Telesat taps Thales Alenia Space for $3 bln deal to build low earth orbit satellites (updated)

Telesat

09/02/2021 14:39

(Adds Leonardo and Thales share price moves)
    By Steve Scherer
    OTTAWA, Feb 9 (Reuters) - Canadian satellite company Telesat
on Tuesday tapped Thales Alenia Space to build 300 low earth
orbit (LEO) telecommunications satellites in a contract worth
about $3 billion, saying the first launch would be in about two
years.
    LEO satellites operate 36 times closer to the earth than
traditional ones so they take less time to send and receive
information, leading to better and faster broadband service even
in remote areas.
    "We are extremely bullish on the opportunity to get into the
market and capture the really surging demand for global
broadband connectivity," Telesat President and Chief Executive
Dan Goldberg said in an interview.
    "We're going to start launching our first satellites in
about two years time. We'll be in service in the higher
latitudes in late 2023, and then we'll have full global service
in 2024," Goldberg said.  
    Thales Alenia Space (TAS) is going to build the first 13
satellites at its facility in Toulouse, Hervé Derrey, TAS
president and CEO, said in an interview. TAS is a joint venture
between Italy’s Leonardo  LDOF.MI  and France’s Thales
 TCFP.PA . 
    Immediately after the announcment, Leonardo shares rose 1.7%
and Thales gained 1.4%. 
    Telesat's satellites will create a "revolutionary new
constellation program that will really outperform all existing
and conceived programs," Derrey said.
    Telesat is moving into the competitive new realm of LEO
networks with the aim to service so-called enterprise customers
who include mobile operators, governments, aircraft and shipping
companies.
    "This is not a consumer broadband play," Goldberg said.
    Most of the LEO competition - which includes Elon Musk's
SpaceX and its Starlink constellation and Jeff Bezos' Blue
Origin and its Project Kuiper - is focused on the consumer
market.
    Financing will be finalized in the "coming months", Goldberg
said, adding that about $2 billion will be in equity and $3
billion in debt for the total $5 billion project.
    The privately-held Telesat, owned by Canada's Public Sector
Pension Investment Board and Loral Space & Communications Inc
 LORL.O , will become a public entity on the Nasdaq as planned
at about mid-year, Goldberg said.
    "We could issue equity that would be used to support the
financing around this LEO project," Goldberg said of the Nasdaq
listing. 
    A further domestic listing on the Toronto Stock Exchange
"would make a lot of sense", he added without providing details.

 (Reporting by Steve Scherer, additional reporting by Francesca
Landini in Milan;
Editing by Marguerita Choy, Kirsten Donovan)
 ((steve.scherer@thomsonreuters.com; +1-647-480-7889;))