Canada Invests $1.44 Billion in Telesat for High-Speed ​​Satellite Internet

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The federal government says it is investing $1.44 billion in Ottawa-based Telesat and its high-speed satellite Internet solution, known as Telesat Lightspeed.

Telesat Lightspeed is the company’s low-Earth orbit (LEO) satellite constellation, which is expected to provide broadband internet to rural areas of Canada by supplying signals to commercial providers for resale to consumers. This business model is different from Elon Musk’s SpaceX LEO offering, known as Starlink, which offers direct sales to consumers.

According to the federal government on Thursday, an agreement in principle will provide financing to Telesat through a $790 million repayable loan and a $650 million investment in preferred stock, with dividend yields. The government will also receive “warrants convertible into Telesat common stock so Canadians can share in Telesat Lightspeed’s financial advantage.”

“With funding announced today and other funding sources already in place, including the previously announced investment by the government of Quebec, Telesat has now arranged approximately $4 billion in funding for the program. We expect to secure the remaining financial commitments needed to fully fund Telesat Lightspeed in the near term,” Daniel S. Goldberg, President and CEO of Telesat, said in a statement.

Telesat Lightspeed is expected to bring broadband internet from 2024, along with LTE and 5G connectivity to rural areas, connecting nearly 40,000 households (at a cost of $36,000 per household). The federal government says it plans to connect all Canadian households to high-speed internet by 2030, including many indigenous communities in the north.

Telesat says it will invest in Canada and says it will spend $3.6 billion in capital expenditures, more than $1.6 billion in operating expenses, retain up to 700 jobs over the next 15 years and also support 100 co-op jobs for post-secondary students and also $800,000 in scholarships.

Telesat’s satellites are not made in Canada. The company previously announced that its satellites would be made by Franco-Italian space hardware manufacturer Thales Alenia Space for a $3 billion USD contract.

“Today’s announcement is about building a strong future for Canada. It strengthens our position as a global leader in tomorrow’s technologies and helps ensure that all Canadian communities have access to the critical infrastructure that is high-speed internet.” said Chrystia Freeland, Deputy Prime Minister and Secretary of the Treasury, in a statement.

So far, Telesat has two satellites in space, compared to the 1,700 Starlink satellites that SpaceX has launched. Telesat satellites are larger and heavier (cost more to launch), and will orbit higher above the Earth than Starlink satellites, serving a larger area with a smaller constellation of 298 satellites.

Starlink plans to have up to 12,000 satellites in orbit, with frequent launches of 60 at a time thanks to its parent company SpaceX’s rockets. Telesat has plans to launch its first satellites through Amazon’s Jeff Bezos and its rocket company Blue Origin.

Earlier this month, SpaceX said it now has 90,000 customers in 12 countries, including Canada. The cost of Starlink is $649 CAD for a satellite dish and wireless router, plus $129 CAD monthly service fee. Customers see download speeds in excess of 200 Mbps.

If the federal government invested $1.44 billion in SpaceX’s Starlink, it would enable 2,218,798 home satellite dishes at retail prices for a product already in use. But unfortunately, SpaceX and Starlink are not based in Canada.

Here’s a good introduction on Telesat versus SpaceX Starlink, despite both targeting different markets.

Last week, the federal government and Ontario announced a $148 million joint investment in Telesat Lightspeed to bring high-speed connectivity to Northwestern Ontario.

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