Telesat Expands Lightspeed Capacity by 44% After Securing $1.93bn Arctic Military Satcom Contract

Telesat has secured a landmark government contract for its planned Lightspeed low Earth orbit (LEO) network, marking a pivotal moment for the Canadian satellite operator and reinforcing the strategic importance of sovereign space connectivity in the Arctic region. The 15-year agreement, valued at C$2.3 billion (US$1.65 billion), was signed with Canada's Defence Investment Agency (DIA) to provide military Ka-band (Mil-Ka) connectivity between 65 and 90 degrees North latitude for the Canadian Armed Forces.

The contract, awarded under the Enhanced Satellite Communications Project – Polar (ESCP-P) program, will leverage the Telesat Lightspeed LEO constellation beginning in 2028. It includes two five-year option periods, each valued at US$143.44 million, bringing the total potential contract value to US$1.93 billion. This represents the largest contract in Telesat's history and is set to drive a significant expansion of the company's constellation architecture.

Under the terms of the agreement, Telesat will launch 69 new satellites, increasing the Lightspeed constellation from 156 to 225 satellites—a 44 percent capacity expansion. All new satellites, configured with both commercial and Mil-Ka capacity, will be built by MDA Space at its Montreal facility. The manufacturing will be fully funded through milestone-based payments from the Government of Canada, commencing in Q3 2026 and continuing through 2028. Launch capacity has been partially secured through a SpaceX Falcon 9 rideshare agreement, with an additional launch pending a separate launch services agreement.

"This contract represents a step change in the scale and commercial potential of Telesat Lightspeed," said Dan Goldberg, Telesat's president and CEO, in a statement. "The significant expansion of our constellation, combined with burgeoning demand for secure satellite communications worldwide, positions us to accelerate the growth of our business while serving the evolving and mission-critical requirements of defence and commercial customers."

During an investor call, Telesat's CFO, Donald Tremblay, estimated that total committed investment in the Lightspeed constellation will now reach approximately US$5.2 billion, including a US$500 million contingency—up from a prior estimate of US$3.8 billion with a US$300 million contingency. Tremblay noted that "a large majority" of Lightspeed's costs are covered by fixed-price contracts with MDA Space and SpaceX. This funding milestone comes just two years after Telesat closed its initial Lightspeed financing of US$1.87 billion in mid-2024.

Telesat's CTO, Michel Forest, indicated during the Q&A session that the company expects to deliver approximately 100Gbps of capacity in the Arctic region. The spectrum allocation for the 225 satellites will be split approximately 75 percent commercial Ka-Band and 25 percent Mil-Ka, reflecting a balanced approach to serving both defense and commercial markets. The Mil-Ka portion of the ESCP-P program also includes network integration services such as user terminals, ground and control infrastructure, training, and support services, which will be financed through a separate agreement between the DIA and Telesat.

The ESCP-P program additionally encompasses an Ultra-High Frequency (UHF) and X-band constellation, with MDA Space serving as prime contractor and Telesat as subcontractor, including systems integration and implementation of Mil-Ka, UHF, and X-Band networks. This multi-faceted approach underscores the growing importance of resilient, sovereign satellite communications for Arctic security and surveillance operations.

As a result of the contract, Telesat has raised its 2032 Lightspeed revenue forecast to US$4.9 billion, up from US$3.2 billion, with defense expected to contribute approximately 46 percent of revenue, compared to 14 percent prior to this agreement. The company has maintained its target of launching commercial service for Lightspeed in the first quarter of 2028, and expects to add another 70 satellites by the end of 2032—bringing the constellation to 295 satellites—should demand materialize as projected.

The contract signals a broader trend in the satellite industry, where government-backed defense programs are increasingly driving constellation expansion and commercial viability. By anchoring Lightspeed with a long-term, high-value military customer, Telesat has de-risked its buildout while positioning itself as a critical player in the secure satellite communications market. Analysts view this as a strategic validation of LEO networks for defense applications, potentially opening doors to additional government and allied-nation contracts in the future.