The Canadian telecommunications satellite operator, Telesat, has sent shockwaves through the industry by announcing a change in suppliers for its upcoming Lightspeed global internet network. In a surprising move, Telesat has decided to partner with Canadian space company MDA instead of the previously contracted manufacturer, Thales Alenia Space. This strategic shift is projected to result in “total capital cost savings” of approximately $2 billion, a staggering amount that has investors buzzing with excitement. Unsurprisingly, the stock prices of Telesat soared, surging by as much as 64% in early trading, indicating a strong market reception to this bold decision.
Telesat’s ambitious plan involves launching the first Lightspeed satellites in mid-2026, with global service commencing once the initial batch of 156 satellites is successfully deployed in orbit. Ultimately, the network will consist of 198 satellites, providing unparalleled coverage and connectivity worldwide. With MDA at the helm of satellite construction, Telesat expects significant advancements and innovation in the network’s architecture, ensuring a cutting-edge and reliable internet experience for its users.
Telesat’s decision to switch suppliers was primarily driven by the desire to optimize its operations and reduce costs. By entrusting the construction of Lightspeed satellites to a domestic company like MDA, Telesat leverages their expertise to achieve substantial savings in capital expenditure. Telesat CEO, Dan Goldberg, expressed pride in the Telesat team for their innovative work, which has resulted in dramatically reduced costs. This move underscores the company’s commitment to forward-thinking strategies that prioritize financial efficiency without compromising on quality and performance.
Contrary to directly competing in the consumer market against industry giants like SpaceX’s Starlink and Amazon’s Kuiper, Telesat’s Lightspeed network will target enterprise customers. By maintaining their focus on government and commercial markets, Telesat aims to provide tailored solutions that cater to the unique needs of these sectors. This strategy aligns with Telesat’s existing business model and positions the company for continued success and growth in high-demand areas where competition is relatively limited.
In addition to the groundbreaking supplier change, Telesat also reported its second-quarter results, showcasing its potential for sustained success. Despite a 4% decline in revenue compared to the same period the previous year, the company experienced a remarkable shift in net income. Telesat’s net income skyrocketed to $520 million in the quarter, a remarkable increase from a net loss of $4 million during the same period in the previous year. This exceptional financial performance can primarily be attributed to a $260 million payment received from the FCC for clearing spectrum for 5G use in the United States. Encouraged by these positive developments, Telesat maintains its full-year 2023 revenue guidance, projecting earnings between $690 and $710 million.
Telesat’s decision to change suppliers for its Lightspeed global internet network marks a pivotal moment in the telecommunications industry. The collaboration with MDA and the resulting cost savings not only demonstrate Telesat’s commitment to innovation but also position the company as a formidable player in the race to provide reliable and high-speed internet connectivity worldwide. By maintaining a laser focus on enterprise customers and capitalizing on its strong financial performance, Telesat is poised to revolutionize the global internet landscape and carve out a unique space for itself in this rapidly evolving market.