Monday, May 27, 2024
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Telesat Announces Supplier Swap for Lightspeed Network, Stock Surges

Canadian telecommunications satellite operator Telesat saw its stock surge by as much as 64% on Friday after announcing a significant change in its planned Telesat Lightspeed global internet network. The company revealed that it would swap suppliers, with Canadian space company MDA taking over the manufacturing of the Lightspeed satellites from French-Italian manufacturer Thales Alenia Space.

A Strategic Move

The decision to switch suppliers will result in “total capital cost savings” of about $2 billion, according to Telesat. The company had previously contracted Thales Alenia Space at an estimated cost of $5 billion to build the network, including about $3 billion for the satellites, plus additional costs for rocket launches, ground infrastructure, and software development.

Telesat CEO Dan Goldberg expressed pride in the team’s innovative work, emphasizing that the move would lead to “dramatically reduced costs.”

Lightspeed Network Details

Telesat plans to begin launching the first Lightspeed satellites in mid-2026, with global service commencing once the first 156 satellites are in orbit. The full network will consist of 198 satellites.

Unlike SpaceX’s Starlink or Amazon’s Kuiper, Lightspeed is not intended to compete in direct-to-consumer markets. Instead, it will maintain Telesat’s existing focus on enterprise customers, including government and commercial markets.

Financial Highlights

Along with the supplier swap announcement, Telesat also reported its second-quarter results. The company’s revenue was $180 million, a decrease of 4% from the same period a year prior. However, net income jumped to $520 million, compared to a net loss of $4 million a year prior. This dramatic shift was attributed largely to a $260 million payment from the FCC for clearing spectrum for 5G use in the U.S.

Telesat reaffirmed its full-year 2023 revenue guidance, expecting to bring in between $690 million and $710 million.

Conclusion

Telesat’s decision to switch suppliers for its Lightspeed global internet network is a significant development that has been met with strong market approval. The move not only promises substantial cost savings but also aligns with the company’s strategic focus on enterprise customers. With the anticipation of the Lightspeed network launch and the positive financial outlook, Telesat continues to position itself as a key player in the satellite communications industry.

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