It just doesn’t seem to be on balance the right thing to sit on our hands and go through a process that we’re pretty, have a lot of conviction about where we’re going to land with these funding sources. We so yes, we’ve decided to move forward and move forward with speed.
Evan McFadgen: Okay. And so I would imagine that the vast majority of that spend on Lightspeed will be on satellite build and design or anything like that?
Daniel Goldberg: The most significant portion of the CapEx that we’ll be investing this year is yes, it’s going to go towards satellites. There’ll be some launch payments. There’ll be some other stuff for user terminals and landing stations. But with the big E will be, our friends at MDA, giving them the cash that they need to turn on their supply chain and move forward.
Evan McFadgen: Right, so because MDA’s prime contract, all that money is going through MDA right?
Daniel Goldberg: I wouldn’t say all of it, but I’d say a very meaningful portion of it.
Evan McFadgen: Right. Okay. And then just on just a question on your on the fact that you lost some business to maritime, it’s kind of styling. It’s my understanding that StarLink doesn’t offer any SLAs and you and when you have like enough, you would offer SLAs. So wouldn’t that give you a competitive advantage?
Daniel Goldberg: Yes. We think it will, but we need or want to be constellation to deliver the service so that that’s why we’re bullish about our prospects to take the market share that we need in order for that project to be successful. I think there are a number of features of the Lightspeed constellation that will it gives us a good competitive advantage and allow us to present a tremendous value proposition to the customer community, the ability to provide SLAs and CIR and give our customers an enormous amount of autonomy to manage the bandwidth that there will be our contracting from us. I think all of those things will allow us to be successful. But yes, that’s one of the features for sure we’ll be offering our customers SLAs on and we think that’s important to some subset of them.
Operator: The next question is from Alex Nolan from Invesco.
Alex Nolan: Thanks. My question was answered. I wasn’t able to take myself out of the queue.
Daniel Goldberg: Thank you.
Operator: The next question is from Walter Piecyk from LightShed.
Walter Piecyk: I apologize if this is kind of a redundant question, but I’ve kind of heard this and we’ll make sure that this is put to bed. This MDA will start constructing these satellites prior to you finalizing the agreements with the government of Canada, correct?
Daniel Goldberg: Correct.
Walter Piecyk: And then in terms of the overall market, now that you’ve seen a little bit more of what StarLink has been doing different verticals, they’ve got they’ve gone into Russia, many people into at least initially expected them to have to go from maritime. I know that there were some of your peers that were claiming they couldn’t do airplanes that are on airplanes. Just curious when you look at the market opportunity for your LEO constellation, has it changed at all or as you kind of approach construction now?
Daniel Goldberg: I don’t believe so. Listen, StarLink is having a big impact on the market and they’re having an impact on our business, which, I don’t love. But what I do love is it is, I think 100% validated the strategic direction that we took Telesat in going some years back and you’re right there, there were folks that doubted whether they penetrate the maritime market and the backhaul market and doubts about the aero market. We were convinced that a LEO architecture was not only a good infrastructure to support those services, but but one that would have a significant competitive advantage and StarLink is demonstrating that in real time. And so but no — our are market plalns and business plan, it’s intact. Yes, we’re seeing, yes, here again for me.
It’s just reinforced everything our customers know now that LEO is the best way to address so many of these requirements, they are taking services from StarLink and it provides a pretty good service, but it doesn’t give everything — everyone — everything that they want. And we’ve talked about, the SLAs. We’ve talked about their ability to manage their own bandwidth pools and whatnot. So it doesn’t give enterprise users, everything they need number one. Number two, the customers don’t want to put all of their requirements with one supplier. They don’t do that with all sorts of of their enterprise infrastructure, whether it’s cloud or, you know, Internet connectivity kind of writ large, whether it’s satellite or not. So they want multiple providers.
Yes, there’s huge opportunity here. So there’s nothing that we’ve seen in StarLink that causes us to question the various assumptions that we made when we got ourselves on this Lightspeed path, if anything, all of our thinking around the intensity of the opportunity and why LEO will have a competitive advantage, capturing those requirements has been validated by everything we’ve witnessed over the last 12 plus months.
Walter Piecyk: In past calls I’ve talked about or you talked about the ability to sign up. People want to know pre reserve capacity, right? And existing enterprise customers from anyone saying, hey, we’re going to take part. And that’s and I think the issue was getting to that point of finalization and that once that occurred, we might be able to see some of those press releases start to hit. Understand that things on finance or actually be finalized. If you’re if you started the construction, isn’t that sending a message to these customers that we can start seeing some releases from you guys are some indications of enterprises signing up for capacity on the new constellation?
Daniel Goldberg: Yes, listen. You’re right. I think, you know, calls like this one and we’re in a small industry. So when this supply chain all gets under contract that that will ripple through the industry if anyone had any doubts about whether or not Telesat was going to proceed with this program, those those should be put to rest — they haven’t already been put to rest. I think they should be put to rest in the coming days and weeks. So I think that it will be a great sign to the customer community that, Lightspeed is common and look for only about our two years away from launching our first satellite. So right, it isn’t that far away on and we are going to be very focused on trying to secure customers and making those announcements and reporting backlogs so that, all sorts of different audiences can track the progress we’re making up.
My own expectation is it will still be closer to in-service when we’re able to make more of those announcements. But but I still have an expectation that we’ll be able to announce, our commitments in advance of being in service. And you can imagine that with all of my colleagues here on the commercial side, we’re very focused and we’re very engaged with the customer community right now, and they’re excited about Lightspeed. So yes, I’d say there is stay tuned. We’re very focused on that, and we’ll be very transparent about the commitments that we get.
Walter Piecyk: If I can just one last one on EchoStar. I mean, they’re facing some financial distress, particularly as they approach at the end of the year, which is I think the time for renewal, have you had any preliminary discussions? Any thought on that made how that may play out?
Daniel Goldberg: Well, you know, we talked about on one of the headwinds that we’re facing this year is an expectation that they use the renewal that we have coming up. It comes up in October is on our Nimiq-5 satellite, which on which they use do the exclusive user of that satellite. And so the guidance that we gave for this year, captures all sorts of different outcomes that we might get there. And on the last call, we had said that we’ve started the conversation with EchoStar about their thoughts about whether they’re going to want to renew or not on. But we haven’t on advanced IT that much since we had our last call just six weeks ago on. And so it’s not clear to me where we’ll end up. I think, regardless of the scenario.
