Globe & Mail Satellite operator Telesat Corp.
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says its Lightspeed constellation is back on track with a switch to MDA Ltd. increase
as its key supplier, allowing it to shave US$2-billion from its planned capital expenditures and sending its stock price soaring. The project, which will beam internet to remote areas from a constellation of 198 low-Earth-orbit (LEO) satellites, was originally slated to cost US$5-billion.
However, the project hit a snag when the COVID-19 pandemic caused supply chain issues and inflation to increase the cost to US$5.5-billion. That presented a setback for Telesat, which needed to raise additional funding.
“Candidly, that was not a lot of fun,” Telesat CEO Dan Goldberg told The Globe and Mail in an interview. “Ever since, we’ve been working hard to get the program back on track.”
Telesat had originally planned to contract French-Italian aerospace manufacturer Thales Alenia Space to build it a constellation of 298 satellites.
MDA, the Brampton, Ont.-based space equipment company that created the iconic Canadarm, was to manufacture the phased array antennas for the satellites.
However, Telesat was “working super hard, kind of behind the scenes, trying to find a better path,” Mr. Goldberg said.
Meanwhile, MDA, formerly known as MacDonald, Dettwiler and Associates, has been investing heavily in digital beamforming technology and advancing as a company, including becoming the prime contractor for the design, manufacture, assembly and testing of 17 new LEO satellites for U.S. satellite communications company Globalstar Inc.
“They’ve now got this digital beam former, it’s ready for primetime and it’s massively more efficient and capable than the other antenna,” Mr. Goldberg said. In addition, MDA has designed an onboard processor for its satellites that integrates with the digital beamformers, he added. “Suffice to say, that has been transformative for the project.”
MDA’s chief executive Mike Greenley said the new technology will allow Telesat to reconfigure in real time where each satellite’s beams are pointing, as well as their size and capacity. Earlier satellites did contain some computing technologies, but they were “more static,” Mr. Greenley said.
“Now we have onboard computing with software ... which allows the operator – in this case, Telesat – to optimize the performance for their customers, to give them the communication capacity that they want, where they need it, when they need it, and to the volume that they need it. And so it results in a much more efficient communication satellite,” he said.
Telesat’s stock, which has been in decline since its initial public offering in late 2021, skyrocketed more than 45 per cent to $16.55 on Toronto Stock Exchange in Friday morning trading, while MDA’s stock was up more than 22 per cent to $10.32.
Lightspeed, which has been scaled down to 198 satellites, is now fully funded for the first 156 satellites, which will allow Telesat to deliver global service, Mr. Goldberg said. The remaining 42 satellites will be paid for out of the company’s cash flows once its constellation is in service by the end of 2027, he added. Satellite launches are scheduled to start in 2026.
Mr. Goldberg said Telesat will not incur any financial penalties for switching suppliers.
Unlike SpaceX’s Starlink, which is offering satellite internet directly to consumers, Telesat is focusing on the enterprise segment of the market, such as governments, telecoms and the airline and maritime industries. The company already has relationships with enterprise customers, which it currently serves through its fleet of geostationary satellites, each of which stays in a fixed spot some 36,000 kilometres above an area of Earth.
The new LEO constellation, which will orbit just 1,000 kilometres above the Earth, will cut down on latency, an industry term for lag time.
The project’s total cost is now expected to be in the realm of US$3.5-billion, Mr. Goldberg said. That means Telesat’s financing costs are also lower, while the return on investment is higher, he noted.
“COVID set us back, but perversely I think we’ve ended up in a better place here,” Mr. Goldberg said. “I’m an optimist. I always believe that things work out for the best. And this for me is another example of that.”
For MDA, the $2.1-billion contract is the largest order in its history. The company will be expanding its team and its production facilities in Montreal, Mr. Greenley said.
“It’s a big day for the Canadian technology industry and the space industry in Canada,” he said.