Shares of Canadian satellite company Telesat Corp. TSAT-T rose nearly 20 per cent on the Toronto Stock Exchange Tuesday, buoyed by investor optimism about a massive wave in defence-related spending by Canada and its allies.
The surge in Telesat’s share price came despite a net earnings loss and warnings from the Ottawa-based company that it cannot repay a substantial portion of debt coming due next year.
Speaking to analysts Tuesday morning, chief executive officer Dan Goldberg said the company is “increasingly bullish on the government and defence opportunity,” as the geopolitical environment is driving a “once-in-a-generation” boost to military investment in satellite technology.
While announcing fourth-quarter earnings Tuesday, Teleset said it has added new capabilities to its low-Earth orbit (LEO) constellation, which is currently under development, in order to service defence needs for governments.
The company’s Lightspeed satellites, which will provide broadband services, will now be able to transmit on the Military Ka-band frequency, an important capability which could allow Telesat to access a range of new military contracts.
“I think the stock reacted so positively because they saw that as a meaningful form of differentiation,” said Caleb Henry, a satellite technology analyst for space business research firm Quilty Space.
“There is not a tremendous amount of military Ka-band that’s out there, especially not in the hands of commercial operators. This is timed to coincide with rising defence budgets and heightened demand for connectivity,” Mr. Henry said.
In recent months, Telesat has announced several defence-related partnerships, including a federal government contract to provide services in Canada’s Far North, and an agreement with South Korean defence electronics company Hanwha Systems Co. Ltd. to work together on defence equipment. Telesat’s U.S. subsidiary was also named an approved supplier for the US$150-billion Golden Dome project, a missile defence system proposed by the U.S. government.
Telesat has been contending with the decline of its legacy technology: its geostationary, or GEO, satellites, which orbit Earth above a fixed point. The utilization rate for those satellites was 59 per cent at the end of 2025, and the company said it is focused on maximizing cash flow as revenue continues to slow from that business.
In place of those GEO satellites, the company is developing Lightspeed, a LEO satellite constellation, for which the former Crown corporation has received billions in support from the federal government.
Ottawa aims to improve Arctic communications with new defence agency’s first procurement
Telesat expects to start launching those satellites late this year, reaching global commercial operations in early 2028. But this comes after years of delays and funding challenges related to the constellation, related in particular to supply chain issues during the pandemic.
Before that business becomes fully operational, however, the company will need to repay about $2.3-billion in debt, due between December and next October.
In financial documents Tuesday, the company warned that its “cash flows alone are not expected to be sufficient to satisfy the obligations related to the settlement of the debt instruments,” and that its advisers are “actively engaged in discussions with lenders’ advisers about refinancing.”
Telesat said its management expects to refinance the existing debt obligations before they become due, but warned that it cannot guarantee those efforts will be successful.
“It’s big for an operator of this size to be declared a going concern,” Mr. Henry said, adding that concerns about the debt may already be baked into the share price.
“The stock shed a lot of value on the depreciation of Telesat’s GEO assets and the rise of [rival satellite operator] Starlink. Investors have just started to get optimistic again.”
Bondholders of satellite operator Telesat file lawsuit ahead of debt deadlines
While the bonds coming due earlier next year are currently being traded at between 75 and 80 cents on the dollar, the bonds maturing next October are trading at about 45 cents.
This suggests debtholders broadly expect earlier debt will be mostly repaid, but that the longer-term issuances could be pulled into a restructuring.
Telesat is not the only satellite company to have faced debt issues in recent years. Several U.S. satellite companies, such as Intelsat, filed for bankruptcy during the pandemic, and generally emerged with reduced debt, Mr. Henry said.
However, this may not be so simple for Telesat, as it is currently in a court battle over the structure of some of that debt. Telesat’s lenders are accusing the satellite operator of illegally moving the value of its “crown-jewel asset” – its low-Earth-orbit satellite business – out of their reach ahead of looming debt-repayment deadlines.
The creditors allege in a U.S. suit that Telesat Canada, a subsidiary of Telesat Corp., transferred much of the equity of its LEO business to another subsidiary last September to move it away from creditors. Telesat’s Mr. Goldberg has said the company was within its rights to make the transfer. The allegations have not been proven in court.
For the quarter ended Dec. 31, Telesat reported consolidated revenue of $94-million, down 26 per cent from last year, and a net loss of $433-million compared with a net loss of $447-million the year before.