OTTAWA — Telesat’s much-delayed constellation of low-orbit internet satellites is a go, it announced Friday, after switching to novel technology from MDA that will cut the cost by more than US$2 billion while giving MDA C$2.1 billion of work.

The deal between the two Canadian space stalwarts sent Telesat shares soaring as much as 50 per cent on the Toronto Stock Exchange Friday morning. Here’s what else you need to know:

The long wait: Ottawa-based Telesat’s earlier plans for a low Earth-orbit (LEO) constellation called Lightspeed to deliver industrial-grade internet connections to remote areas was scotched by the pandemic, supply-chain troubles and inflation. Prime contractor Thales Alenia of France informed Telesat CEO Dan Goldberg in October 2021 it couldn’t deliver 298 satellites at the previously agreed price, which was heavily subsidized by the federal government, Ontario and Quebec.

Goldberg told The Logic last fall that he was close to securing more money for a 198-satellite system and expected to nail down the roughly US$5.5 billion he needed by the end of 2022. He didn’t.

“It’s been a long road,” Goldberg told analysts Friday. “Much longer than we anticipated, certainly much longer than I anticipated.”

The new solution: Brampton, Ont.-based MDA, which was to supply analogue technology for the Thales satellites, had been working in parallel on new “software-defined digital satellites.”

MDA chief executive Mike Greenley told The Logic in an interview Friday that the new technology gives its satellites more beams of data and allows them to be directed precisely to meet real-time demand.

“All of that adjustability allows the operator to have much more efficient satellite operations,” Greenley said.

Telesat’s Goldberg said the company had previously decided digital beam-forming technology wasn’t ready. More recently, its engineers took another look and concluded that “not only could we leverage it, but that we had to, given the massive efficiencies it delivers.”

The funding: Telesat now pegs the cost of Lightspeed at US$3.5 billion, covered by the government subsidies, its own capital and “certain vendor financing” (which both Goldberg and Greenley said is not coming from MDA).

It expects to launch 156 satellites starting in 2026, to begin service in late 2027, and to fund the next 42 satellites with revenue from the initial swarm.

The reaction: Both Telesat and MDA announced quarterly results, too. Telesat recorded a six per cent decline in revenue—it needs Lightspeed to replace its gradually decaying business in traditional satellites—though it booked net income of $520 million partly thanks to a payout for wireless spectrum it no longer uses. 

MDA reported net income of $9.9 million on revenue that increased 27 per cent from the previous year. It won’t add the new Telesat business to its backlog of contracted work until the next quarter. MDA shares closed up more than 23 per cent.