The federal government said it is prepared to loan a subsidiary of Telesat $2.14 billion toward the launch of low-earth orbit satellites intended to provide hard-to-reach areas with connectivity toward the goal of connecting the entire country to high-speed internet by 2030.
After months of negotiations, Innovation Canada and Telesat Leo struck a deal-in-principle on March 28 for the loan with a payback period plus interest of 15 years. In return, the Canadian government will get warrants for 10 per cent of the common shares of Telesat LEO based on a $3-billion valuation.
The loan has not been finalized and is subject to conditions.
The satellite operator said the significance of this loan is a lower borrowing cost that will save it money in a period of high inflation and interest rates.
“We estimate that, in addition to the roughly US$2 billion of capital cost savings, we will realize roughly US$750 million of savings in reduced borrowing costs relative to the original Telesat Lightspeed program,” Telesat CEO Dan Goldberg said in a press release. “Telesat Lightspeed will revolutionize broadband connectivity for enterprise and government users and represents a highly compelling growth and value creation opportunity for Telesat and its stakeholders.”
“Telesat Lightspeed is a highly innovative and disruptive global broadband network and the largest space program in Canada’s long and distinguished history as a space faring nation,” Goldberg said. “I am delighted with the engagement we have had with the Government of Canada on this flagship program, which will help bridge the global digital divide, create and sustain thousands of high-quality jobs in Canada, spur domestic innovation, investment and exports, and ensure that Canada is at the forefront of the rapidly growing New Space Economy. The Government of Canada has been a strong supporter of the Telesat Lightspeed program and we applaud their leadership and foresight.”
The new committed supersedes a previous one in the amount of $1.44 billion by the federal government back in 2021. No investments were made from that original amount.
As part of that original agreement-in-principal announcement, Telesat said by 2024 it would “enable broadband Internet and LTE and 5G connectivity in Canada.” It added at the time that the technology would connect around 40,000 households in rural and remote Canadian regions and “will allow for significantly better service offerings in many regions of the country where current speeds struggle to meet the demands of an increasingly digital world.”
In the fall, Telesat contracted SpaceX for 14 satellite launches to deliver multiple Telesat satellites into low-earth orbit.
Clarification: This story has been clarified to say that the loan is not finalized and that it is replacing the $1.44 billion the federal government committed in 2021.
