The government of Ontario announced today that it was investing $109 million into the Telesat Lightspeed Low Earth Orbit (LEO) telecommunication constellation. That brings the total investment for Lightspeed to $1.61 billion since last November.
The announcement was made early this afternoon at Telesat’s Alan Park teleport (ground station) just east of Hanover, Ontario by Vic Fedeli, Ontario’s Minister of Economic Development, Job Creation and Trade. He was joined by Kinga Surma, Minister of Infrastructure, Bill Walker, MPP for Bruce-Grey-Owen Sound, Lisa Thompson, MPP for Huron-Bruce, and Daniel Goldberg, CEO of Telesat.
Minister Fedeli said, “supporting Telesat is an investment in our economic recovery, economic growth and good jobs, now and on the horizon. This is an investment in continued research and development, and the commercialization of satellite technologies in Ontario with economic benefits that will resonate in communities across the province.”
For its $109 million investment, the Province of Ontario will get “40 gigabits of broadband capacity on Telesat Lightspeed for local service provider use for five years. Following a signed agreement, Telesat and Ontario would determine how the dedicated capacity would be used based on the connectivity needs of the day.”
Telesat stated in their press release that “through this 5-year partnership, a dedicated Telesat Lightspeed capacity pool will be made available at substantially reduced rates to Canadian Internet service providers (ISPs), including Indigenous owned and operated ISPs, as well as mobile network operators to expand high-speed Internet and LTE/5G networks to Ontario’s unserved and underserved communities.”
Telesat has also committed to “about $20 million in capital expenditures including a new, state-of-the-art gateway landing station at Telesat’s Allan Park teleport near Hanover as well as the expansion of the company’s corporate headquarters in Ottawa.”
During the press conference I asked Minister Fedeli on the timing of the announcement as both the federal and Quebec governments were onboard much sooner and Telsat is headquarter in Ontario. Minister Fedeli responded by saying “I think the timing wasn’t as structured, it was something that we began investigating, working with Telesat, working hand in hand, seeing how we can maximize the opportunities for Ontario, seeing exactly how we can maximize the investment from Telesat up to $6.5 billion, seeing where we can come into play from the province of Ontario and we ended at $109 million. So this is a truly great opportunity. The timing was just coincidental that we are now completed and ready to make the presentation and so that both are optimized.”
The announcement follows a joint provincial and federal announcement made on July 29, 2021 that will see investment up to “$1.2 billion in 58 new projects to bring high-speed internet to up to 280,000 rural households in hundreds of communities through the provincial Improving Connectivity for Ontario (ICON) program and the federal Universal Broadband Fund programs.”
The ramp-up in investment in Telesat Lightspeed began last November 20, 2020 when Prime Minister Trudeau announced that a previously agreed to MOU had been finalized. The federal government will pay Telesat $600 million over 10 years for capacity on the Lightspeed constellation which will be provided to Internet Service Providers at reduced rate.
In February of this year the Quebec government announced $400 million in funding, $200 million as a loan and $200 million as a preferred equity. In April of this year Telesat closed a Secured Notes Offering of $500 million for Lightspeed. And just a few weeks ago Loral Space & Communications, the largest shareholder in Telesat, presented shareholders their updated plan for their upcoming initial public offering.
While Telesat has moved at a slower pace than others looking for market share in the LEO telecom market, their methodical planning which included bringing government onboard as an investor and customer appears to be working.
Telesat has been pivoting its business to remain relevant and a leader in the changing satellite telecommunications marketplace where LEO satellite constellations will play a major role moving forward with potential earnings that couldn’t be ignored. Telesat’s traditional Geostationary (GEO) Satellite market is still important, but LEO will drive growth going forward.
Watch the Government of Ontario announcement.