Aging Telesat satellite running out of fuel as projected LEO costs rise

Aging Telesat satellite running out of fuel as projected LEO costs rise

TAMPA, Fla. — Canada’s Telesat expects revenue to peak in 2023 after being forced to retire its Anik F2 satellite from full service three years earlier than planned.

Boeing’s aging satellite has been operating in recovery mode for the past year after two of its four station-keeping thrusters experienced an anomaly.

One of the thrusters failed and the second continued to support operations with some restrictions, Telesat said August 5, which enabled the company to avoid impact on Anik F2 customers located mainly in Canada.

However, this workaround required Anik F2 to use up fuel faster than planned, reducing the time it could maintain its position in geostationary orbit.

“We expected this approach to allow us to provide station-maintained service until 2025,” Telesat CEO Dan Goldberg said during the company’s financial results call.

“But it now looks like we can only maintain a station-maintained service until the end of this year, at which point the satellite will be put into an inclined orbit.”

Some services will be adversely affected as early as February, Goldberg said, and “other services will degrade over time, depending on the size of the antennas that receive signals from the satellite.”

“As a result, starting next year, we expect Anik F2’s revenue to decline unless we can find other ways to support the services.”

Mitigation techniques include adding tracking antennas to certain locations to extend customer service life, and repointing existing antennas to other Telesat satellites or third-party spacecraft.

Anik F2 currently accounts for about 8% of Telesat’s revenue, or about 50 million Canadian dollars ($39 million).

Telesat is set to lose about a third of Anik F2’s revenue next year if mitigation techniques are unsuccessful, Goldberg added.

This would “likely be offset” by reselling freed up capacity for mobility services that Anik F2 would be able to support in inclined orbit, he said.

Anik F2 launched in 2004 and was already operating beyond its 15-year design life when some of its thrusters malfunctioned.

No reason is yet known behind the failure and the satellite was not insured at the time, Telesat spokeswoman Lynette Simmons said.

Telesat Lightspeed installation costs

Goldberg also revealed higher costs and additional delays for Telesat Lightspeed, his proposed low-Earth-orbit broadband constellation.

During Telesat’s last financial update on May 6, Goldberg said he expected to know where he stood with export credit agencies (ECAs) regarding the completion of the project’s financing by the end of June.

The company now expects to have that clarity in the fourth quarter and have a term sheet signed by the end of the year, which Goldberg says is needed to “feel comfortable about making a worthwhile spend and moving forward with the program .”

Goldberg said that Europe’s Thales Alenia Space, the prospective manufacturer of the constellations, was unable to send a final proposal for the project “a few weeks ago,” which was sent to ECA lenders earlier this week.

Pandemic supply chain issues have delayed and complicated plans for the constellation and other satellite projects across the industry.

Despite reduce the proposed constellation by a third to 198 satellites earlier this year to maintain its $5 billion budget, Goldberg said that delays and rising inflation have increased costs by 5-10%.

To date, Telesat has raised approximately 4.2 billion Canadian dollars to fund the project from existing financial resources and Canadian government funding, and expected to cover substantially the final third of its cost with ECA debt.

However, Goldberg said the company needs to raise additional funds beyond what it can get from ECA lenders to cover rising costs.

The company will also need additional funds to meet the hitherto unknown “contingent capital” needs of ECA lenders. These funds would be set aside to deal with schedule delays, cost overruns, and other issues that could affect the multi-year project.

“While we are disappointed by the supply chain challenges and inflationary pressures we have encountered, we remain extremely bullish on the opportunity Telesat Lightspeed presents us to grow our business,” said Goldberg.

Goldberg also sees no impact on his negotiations with French state-owned ECA lender Bpifrance following Eutelsat’s plan to merge with OneWeb, a LEO broadband constellation that would compete with Telesat Lightspeed. Bpifrance is Eutelsat’s largest shareholder.

He said, basically, “these export credit agencies are there to support their domestic exporters” to help create jobs and develop technologies.

Schedule adjustments

Goldberg also suggested during Telesat’s financial results call that the company could look beyond Thales Alenia Space as the primary manufacturer of the constellation.

He said “they’re a prime contractor, I think they have a great track record, but we’re not locked into Thales.”

Telesat plans to provide an update on the constellation’s timing and deployment plan once it has received its funding.

The company’s last update in May pushed the start of Telesat Lightspeed service out to 2026.

These delays also mean the company will likely have to request extensions to the deployment milestones associated with its spectrum licenses from the US and the International Telecommunications Union (ITU).

One of the Canadian company’s ITU filings for the project, which involves 72 satellites, calls for 10% and 50% of the satellites to be in orbit assigned to Telesat by January 1, 2023 and January 1, 2026, respectively.

Telesat reported 187 million Canadian dollars in revenue for the three months to the end of June, down 3% compared to the same period last year when adjusted for changes in foreign exchange rates.

Adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, fell 4% to 146 million Canadian dollars.

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