Telesat (TSAT) Investor update summary

Major contract announcement and business update

• Secured a contract valued at up to $2.3 billion over 15 years with the Government of Canada for the Mil-Ka portion of the ESCP program, with two five-year options potentially raising the total to $2.7 billion, supporting Arctic connectivity for Canadian Armed Forces and allied interoperability, and milestone-based payments funding constellation expansion to 225 satellites.

• $1.5 billion of the contract will be paid before service begins, supporting the constellation build-out; further significant contract opportunities are expected for Mil-Ka, X-band, and UHF capabilities.

• The expanded constellation is fully funded, with all launch vehicles secured except for one Falcon 9, and the global service start date remains Q1 2028.

• Total committed investment in Lightspeed rises to approximately $7 billion, with $2.7 billion invested to date and the remainder funded by cash, government financing, vendor financing, and milestone payments.

• Backlog increases by $3.3 billion, and milestone payments will be recognized as deferred revenue over the contract term, with annual cash inflows through 2043.

Market opportunity and demand outlook

• Expanded constellation and Mil-Ka capability position the company for additional defense requirements in Canada and globally, with ongoing discussions with NATO allies and other partners.

• NATO defense spending is projected to rise significantly, with the addressable market for satellite defense broadband connectivity estimated at $43 billion by 2032.

• Lightspeed’s 2032 revenue forecast increases to $4.9 billion, up from $3.2 billion, with 46% expected from the defense sector, reflecting a shift in revenue mix due to geopolitical changes and Mil-Ka addition.

• The addressable market for 2032 is estimated at nearly $360 billion, with Lightspeed targeting a 1.3% share overall and 5% of the defense broadband market.

• The company expects to capture 7% of the aero and 13% of the maritime segments, with enterprise representing a smaller share due to the defense focus.

Constellation expansion and technical details

• The constellation will expand from 156 to 225 satellites, a 44% increase, with all satellites being dual-purpose for commercial Ka and Mil-Ka use, built by MDA Space and launched by SpaceX.

• The system is flexible, allowing dynamic allocation of satellite power between commercial and military uses based on demand.

• The Arctic region will have around 100 Gbps of Mil-Ka capacity, with significant additional capacity available for Canada and allies.

• Future plans include a potential expansion to 295 satellites by 2032, with further growth dependent on demand and possible strategic partnerships.

• The program includes end-to-end network integration, user terminals, ground infrastructure, training, and support services.