- Telesat switches to Canadian space company MDA, saving $2 billion on its planned Lightspeed global internet network.
- Stock jumps as much as 64% following the announcement, reflecting market enthusiasm.
- Second-quarter results show a notable increase in net income, buoyed by a $260 million payment from the FCC.
Telesat, the Canadian telecommunications satellite company, made waves on the stock market after it announced a major change in plans for its upcoming Lightspeed global internet network. The decision to switch suppliers from French-Italian manufacturer Thales Alenia Space to Canadian space firm MDA has turned more than a few heads. The new deal is expected to save the company a whopping $2 billion in total capital costs.
The company's ambitious Lightspeed project is set to begin its first phase in mid-2026, with the launch of 156 satellites out of a total planned network of 198. The expectation is that this network will enable global service, giving Telesat a significant edge in the market. The buzz around this announcement has caused Telesat's stock to jump by an impressive 64% before settling closer to 50%.
Telesat's CEO, Dan Goldberg, expressed immense pride in the team's innovative approach that led to this cost-saving measure. The initial plan involved contracting Thales Alenia Space for the manufacture of satellites at a hefty price tag of $5 billion. This cost included $3 billion for the satellites, plus the additional expenses of rocket launches, ground infrastructure, and software development.
Goldberg was quick to clarify that Telesat's Lightspeed is not targeting the same market as SpaceX's Starlink or Amazon's Kuiper. Instead, the project aims to cater to Telesat's traditional clientele, comprising government and commercial markets. These are areas where Starlink has made inroads over the past year.
In addition to this announcement, Telesat's second-quarter results were released on Friday. While revenue decreased by 4% to $180 million, net income soared to $520 million, a substantial leap from a net loss of $4 million the previous year. This shift was largely due to a $260 million payment from the FCC for clearing spectrum for 5G use in the U.S. The company also stands by its full-year 2023 revenue guidance of between $690 and $710 million.
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