"Telesat Stock Skyrockets as Satellite Internet Company Switches Suppliers, Saving $2 Billion"

Telesat's Strategic Supplier Swap Boosts Stock and Saves Billions

Telesat Announces Supplier Change for Lightspeed Network

In a significant development, Telesat, a leading Canadian telecommunications satellite operator, saw its shares surge on Friday. This followed the company's announcement that it would be changing suppliers for its forthcoming Lightspeed global internet network. The new supplier, Canadian space company MDA, will replace the French-Italian manufacturer Thales Alenia Space. This strategic move is expected to result in "total capital cost savings" of approximately $2 billion.

Launch Timeline and Network Specifications

Telesat has projected the launch of the first Lightspeed satellites to commence in mid-2026. The global service is set to begin once the initial 156 satellites are in orbit. The entire network is planned to consist of 198 satellites. This ambitious project represents a significant step forward in global internet connectivity.

Stock Surge and CEO's Remarks

Following the announcement, Telesat's stock experienced a significant surge, rising roughly 40% in premarket trading from its previous close at $8.45 per share. Telesat CEO Dan Goldberg expressed immense pride in the Telesat team for their innovative work, which led to the dramatic reduction in costs.

Previous Contracts and Future Market Focus

Prior to this change, Telesat had contracted Thales Alenia Space to manufacture the satellites, with an estimated network build cost of $5 billion. This included about $3 billion for the satellites, in addition to the costs of rocket launches, ground infrastructure construction, and software platform development to operate the network. Goldberg emphasized that Lightspeed is not intended to compete in direct-to-consumer markets against SpaceX's Starlink or Amazon's Kuiper. Instead, it will maintain Telesat's existing focus on enterprise customers, including government and commercial markets.

Telesat's Second-Quarter Results and Future Revenue Guidance

Telesat also reported its second-quarter results on Friday, which included $180 million in revenue, marking a decrease of 4% from the same period a year prior. However, Telesat's net income saw a significant jump to $520 million for the quarter, compared to a net loss of $4 million a year prior. This dramatic shift was largely attributed to a $260 million payment from the FCC for clearing spectrum for 5G use in the U.S. Looking ahead, the company reaffirmed its full-year 2023 revenue guidance, expecting to bring in between $690 million and $710 million. In conclusion, Telesat's strategic supplier swap for its Lightspeed network has not only boosted its stock but also resulted in significant cost savings. This move, coupled with the company's focus on enterprise customers, positions Telesat strongly in the competitive satellite internet market.

Implications for New Businesses

Telesat's strategic supplier swap and the resulting surge in stock value offer a compelling case study for new businesses. This move demonstrates the potential of strategic decision-making to not only save significant capital but also to boost investor confidence and market value. For a new business, particularly one in the technology or telecommunications sectors, this development underscores the importance of supplier relationships. By carefully evaluating suppliers and being open to change, companies can potentially achieve substantial cost savings, as Telesat has demonstrated. Furthermore, Telesat's focus on enterprise customers, rather than direct-to-consumer markets, provides an interesting contrast to the strategies of competitors like SpaceX's Starlink or Amazon's Kuiper. This suggests that even in highly competitive markets, there can be value in carving out a specific niche and focusing on serving it well. In conclusion, Telesat's recent moves provide valuable insights for new businesses. From strategic supplier relationships to focused market positioning, these decisions can have significant impacts on a company's financial health and competitive positioning. As such, new businesses can take a leaf from Telesat's book as they navigate their own paths to success. Article First Published at: https://www.cnbc.com/2023/08/11/telesat-swaps-internet-satellite-suppliers-to-save-2-billion.html Brought to you by ChatGPT for www.BusinessFormation.io