Telesat had previously planned to provide 15 terabits of capacity with 298 operational LEO satellites for the government and enterprise markets it aims to serve.
- However, Telesat had to rethink the constellation after Thales Alenia Space alerted the company in October that it had run into supply chain shortages, which have pushed out the service’s planned debut a year to 2026.
- Despite downsizing Telesat Lightspeed, Goldberg expects the project will continue to cost $5 billion amid rising inflation.
- He said Telesat has lined up 4.2 billion Canadian dollars ($3.3 billion) so far to fund the project from existing financial resources and Canadian government funding.
- The company is waiting to get commitments for covering the rest of Telesat Lightspeed’s cost before signing an order contract with Thales Alenia Space.
- Goldberg said he expects to have “a pretty good sense of where we’re sitting” with export credit agencies to complete the project’s financing by the end of June.
- He said Telesat was close to securing these funds before having to pause discussions last year to update its constellation plans.
Changing the NGSO (Non-Geosynchronous Satellite Orbit) landscape
- The delay in ordering Telesat Lightspeed satellites gives Amazon’s proposed LEO constellation Project Kuiper more time to catch up with the company.
- Amazon announced multi-billion dollar contracts April 5 for launching most of Project Kuiper’s 3,236 satellites over five years. Although Amazon did not say when launches will start, it must deploy half the constellation by July 2026 under its Federal Communications Commission license.
- Project Kuiper is mostly focused on consumer broadband, similar to SpaceX’s rapidly expanding Starlink network that currently has more than 2,100 satellites in LEO, but could seek a share of Telesat Lightspeed’s enterprise and government markets.
- OneWeb has signed launch agreements with SpaceX and India’s space agency to resume satellite deployments this year.
- Telesat has previously said its LEO constellation could capture 1% of a total addressable market worth 430 billion Canadian dollars, implying revenue of 4.3 billion Canadian dollars.
- The company reported 186 million Canadian dollars in revenue for the three months to the end of March, a 2% decrease compared with the same period in 2021 when adjusted for foreign exchange rates.
- The revenue drop was primarily due to less direct-to-home broadcast business in North America and a fall in equipment sales to Canadian government customers, according to Telesat.
- Goldberg said U.S.-based satellite broadcaster Dish Network renewed a contract to use its Anik F3 Ku-band satellite for at least another two years but at a lower rate.
- Dish Network is using “a little more than half” the capacity it had previously been taking on Anik F3, he said, and most of the remaining capacity it did not renew was sold to a mobility services provider for the maritime market.
• April 4, 2022: Canada’s Telesat said April 4 it has gained the security clearances it needs to sell directly to U.S. government customers. 5)
- The approval for the satellite operator’s U.S.-based Telesat Government Solutions subsidiary is an important milestone for the company’s low Earth orbit (LEO) ambitions, according to the business unit’s new president Tom Eaton.
- “The direct interaction with the U.S. government customers is key for us in making sure that, as we roll out the network, that it’s designed with the important features that the U.S government customers are going to want,” said Eaton, who used to run Telesat’s non-Canadian international sales efforts.
- While providing capacity at a wholesale level to customers who would then distribute it to the U.S. government “worked fine for us in a [geostationary orbit] space,” he said its Lightspeed LEO network requires closer cooperation to fine-tune services.
- Telesat Government Solutions started the process for Facility Clearance from the Defense Counterintelligence and Security Agency in August 2020.
- “I think our timing is perfect because there’s large [Request for Proposals (RFPs)] that are being issued for things like proliferated LEO, where the U.S government will select not just one but multiple commercial LEO systems to support their communication needs,” Eaton added.
- Although Lightspeed has run into production delays that have pushed out the launch of its services into 2026, Eaton said Telesat also sees growing demand for helping the U.S. government understand and take advantage of emerging LEO capabilities with other systems.
- He pointed to the study contract Telesat has with the Defense Advanced Research Projects Agency (DARPA) for the Blackjack program, which involves two spacecraft slated to launch in October to LEO at roughly the same altitude as its planned Lightspeed network.
• February 1, 2022: Landing stations that can connect to Telesat’s planned low Earth orbit (LEO) broadband network will start being built in spring 2023, according to an executive for the Canadian satellite operator. 6)
- Danish equipment supplier Cobham SATCOM plans to install the first of 30 global landing stations in Canada, Telesat LEO landing station and user terminal director Aneesh Dalvi said after announcing their partnership Feb. 1.
- Cobham SATCOM built the landing station for testing the Telesat Phase 1 prototype that was launched to LEO in January 2018, and is also in the process of replacing most of the ground infrastructure for U.S.-based satellite operator Globalstar.
- Telesat’s landing stations will be based on Cobham SATCOM’s TRACKER Gateway series, with each comprising multiple Ka-band antennas depending on the topography.
- Under the agreement, Cobham SATCOM will make, integrate and install the tracking antennas that Telesat will need to land signals from a planned constellation of 298 satellites.
- The ground infrastructure will be critical for providing the 15 terabit/s (Tbit/s) of global capacity that Telesat aims to offer with its full constellation.
- Those plans hit a stumbling block last year, however, with Telesat CEO Dan Goldberg saying Nov. 5 that its satellite maker Thales Alenia Space had run into pandemic-related supply chain issues that are delaying production.
- Telesat said it will need an extension to meet regulatory commitments made with the U.S. Federal Communications Commission as a result, because it no longer expects to able to deploy half the constellation by Nov. 3, 2023.
- Dalvi told SpaceNews that the magnitude of the manufacturing delay is still unknown as Thales Alenia Space engages with the hundreds of suppliers on the project for ways to mitigate the issues.
- Telesat, which became a public company Nov. 19, has also not yet fully secured the final $2 billion of the LEO constellation’s $5 billion cost.
From the Ground Up
- Telesat is moving full steam ahead with the LEO network’s ground infrastructure despite the space segment delays.
- The Canadian operator has announced significant capacity commitments with Canada’s government in return for financial support, and Dalvi said the company expects to get regulatory clearances this year to build its first landing station in the country.
- Discussions about setting up landing stations elsewhere are in the works and at “different stages for different countries,” he said, adding that there will be “some in Europe and in Australia” because Telesat needs sites in northerly and southerly latitudes to support initial launches.
- The constellation is being designed with optical inter-satellite links (OSL), which reduces its reliance on ground infrastructure to land traffic.
- “Because we have the [OSL] mesh on all the satellites, we can provide service anywhere in the world with only one landing station to begin with,” Dalvi said.
- However, he said “each OSL hop” adds about 5-10 milliseconds of latency, depending on the geography.
- That makes it challenging to stay within the company’s 50-millisecond latency target “if you have to backhaul the traffic over the OSL mesh halfway around the world or something like that,” he said.
- Dalvi estimates it will take Telesat and Cobham SATCOM about three to four months to set up a landing station after clearing all regulatory hurdles.
- Their agreement includes the option to deploy more than 30 landing stations if demand calls for it.
- He said Telesat Lightspeed has also chosen a user terminal supplier, but declined to discuss details.
• November 19, 2021: Satellite operator Telesat started trading as a public company Nov. 19 in the U.S. and Canada, boosting talks with export-credit agencies about funding the rest of its $5 billion Lightspeed broadband constellation. 7)
- Ottawa-based Telesat did not raise cash in listing on Nasdaq and the Toronto Stock Exchange by merging with shareholder Loral Space & Communications, but the move should help accelerate years of discussions with debt lenders to secure the final $2 billion it needs for a network comprising nearly 300 satellites in low Earth orbit.
- “I would say lenders always like to know that a company that they lend to has access to additional sources of financing,” Telesat CEO Dan Goldberg told SpaceNews in an interview.
- Public companies also must operate with more transparency than private firms, adding credibility and lowering risk for lenders — although Telesat has already been holding quarterly earnings calls and making more disclosures than a typical private company because it has publicly traded debt.
- “But with the public equity being listed too, there’ll be more disclosures still … that’s probably also a helpful thing for anybody lending to the company,” Goldberg noted.
- Telesat is trading on both stock exchanges under the symbol TSAT.
- The biggest obstacle in the way of finalizing Telesat Lightspeed’s funding is the uncertainty around the constellation’s deployment schedule, however, as its European manufacturer Thales Alenia Space runs into pandemic-related supply chain issues.
- Goldberg said Telesat is still waiting to hear from Thales about the magnitude of these delays.
- “Our teams are meeting on a daily basis figuring this out,” he said, adding that Thales has to “go back through their supply chain and whatnot, so it takes a little bit of time, but we’ll know shortly.”
- The company does not expect any issues with Telesat Lightspeed’s International Telecommunication Union filings, but it has said it will need an extension to meet deployment commitments made with the U.S. Federal Communications Commission (FCC).
- Without a waiver from the FCC, Telesat has to deploy 50% of Lightspeed’s satellites by Nov. 3, 2023.
- Lightspeed’s manufacturing delays will not result in a “meaningful change” in cost for Telesat, Goldberg added, and potentially give it more time to optimize the network’s design.
- “We’re not going to do anything major,” he said.
- “The significant building blocks of the constellation are going to remain the same, and those are things like processed payloads, the phased array antennas to dynamically move our coverage around on the Earth, the inter-satellite links ... but within those, there might be some optimization that we can do to get something better still.”
- He expects to have clarity on Telesat’s discussions with Canada’s export-credit agency, and its counterpart in France, “in the coming months” to finalize the constellation’s financing in the near term.
- The next step after completing the financing will be to “hit the big green button” on production, according to Goldberg.
- He declined to discuss whether Telesat could raise money on the public equity markets if talks with the ECAs take longer than anticipated.
• August 12, 2021: Telesat is close to securing all the funds it needs for Lightspeed, after the Canadian government said it would inject more than a billion dollars into the low Earth orbit constellation. 8)
- The government plans to invest 1.44 billion Canadian dollars ($1.15 billion) in the project, which aims to start launching a network of nearly 300 broadband satellites next year.
- In return, Telesat will invest in Canadian infrastructure to build out Lightspeed, including hundreds of jobs and scholarships.
- It means Telesat has now made arrangements for about 4 billion Canadian dollars of funding for Lightspeed, more than two-thirds of its expected overall cost. Telesat has put a $5 billion price tag on Lightspeed, or 6.3 billion Canadian dollars.
- The rest of the funding will primarily come from debt financing from export credit agencies.
- Europe-based Thales Alenia Space is building the satellites. U.S.-based Blue Origin and Relativity Space have early agreements to launch them.
- Telesat CEO Dan Goldberg said the company expects to secure the remaining financial commitments “in the near term” for Lightspeed.
- “Now is the time to bolster Canada’s position as a global leader in the new space economy,” said François-Philippe Champagne, Canada’s minister of innovation, science and industry in an Aug. 12 statement.
- “Through its partnership with Telesat, our government is creating more high-skilled jobs, enabling innovation and helping to unlock economic and social opportunities in Canada’s most rural and remote communities. Every Canadian should have access to affordable high-speed Internet. Today, we took a big step towards making that happen.”
- The government’s investment is split between a 20-year, 790 million Canadian dollar loan, and 650 million Canadian dollars in preferred equity. The financial package includes warrants that can be turned into shares later.
- Telesat committed to investing 1 billion Canadian dollars of Lightspeed’s initial capital expenditures in Canada as part of the deal.
- The operator said it would also employ at least 700 full-time-equivalent employees in Canada while supporting academic and scholarship initiatives, particularly those focusing on women in science, technology, engineering, and mathematics (STEM) programs.
- Telesat also committed to spending 50% of the cost to deploy a second-generation Lightspeed constellation in Canada, or 2.6 billion Canadian dollars if that amount is lower, while giving the government incentives to make additional investments in it.
- The financing comes less than a week after Telesat said it secured a five-year investment agreement from Ontario’s government, worth 109 million Canadian dollars.
- The Canadian company also plans to list shares on the Nasdaq stock exchange this summer to support Lightspeed.
• August 6, 2021: Telesat has struck a deal with Ontario’s government to partly fund its Lightspeed constellation, which will dedicate some of its satellite capacity to improving connectivity in the Canadian province. 9)
- The Ottawa, Ontario-headquartered satellite operator said the five-year agreement is worth 109 million Canadian dollars ($87 million), and focuses on extending high-speed internet and cellular networks to unserved and underserved communities.
- Lightspeed, the low Earth orbit broadband constellation that Telesat aims to bring into service in 2023, will offer internet service providers and cellular operators substantially reduced rates for part of its capacity under the plan.
- Telesat has a similar arrangement with Canada’s federal government, worth 600 million Canadian dollars, to subsidize broadband services in rural communities.
- As part of the deal announced Aug. 6, Telesat will increase its Ontario-based staff by around 35% to about 400 highly skilled jobs.
- The company also committed to investing 20 million Canadian dollars to build out facilities in the province, including a new gateway landing station and an expanded corporate headquarters.
- “This partnership with the Government of Ontario will not only achieve the province’s goal of connecting everyone, regardless of where they live, to affordable high-speed Internet, but also positions Ontario at the forefront of the highly strategic New Space Economy through Telesat’s local investments in jobs and technology innovations,” Telesat CEO Dan Goldberg said in a statement.
- COVID-19 has highlighted how important high-speed internet and reliable cellular services have become for society, added Kinga Surma, Canada’s minister of infrastructure.
- Telesat expects to finalize the transaction in the coming weeks.
- In February, Quebec’s provincial government said it will invest 400 million Canadian dollars in Lightspeed, and Canadian space hardware maker MDA, to build the network’s phased array antennas.
- Telesat later raised $500 million in debt in April to help fund Lightspeed’s $5 billion cost.
- However, plans to hold an auction of its C-band spectrum to raise more funds for the constellation were shot down May 21, when the Canadian government said it will run the sale instead.
- While satellite operators in the U.S. are due to get billions of dollars from a C-band auction that the Federal Communications Commission managed, it is unclear how much compensation Telesat will get from Canada’s process.
- Telesat has plans to list shares on the public markets in the third quarter of this year to support Lightspeed. It has also said it is talking to export credit agencies about raising more debt to back the project.
• May 14, 2021: Telesat could start a spectrum auction to help fund its $5 billion Lightspeed low Earth orbit constellation “in a couple of months” if Canada’s government approves its proposal, according to CEO Dan Goldberg. 10)
- Canada is considering proposals on how to release satellite C-band spectrum in the country for terrestrial 5G wireless networks, after a sale in the U.S. raised more than $81 billion.
- The Canadian government has plans to sell adjacent spectrum in the 3.5 GHz band by the end of June, suggesting a decision on releasing C-band will come before then to give bidders a better picture of the nearby spectrum environment.
- Telesat proposes running the sale of its C-band sale itself, much like satellite operators requested for in the U.S.
- On a May 14 conference call following financial results, Goldberg said the operator has already been laying the groundwork with external auction experts, enabling it to move quickly with its plan if regulators approve it.
- “It would take us probably some months just to make sure that we reflected all the different requirements, restrictions and whatnot that the regulator would invariably articulate as part of it,” he said.
- In terms of how quickly it could get cash in the door for monetizing the 200 MHz of spectrum, Goldberg said it is too early to tell whether the frequencies would first need to be cleared.
- The U.S. Federal Communications Commission (FCC) ultimately decided to run the C-band auction, which kicked off late last year. Part of the proceeds of the sale it completed in February will reimburse satellite operators for the costs of clearing the spectrum, after they clear it, and to incentivize them to do so quickly with various deadlines.
- Satellite operators Intelsat and SES, which hold the majority of C-band in the U.S., recently said they are on track to secure more than $2 billion combined from hitting a clearing deadline in December.
- Goldberg said Telesat is also on course to hit its C-band clearing targets in the U.S., generating around $300 million in total to partly fund Lightspeed.
- Lightspeed has also racked up about 1 billion Canadian dollars in combined funding from Canada’s federal government and Quebec’s provincial government to date.
- Telesat secured a $500 million bond in April as part of a debt package that will fund 60% of Lightspeed’s cost. It is still in talks with export credit agencies (ECAs) about raising more debt to back the project.
- “We are in what I would describe as very advanced discussions with the export credit agencies about the terms under which they would fund the program,” Goldberg said.
- Equity will finance the remaining 40% of the project.
- Lightspeed will be an important part of Telesat’s growth story for investors, according to Goldberg, as it prepares to put its shares on the public markets in the third quarter of this year.
- He said about 25% of Telesat’s current geostationary orbit (GEO) business could be served better from satellites in LEO.
- COVID-19 impacts on commercial aero and maritime markets dragged Telesat revenues down 6% to 190 million Canadian dollars for the first quarter of 2021, compared with the same period in 2020 when adjusted for foreign exchange rate changes.
- Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) fell 5% to 152 million Canadian dollars.
- Before the pandemic, Goldberg said aero and maritime represented about 10% of its commercial business and is now “a little bit lower, given COVID.”
- However, he is optimistic this will bounce back as the pandemic subsides.
- He said “for sure, when our customers in the aero and maritime market, particularly the cruise market, are back in full swing, that’s got to have tailwinds for us.”
- Europe’s Thales Alenia Space is building Lightspeed satellites, managing network software and gateway integration, in a $3 billion contract.
- Telesat has early arrangements to start launching nearly 300 satellites for the constellation next year, for services to begin in 2023.
- It has lined up Blue Origin and Relativity Space, which have yet to conduct an orbital launch, and Goldberg said it is in talks with others that he expects to announce this year.
- He said he is confident Blue Origin will be up and running by the time it needs to launch.
- “For us, we have real conviction that they’re going to be in the game when we need them to be in the game,” Goldberg said.
- The New Glenn rocket Blue Origin is developing could launch around 30 of its satellites at a time, he said, depending on the orbit. SpaceX could launch 15-16 satellites to an inclined orbit on a Falcon 9 and “something like 13” to a polar orbit.
- Launches will happen “around two years time,” he added.
Eying Up the Competition
- That puts it behind the megaconstellations SpaceX and OneWeb are actively deploying.
- But Goldberg said that unlike SpaceX’s Starlink, Lightspeed will focus on enterprise customers and not the consumer market. Unlike OneWeb, which is going after a similar market, he said Telesat has focused on the enterprise sector from the start.
- He said if Telesat “from day one were focused on the consumer market, our constellation architecture would look different if you want [to build] a constellation to efficiently address one you’re almost by definition trading off your ability to efficiently address the other.”
- The company never expected to enter the LEO market without any competition, Goldberg added.
- “We’ve been operating in a highly competitive environment for decades now and I don’t expect the future to be any different,” he said.
- “This is not going to be a ‘winner take all’ game.”
- Meanwhile, Telesat continues to explore options for satellites in its GEO fleet that are coming up for replacement as they near the end of their operational lives.
- “Provided that we’ve got a good business case to replace those satellites then we’ll certainly allocate some of the cash that … should be building up at Telesat Canada for those purposes.”
• April 14, 2021: Canadian satellite operator Telesat plans to raise $500 million with a bond to help fund its $5 billion Lightspeed broadband constellation. 11)
- The senior secured notes due 2026 will be issued around April 27 as part of a debt package that will fund 60% of the project’s cost, with the remaining 40% financed through equity.
- Dan Goldberg, Telesat’s CEO, told a session of the Satellite 2021 LEO Digital Forum April 6 that he expects to complete Lightspeed’s financing “in the next couple of months.”
- The company is also close to finalizing plans to start launching the constellation of nearly 300 satellites from next year. It has early launch arrangements with Jeff Bezos’ Blue Origin and 3D printing specialist Relativity Space. Neither company has conducted an orbital launch.
- Europe’s Thales Alenia Space is building the low Earth orbit (LEO) satellites in a $3 billion contract, including network management software and gateway integration.
- As part of plans to fund the multibillion-dollar constellation, Telesat said Nov. 24 it will form a new Canadian company to list shares on the Nasdaq stock exchange in the third quarter of 2021.
- Telesat is combining with Loral Space & Communications, a major shareholder that already trades on the Nasdaq.
- Loral and Canadian pension fund manager PSP Investments are Telesat’s largest shareholders, after buying the company in 2007 for about $3 billion in a leveraged buyout deal.
- Telesat has also said it is considering debt financing from an export-credit agency (ECA), which used to be prevalent in the commercial space industry before bonds and other financing alternatives rose to the fore.
- Meanwhile, the company has been receiving strong government support to develop Lightspeed.
- Canada’s federal government awarded Telesat 600 million Canadian dollars in funding in November to provide subsidized broadband services to rural communities in the country.
- Separately, Quebec’s provincial government said Feb. 18 it will invest 400 million Canadian dollars in Lightspeed, and Canadian space hardware maker MDA, to build the network’s phased array antennas. The Quebec government is splitting its investment between equity in Telesat and a loan to the company.
- Telesat expects Lightspeed will start offering services in 2023, putting it behind other broadband megaconstellations Starlink and OneWeb.
- However, the company plans to leverage its existing geosynchronous (GEO) satellite network, and the expertise gained during five decades in business.
- Telesat’s fleet comprises 15 GEO satellites, one LEO test spacecraft and a Canadian payload on U.S.-based operator Viasat’s ViaSat-1.
- Unlike megaconstellation frontrunner Starlink, which has 1,378 satellites in orbit, Lightspeed will not provide consumer broadband services. It will focus on markets including backhaul services for mobile network operators and internet service providers, aeronautical and maritime connectivity, and government customers.
- Telesat’s new bond carries a 5.625% coupon, which is the annual interest payment that its holder receives from the bond’s issue date until it matures.
- The debt prompted Moody’s Investors Service, the ratings agency, to downgrade the operator’s corporate family rating (CFR) by one notch to B2 from B1.
- Peter Adu, Moody’s vice president and senior analyst, said it downgraded the company because the bond will change its ratio of debt to adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, from 5.1 times 2020 earnings to 6.1 times earnings.
• April 07, 2021: Telesat expects to finalize the financing for its Lightspeed broadband constellation in the next few months, along with contracts to launch the fleet of nearly 300 satellites. 12)
- Telesat selected Thales Alenia Space Feb. 9 as the prime contractor to build the constellation of low Earth orbit satellites. That contract, which includes network management software and integration of the satellites with gateways, was valued at $3 billion, with Telesat estimating the total cost of the system at $5 billion.
- During a session of the Satellite 2021 LEO Digital Forum April 6, Dan Goldberg, president and chief executive of Telesat, confirmed the $5 billion total cost for Lightspeed. The system will be financed with a mix of debt and equity, with 60% of the financing from debt and 40% from equity.
- “We’re almost done on the journey to put the financing in place,” he said. “I expect that will get done in the next couple of months.”
- He offered a similar time frame for finalizing plans to launch the constellation. The company has a contract with Blue Origin announced more than two years ago for an unspecified number of New Glenn launches. It also has a contract with Relativity Space for launches on its Terran 1 small launch vehicle to place in orbit individual satellites to fill gaps in the system.
- With Telesat seeking to start Lightspeed launches in 2022, but New Glenn not scheduled to make its debut until at least the fourth quarter of 2022, Telesat is likely to work with other launch companies. “We’re well-engaged with other launch providers right now as well,” Goldberg said. “In the coming months I think we’ll be in a position to make some announcements.”
- Among major operators of geostationary communications satellites, Telesat has been the most aggressive in pursuing a LEO constellation. While SES has its O3b system of satellites in medium Earth orbit, Telesat’s Lightspeed will be far larger, and compete directly with new entrants like SpaceX, OneWeb and Amazon’s Project Kuiper.
- Telesat is focusing on several markets for Lightspeed, including backhaul services for mobile network operators and internet service providers, aeronautical and maritime connectivity, and government customers. “We see huge growth there, provided that you bring the right value proposition to the market,” he said. “What those verticals are looking for are big, fast, affordable links. We believe that it’s essential that they be low latency.”
- Those requirements, as well a desire for “ubiquitous” connectivity, including in polar regions, drove Telesat to a LEO constellation. “We believe we’re going to answer those sets of requirements,” he said. “We’re super bullish about our opportunities.”
- Asked if Telesat pursued a LEO system out of fear of becoming less relevant had it continued to be solely a GEO operator, Goldberg hesitated before answering. “I think it’s something we had to do,” he ultimately said, based on its analysis of the growth of the broadband market and how to best serve it. “For us, you inescapably land at LEO.”
- Telesat, he added, is not abandoning GEO, citing its strengths in other markets, like direct-to-home (DTH) television. “I believe that DTH is not going be best provided from LEO any time soon,” a time frame he defined as a decade or more. “The DTH business, as we know it today, is still going to be around for quite some time, and that is served very, very well from GEO.”
- However, he sees future growth coming from broadband services coming from LEO. “I think LEO is going to be the predominant architecture, but I don’t think it’s going to happen overnight,” he said. “There’s going to be a transition. That transition almost always takes longer than we expect.”
1) ”Telesat to Redefine Global Broadband Connectivity with Telesat Lightspeed, the World’s Most Advanced Low Earth Orbit (LEO) Satellite Network,” Telesat Press Release, 9 February 2021, URL: https://www.telesat.com/press/press-releases/manufacturer-announcement/
2) Jason Rainbow, ”Telesat requests UK license to connect Lightspeed terminals,” SpaceNews, 24 June 2022, URL: https://spacenews.com/telesat-requests-uk-license-to-connect-lightspeed-terminals/
3) Jason Rainbow, ”Telesat tests LEO broadband prototype in India,” SpaceNews, 19 May 2022, URL: https://spacenews.com/telesat-tests-leo-broadband-prototype-in-india/
4) Jason Rainbow, ”Telesat to order 100 fewer satellites for LEO constellation,” SpaceNews, 6 May 2022, URL: https://spacenews.com/telesat-to-order-90-fewer-satellites-for-leo-constellation/
5) Jason Rainbow, ”Telesat gets security clearance to serve US government directly,” SpaceNews, 4 April 2022, URL: https://spacenews.com/telesat-gets-security-clearance-to-serve-us-government-directly/
6) Jason Rainbow, ”Telesat Lightspeed aiming to break ground early next year,” SpaceNews, 1 February 2022, URL: https://spacenews.com/telesat-lightspeed-aiming-to-break-ground-early-next-year/
7) Jason Rainbow, ”Telesat goes public in a boost for LEO constellation funding talks,” SpaceNews, 19 November 2021, URL: https://spacenews.com/telesat-goes-public-in-a-boost-for-lightspeeds-funding-talks/
8) Jason Rainbow, ”Telesat close to completing Lightspeed funding,” SpaceNews, 12 August 2021, URL: https://spacenews.com/telesat-close-to-completing-lightspeed-funding/
9) Jason Rainbow, ”Ontario’s government invests in Lightspeed constellation,” SpaceNews, 6 August 2021, URL: https://spacenews.com/ontarios-government-invests-in-lightspeed-constellation/
10) Jason Rainbow, ”Telesat ready to move fast on selling spectrum to fund Lightspeed constellation,” SpaceNews, 14 May 2021, URL: https://spacenews.com/telesat-ready-to-move-fast-on-selling-spectrum-to-fund-lightspeed-constellation/
11) Jason Rainbow, ”Telesat raising $500 million in debt for Lightspeed broadband network,” SpaceNews, 14 April 2021, URL: https://spacenews.com/telesat-raising-500-million-in-debt-for-lightspeed-broadband-network/
12) Jeff Foust, ”Telesat completing financing for Lightspeed constellation,” SpaceNews, 7 April 2021, URL: https://spacenews.com/telesat-completing-financing-for-lightspeed-constellation/
The information compiled and edited in this article was provided by Herbert J. Kramer from his documentation of: ”Observation of the Earth and Its Environment: Survey of Missions and Sensors” (Springer Verlag) as well as many other sources after the publication of the 4th edition in 2002. - Comments and corrections to this article are always welcome for further updates (email@example.com).
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