Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Telesat Third Quarter 2026 financial results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to James Ratcliffe, Vice President, Investor Relations. Please go ahead.
Thank you, Kate, and good morning, everyone. Thank you for joining us today. Earlier this morning, we filed our quarterly report for the period ending September 30th, 2026, on Form 6-K with the SEC and on SEDAR+. Our remarks today may contain forward-looking statements. There are risks that Telesat's actual results may differ materially from the known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat's annual report and updates filed with the SEC. Telesat assumes no responsibility to update or revise these forward-looking statements. I would now like to turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer.
Okay. Thank you, James, and thank you all for joining us this morning. I will start with a few words about the business and then hand over to Donald to speak to the numbers in more detail. We will then open the call up to questions. We made good progress last quarter and in the first nine months of the year to advance our core strategic objectives and position the company for significant growth and value creation. Certainly, the agreement we announced in August with Canada's Defence Investment Agency is a major validation of the essential and differentiated capabilities of the Lightspeed network and of what we believe the magnitude of the opportunities in the defense vertical to be. The agreement, including option periods, is valued at CAD 2.7 billion and will provide high-performance secure communication services using military Ka-band frequencies to the Canadian Armed Forces in the Arctic.
As we emphasized when we announced the agreement, this is Telesat's first contract under the ESCP-P program. There are more to come under ESCP-P for satellite communications in the Arctic, and we see meaningful additional opportunities above and beyond ESCP-P with the Canadian Armed Forces for services outside of the Arctic, namely the rest of Canada and other geographic areas of interest. We are also seeing very significant concrete opportunities with Canada's allies for defense and sovereignty requirements. The hostilities in Ukraine, in particular, have governments and their militaries all over the world focused on having assured access to an advanced LEO capability, like the one we are building, to protect their citizens and their territorial sovereignty. We are very focused on supporting those needs.
There is strong demand for advanced LEO services in other market verticals, including rural broadband connectivity, broadband for planes and ships, and other enterprise applications. Customers increasingly recognize the value of a resilient, secure, high-performance network designed for demanding mission-critical applications. On the implementation side of things, the Lightspeed program continues to advance across the satellites, ground infrastructure, user terminals, and software systems that make up the end-to-end network. It is a significant undertaking, and I am very pleased with the progress my colleagues are making across the technical, operational, regulatory, and commercial domains. With regards to schedule, MDA is progressing the first two initial satellites, which we need in orbit so that we can validate performance of the spacecraft and end-to-end network.
We have been exploring the best solution to launch these satellites, and given the very tight launch vehicle market, we are loath to use one of our valuable Falcon 9 launch slots to launch just two satellites. We believe we found a solution that will allow us to launch the satellites at a reasonable cost by piggybacking on a third-party Falcon 9 rocket, which we expect will launch in mid-2027. We plan to test those initial satellites on the network for roughly two months. Once we are satisfied, we will be able to start our full launch cadence, launching 15 satellites on each of the Falcon 9 rockets we have secured. With all that said, we now plan to have full global service around the end of Q2 2028, as opposed to the end of Q1 2028, which was our previous target.
To mitigate that slight delay, we have altered our satellite deployment strategy so that we can still support service in the higher latitudes by the end of Q1 2028, which means we will be able to start the services for the Canadian military in the Arctic under the ESCP-P program, as well as our other northern rural broadband services as previously planned. The three-month delay in the global service date is reflected in our updated LEO CapEx guidance for the year. Turning to GEO, the business performed largely as expected through the first nine months of the year. The revenue reductions reflect the continuing structural changes in the video distribution and broadband markets we have discussed in the past, the impact of specific contract renewals and expirations, and the retirement of certain of our GEO satellites over the past 12 months.
Against that backdrop, we remain laser-focused on providing outstanding customer service and maintaining our strict OpEx and CapEx cost discipline. We are reiterating our 2026 GEO revenue and adjusted EBITDA guidance. Lastly, we remain focused on refinancing the Telesat GEO debt, which begins to mature later this year. Our advisors continue to seek good faith engagement with the Telesat GEO debt holders, and we are evaluating other alternatives as well, with the goal of reaching an outcome that is fair to all stakeholders. While I have no doubt that investors have questions on where things stand and the likely path forward, I hope folks appreciate that when it comes to the Q&A part of today's call, we are pretty constrained in terms of what we can say at this time.
With that, I will hand the call over to Donald, who will take you through the financial results in more detail.
Thank you, Dan, and good morning, everyone. My prepared remarks today will focus on highlights from this morning's press release and filing. In the third quarter of 2026, we delivered results in line with our plan and expectations, with consolidated revenue of CAD 81 million, adjusted EBITDA of CAD 12 million, and a net loss of CAD 157 million. For the first nine months of 2026, consolidated revenue was CAD 247 million, adjusted EBITDA totaled CAD 69 million, and net loss was CAD 867 million. Adjusted EBITDA and net loss include expense relating to our debt refinancing of CAD 25 million during the quarter and CAD 46 million for the year, up from CAD 16 million and CAD 26 million for the same period last year.
The net loss for the quarter and year- to- date also include loss caused by the increase in the fair value of Telesat Lightspeed financing warrants of CAD 90 million in the quarter and CAD 577 million for the first nine months of 2026. This increase in the valuation of the warrants reflect the growing value of Telesat Lightspeed following ESCP-P contract and the other progress we are making on the program. Interest expense totaled CAD 55 million for the quarter and CAD 155 million for the first nine months of the year. Interest incurred on the Telesat Lightspeed financing of CAD 28 million for the quarter and CAD 60 million for the year have been capitalized to the project. Our GEO segment results were consistent with our expectations during the third quarter and for the year- to- date.
We generated CAD 79 million in revenue, down 21% or CAD 22 million compared to the same period last year. For the first nine months, GEO segment revenue was CAD 243 million, down 24% or CAD 79 million. The decline was driven primarily by the non-renewal of a broadcast contract in 2025 and a reduction in contractual capacity for a broadcast customer in 2026, together with reduced service to a North American fixed broadband customer and the removal from service of certain geostationary satellites. GEO satellite utilization was approximately 59% at September 30th, 2026, and GEO backlog was approximately CAD 800 million. Adjusted EBITDA of our GEO segment was CAD 36 million for the third quarter, down 43% or CAD 27 million from the comparable period in 2025. For the first nine months, GEO adjusted EBITDA was CAD 135 million.
Operating expense, excluding costs attributable to our refinancing effort, were down 12% for the first nine months of the year compared to the same period last year. Excluding costs relating to our refinancing, GEO EBITDA for the third quarter would have been CAD 61 million, with an adjusted EBITDA margin of 78%, compared with 79% in the same period last year. For the first nine months, GEO adjusted EBITDA, excluding the refinancing expense, would have been CAD 180 million, with an adjusted EBITDA margin of 74%. On the LEO front, we invested CAD 360 million in the Telesat Lightspeed program during the third quarter of 2026, comprising CAD 344 million in capital expenditure and CAD 24 million in operating expense. For the first nine months, total investment was CAD 705 million, including CAD 641 million in capital expenditure and CAD 64 million in operating expense.
We ended the quarter with backlog of approximately CAD 5.6 billion in our LEO business segment. Turning to liquidity. At September 30th, 2026, we had consolidated cash and cash equivalents of approximately CAD 814 million. We received CAD 510 million of milestone payments during the quarter under the ESCP-P agreement, with a further approximately CAD 1.5 billion in milestone payments due as we reach deployment and deployment benchmark. In addition, we had approximately CAD 1.5 billion available to draw under the Telesat Lightspeed financing at the end of September. Based on our performance through the first nine months of 2026, we are reiterating our GEO segment guidance for the year, with revenue of CAD 300 million-CAD 320 million and adjusted EBITDA of CAD 210 million-CAD 230 million, excluding non-recurring debt refinancing costs.
Given our actual CapEx and OpEx spending in the first nine months and our forecast for the fourth quarter, we now expect full-year Lightspeed spending to be between CAD 1.1 billion and CAD 1.3 billion, below our previous guidance of CAD 1.3 billion-CAD 1.5 billion. Before I conclude my prepared remarks, I would like to confirm that as of the date of our filing, we are in compliance with the financial covenants of our Telesat GEO financing and Telesat Lightspeed financing. I will now turn the call back to the operator for the Q&A. Thank you.
At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We request to limit yourselves to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Drew McReynolds with RBC Capital Markets. Your line is open.
Yeah. Thanks very much, and good morning. Dan, I know you are constrained obviously with respect to the debt refinancing process. Just wondering if you can comment on when you think about fair value and a fair outcome here, does that include potential equity issuance among obviously the other alternatives and options you are looking at? Then the second question, on the LEO backlog build, obviously you are pretty optimistic on kind of future government defense contract pipelines. Any updated comments on maybe the timing of some additional contracts, either by the end of this year or certainly through 2027? Thank you.
Yeah. Okay. Good morning and thanks for the questions. On the first one, you're right, and I noted it in my affirmative remarks. There's just not a whole lot we can say at this point on the refi. You asked a question, I think, about equity issuance, and all I'd say is, yeah, it's just premature to speculate on that right now. We've said that getting the refi addressed is a key priority of ours. We're, through our advisors, engaged with the lender group and the range of alternatives that we've got under consideration. But beyond that, there's just not anything more we can say at this time. On LEO backlog, I mean, obviously, we've grown it very meaningfully this year with the ESCP-P contract and other smaller opportunities throughout the course of the year. And the pipeline, particularly on the sovereign opportunities, is compelling.
As far as timing, these sovereign opportunities just sort of by definition involve government, so it's always hard to handicap exactly when things will close. If I were to speculate, I think over the course of mostly next year, I could envision some meaningful opportunities getting closed. And that's just sort of what it feels like right now, again, with all the caveats that it ain't done until it's done, and working with government customers is harder still to handicap the timing of those things. But the reality, though, is there's a growing recognition of what we're building. There is a growing and heightened need around the world to have a capability like the one that we're building. And all of those things suggest to us that, yeah, we're very well-positioned to close some meaningful opportunities.
Okay. That's great. Understood. Thank you very much.
Thank you.
Your next question comes from the line of Edison Yu with Deutsche Bank. Your line is open.
Hey, good morning. Thanks for taking our questions. First, I want to ask about the LEO side, and I am sure you, and I think you kind of alluded to this earlier on the Starlink-Starship situation. Can you maybe help us understand what are the, I guess, for you, what kind of, is it terms of service or priority? How do you envision scenarios like that playing out in the future in respect to Lightspeed?
Edison, thanks for the question. If you could just be a little bit more specific, what do you mean?
As in, I think at least from what has been reported, it was turned off. But obviously, Ukraine did not want that, and I think there was a terms of service violation, and you have kind of, I think, many parties kind of saying things. I guess if you think about Lightspeed and its sovereign use, is it a terms of service thing? Is that different? Who has ultimate say in what you can do, and stuff like that?
Okay, I got it. Maybe a couple things about that. For us, we have no privileged insight into what unfolded with Ukraine and SpaceX and the like. But for us, Telesat has been around for almost 60 years now, and working with allied governments, Canada, U.S., other allies, is something that, yeah, we've done for decades. Lightspeed, for sure, has great interest for sovereign users, and we added the military Ka-band frequency specifically for allied governments to make use of to support their defense and their sovereignty requirements. In terms of use, just a couple of things. One, not surprisingly, we require our customers to comply with the law and all the applicable regulatory frameworks, so that's always there. We ourselves are subject to certainly the jurisdiction of the government of Canada.
When we get market access all around the world, we're subject to the licensing terms of the various countries that grant us permission to serve their markets, and that's something that we take seriously. The system is built to comply with, whether that's lawful intercept or the ability to turn off service, things like that, the system's built to support that. So that's kind of the framework that we operate in. For sure, when it comes to how the government of Canada could use the Lightspeed constellation, and again, they're a big anchor customer with the deal that we did with ESCP-P, and maybe other sovereign governments that we enter into arrangements with, in terms of how Lightspeed is used there, we would be in close coordination with the government of Canada, in particular, to make sure that we're on side in terms of the use of the network.
The government of Canada, of course, would have its own relationships and understandings with the allies who would make use of the constellation. So that's a lot of words, but that's how we would approach it.
Got you. Appreciate the color. Follow-up, actually, on the launch side. You gave a very detailed roadmap on how you plan to do that. I'm curious in terms of going forward, I know you have the launch secured, but I think everyone sees what's going on in the market and feels it's very tight. I guess, how do you think about just the capability of launch after Lightspeed, in case you want to add more satellites, in case you're involved in a different type of constellation? Is that going to be kind of super handicapped because capacity is so tied and/or pricing is so high? How do you think about that?
Yeah. No, and it is something that, yeah, we are certainly focused on. To the point you made, we have the arrangements in place already with SpaceX for the current Falcon 9s, and there is one more, so we are under contract for 14 Falcon 9 rockets. We need a 15th. We have an agreement in place with SpaceX for the 15th, although it is still in the process of being finalized. So we feel good about having made a provision for the 225 satellites that we are launching. I feel like we have the right rockets to deploy that. Your question was, okay, what comes next? SpaceX talks a lot about the development of Starship, and they are optimistic that they will have Starship launching in a regular cadence early next year, from what I recall what they said on their last call and our own discussions with them.
From what I understand about the availability of Starship for companies like Telesat, third parties, it is my understanding, first and foremost, they will focus on the deployment of their own satellites and their own requirements. I would say secondarily, or right alongside of that, the U.S. government will be a priority customer for them and maybe other governments as well. It is certainly going to be up to them. I do believe that so long as our next gen satellites are configured in a way that can go into their dispenser, the same dispenser that they will be using to deploy their own satellites, I believe at this time we have some expectation that Starship would be available to Telesat to support future missions.
That is how we think about our future with SpaceX. There are other providers. There are other providers on the market today, not where I think the industry would like them to be right now, but they are all sort of ramping their capacity and capability. There are some new entrants that are coming onto the market as well. Some of those options, they are quite promising. I think it is something that we pay a lot of attention to. I think that as we grow the constellation, and it is our plan to grow the constellation so long as the demand is there for it, I think that through those different platforms, we will have a path to get our satellites deployed.
Thank you.
Your next question comes from the line of Erin Kyle with CIBC. Your line is open.
Hi, good morning, and thanks for taking the questions. Just wanted to follow up a question on the launch schedule that you provided and the timeline shift for global service into Q2. I just want to clarify there that that shift is predominantly related to the timing of when the Pathfinders are going up now and the period of time you need to wait before you can progress the launches, and there's not any other scheduling issues on the manufacturing side. As it stands, MDA's on track?
Hi, Erin. Thanks for the question. On the launch, as we said, we are zeroing in on having the ability to piggyback on this other Falcon 9 launch vehicle that we're expecting will launch mid-next year, so sort of June kind of timeframe. MDA is progressing the first two satellites, we've called them in the past Pathfinder satellites, that will go on that launch vehicle. Those satellites aren't complete yet. We expect them to be complete in time for the June launch. And we expect that the production-level satellites, so our first launch of our full suite of 15 satellites on our first Falcon 9 launch opportunity. We're expecting that to be in sort of the September timeframe, so a little bit less than a year from now.
We expect that those satellites, based on what we are hearing from MDA and what we are seeing, will be available in that timeframe. But 100%, though, it is tied to two things. One, MDA having the satellites and the software that is required available to support those launch timeframes, and then that first launch vehicle being available to us in June, and then we will go from there.
Okay, thank you. That is helpful detail. Then maybe just for my follow-up, and you touched on this in the prepared remarks, but I did notice the fair value of the warrants were increased again this quarter. Just wondering if you could provide any extra color on what is driving that value increase, as I know last quarter's adjustment reflected the ESCP-P contract.
Yeah. Donald, do you want to handle that?
I guess it is like the program is advancing, and then as we progress, risk forward, coming down a little bit. So that is basically helping us increasing the value when we are doing the work on the project valuation, basically.
Okay, so tied to progress and the risk profile.
Exactly.
That is helpful. Thank you.
Exactly.
Your next question comes from the line of David McFadgen with ATB Cormark. Your line is open.
Yeah, great. So a couple of questions. So the timing now for you being fully up and running, and generating revenue for Lightspeed would be Q2 2028, not Q3 2028?
The words fully up and running and generate revenue, David, for me, they're two different things. The plan is, we'll launch our first satellites, we'll start in September next year, and then the plan is to go launching about every three weeks or so. We believe that with that schedule, by the end of Q1 2028, which was when we last updated the market, we wanted to have global coverage by the end of Q1 2028. Because of the update that we gave today, that's sliding back about three months. But still by the end of Q1 2028, we're expecting to have enough satellites in orbit that we can start commercial service in the northern, I should say, the higher latitudes that will allow us to start the ESCP-P services under that first contract that we have with the government of Canada.
It will allow us to start providing broadband connectivity to some of the communities in the far north. We think that the constellation, at that time, could support other services too. We're working, for instance, for broadband to planes, right? Certainly, the planes that are flying in those higher latitudes, we could potentially already start connecting them to Lightspeed. We're evaluating what other use cases we could start by the end of Q1 2028, which means that we expect to start recognizing revenue in that timeframe. By the end of Q2 2028, that's when we expect to have global service. Then again, we'll have global service, but then we'll continue to launch more satellites until we deploy all 225.
The expectation to have all 225 up in space is when exactly?
I think they'll all be in orbit under our plan by the end of 2028, although some of them might still be doing some orbit raising, and we might still be inserting them into the constellation. The original 156, before we added the other 69 with ESCP-P, will be in place providing service, we expect probably in, call it, Q4 2028. Then the other 69 will come online.
Okay. If you are not able to provide the government with service for ESCP-P by the end of Q1 2028, are there any financial implications from not being ready at that point in time?
No. It just means we will have to wait a little bit longer before we can light up the service and start recognizing revenue. But no.
Okay. So no financial penalties or anything. Okay.
Zippo.
As we look to 20— I am sorry?
I am sorry. I said zippo, which is to say no financial penalties.
Okay, great. November is very soon. As we look to 2027, just kind of wondering if we are going to see a bit of a slowdown and the decline on the GEO side. I do not know if you can give any color right now, but thought it is worth asking.
I am sorry, David, ask that one again, if you could.
What do you think about the revenue decline for the GEO business in 2027? Do you think it could slow down?
Yeah. We will give guidance, obviously, for 2027, when we provide our guidance, that will be early next year. Just in my own mind, first off, the business has been trending down. Some of our GEO satellites have reached the end of their lives, and they have come out of service, and so there will be some of that. The Nimiq 6 contract with Bell comes up for renewal mid-next year. Our expectation that that is an important satellite for Bell, and certainly they still have a lot of subscribers that are still needing that service. My expectation is that we will renew that contract with Bell. Likely to come at a lower rate, which will provide some headwinds in terms of what next year looks like. Anyway, my expectation is there will be further revenue declines, but again, we will give guidance on that early next year.
Okay. All right, thanks.
Thank you.
Your next question comes from the line of Greg MacDonald with Stifel. Your line is open.
Thank you. Dan, I am going to try and ask another question on this, the ODET, but it is one that I think you might be able to answer. The changes that have happened in the last three months, one of the big ones is the Defence Investment Agency becoming a crown corp or about to become a crown corp with new financial powers. My original thought on that was that it increases options for backstop scenarios, for bridging scenarios, even given your new slightly changed free cash flow profile, maybe partial maturity, partial refi scenarios. So many non-dilutive options. Would you read that the same way? Is that DIA change informing your commentary on quote unquote other alternatives as well?
No. It is not.
What is informing that new commentary?
I do not think that is new commentary. I think we have suggested for some time that our focus has been on reaching a consensual outcome on the refi, that we have been engaging in good faith. We have always emphasized that there are a number of alternatives that the company has been considering, and so it is not a new message from us around the refi. I think we have been pretty consistent in our communications around that.
Okay. The second follow-on is just on going back to the Starshield, I will call it restrictions, or I think that is the way that they mentioned it. Have you gotten any increase in engagement from non-Canadian potential clients since that? Is that lighting a fire in Europe more so than it did back in 2023 or 2022? I forget the first time they did that.
I would say for some time now, governments have appreciated how consequential having access to an advanced LEO constellation is. We have been having good engagement with the government of Canada and, as I have mentioned, with Canada's allies on using Lightspeed for their own sort of sovereign requirements. It is certainly the case that the development with SpaceX in Ukraine has animated various governments. I read the news like everyone else. Certainly, we have read that the Europeans are wanting to move with increased focus and whatnot on, for instance, IRIS². So that is something that we have read. I guess all I would say is, just the way modern warfare is waged right now, the importance of these autonomous networks, the importance of having a high throughput, low latency, highly resilient network has just become really essential.
Canada has identified space as a key sovereign capability in its fairly new-ish Defence Industrial Strategy. I think other governments, whether doing that explicitly like the government of Canada did or just more a tacit recognition, just all of that, I think, has created, I guess that is fair, more momentum around some of the discussions that we are having. Our timing is such that we are coming to market soon. We are having our first launch of the initial two satellites, and those will be tested not just by us, but by users as well. That is coming up in seven or eight months. Less than a year from now, we are going to be launching lots and lots of satellites. I think that is very well known to the market, our timing, that we are well advanced in the project.
Anyway, that is the environment right now, which is why when we are bullish about what the pipeline looks like, when we have confidence about signing and announcing meaningful contracts over the course of next year, it comes from that. It comes from those conversations and the environment that we are in right now.
Okay. Much appreciated. Thanks, Dan.
Your next question comes from the line of Maher Yaghi with Scotiabank. Your line is open.
Great. Thank you for taking my question. Dan, correct me if I'm wrong, but on October 23rd, without getting into the conversation that you're having with the plaintiffs in the court, and I fully understand how that is privileged information and confidential, can you give us maybe just a big-picture view of what the plaintiffs' settlement proposal that they made on the 23rd was?
Thanks for the question. I don't think it's really appropriate for us to wade into that sort of a thing. Trying to conduct these refinancing engagement through the newspapers doesn't seem like a good idea to us. I guess all I would say is we've got some very capable advisors that are supporting us. They are engaged with the debt holder advisors. Our focus is genuinely achieving an outcome that's good for the company, good for the various stakeholders that we have. That's what we're spending our energy on. It's just not productive to go into the details of kind of exactly the nature of the conversations right now.
Okay. That's fair. I understand. Maybe just to shift on the commercial side, which is more exciting, and probably you can talk a little bit more about that. Pushing out the launch or the commercial phase of LEO, does that affect any way the pace of how and when you can sign new contracts ahead of that launch? I.E., your commercial partners that you're talking with, the airlines potentially, or any kind of terrestrial operators, are they waiting for validation from the two initial launches that you're going to be making for them to commit into some sorts of long-term contracts.
Yeah, it's a great question. I would say that, yes, for some customers, they absolutely want to be able to test a real network and test the satellites. We've got sort of a queue building up of just exactly those kinds of activities, doing real-world testing with various customers all over the world. Then there are other customers, again, that's why we have CAD 5.6 billion of backlog right now on LEO. There are other customers that have done significant technical due diligence. They've toured the factory. We have, as you probably know, a low Earth orbit satellite in orbit right now. It's not as capable of the Lightspeed satellite, so it will be built, but still a LEO satellite, and we can do quite a bit of testing and demonstrations with it. So there are other customers that are confident proceeding contractually with that.
We still need to deliver the service. They can sign a contract, but if we're unable to deliver the service that we've promised to deliver, then obviously, they're not required to write us checks. But it is important for us to get those initial satellites up, and then it's important for us to keep launching. The more satellites that we have up there, the more testing that we can support, the more real-life it is in terms of how the network operates, how the traffic is handed off from satellite to satellite, from gateway to user terminal, and all of that. So we're very focused on getting it done. We shared that we're sliding back by three months the date of global service. The good news, though, is we are going to launch commercial service as planned at the end of Q1.
We would have preferred a global service, but being able to support the higher latitude requirements, which are significant for Telesat with the ESCP-P program and other requirements, that's important for us.
Great. Good to hear. Maybe just one last clarification. Can you just clarify for us, the push out of the two test satellites is a decision that you guys made, in terms of logistics on launch logistics, and not due to any kind of delays, production delays of these satellites? I am just trying to make sure we understand it very well.
Yeah, no, I would say it was twofold. The initial satellites are not yet ready for launch. The hardware is coming together. We spend a lot of time in MDA's factory, and it is good to see those two satellites being assembled, which is exactly what is happening right now. There is also software that needs to be available to support the operation, and to unlock, I would say, the functionality of the satellites, software that MDA needs to deliver, and then software that we develop as well, to fully exercise the capabilities of the satellite, which are important to do the testing. Today, that work is still being done. We expect it to be fully done in time to support the June launch opportunity that we have. So it is those two things.
If the launch vehicle were available today, we would not be ready to put those first two satellites on it. But it was never our expectation that we would be doing it now. But that is kind of what the situation is.
Got it. Thank you very much.
Okay. Thank you.
Your next question comes from the line of Caleb Henry with Quilty Space. Your line is open.
Hi. Thanks for the question. I have two. The first is on backlog. Of the CAD 5.6 billion, how should we think about conversion once the service starts, and is that even or does it ramp, and how much is take-or-pay?
How much is take-or-pay? I mean, it's pretty much all take-or-pay, the whole CAD 2.6 billion. In terms of how it. Maybe a couple of things. So one, we've got the CAD 600 million deal with the government of Canada for rural broadband connectivity. That's a 10-year deal, and the revenue recognition there is pretty much linear, so about CAD 60 million a year. As we talked about before on that contract, that creates a pool of bits that rural ISPs in Canada can tap into. When they do, and the Northwestel contract that we announced, I think earlier this year, is an example of that. That's on top of the CAD 600 million. So we expect that CAD 600 million from that pool of capacity to be greater. On the ESCP-P contract, I think we provided quite a bit of information about the ESCP-P contract.
There is a big prepayment that comes in, and it has already started to come in this year and next year as we build the 69 satellites that the ESCP-P program helped unlock. Again, ESCP-P is going to be leveraging all 225 satellites. A lot of the CAD 2.7 billion of revenue recognition, that is the CAD 2.3 billion for the initial piece, and then there are two option periods of CAD 200 million apiece. But the revenue recognition, there is a difference between cash and revenue recognition. The revenue recognition will be more or less over a 15-year period. Pretty flat, I think. But the way the cash works is different. Because nearly CAD 2 billion Canadian is being paid up front, there is also this financing component.
We have tried to be very transparent about that and show what that looks like in some of the materials that we have provided. Those two alone cover so much of that CAD 5.6 billion. Then we have got a meaningful contract with Viasat, and that is also a take-or-pay contract, but that one ramps. It is a meaningful contract, but I do not think we have disclosed the exact value of it. I think that is responsive, Caleb.
Yeah. That is very helpful. Thank you. My last one is on the user terminals. If you could give a sense of the roadmap for what the first types of user terminals you expect to be ready, and then how they come online after that? From your earlier comments, it sounds like maybe enterprise and then aeronautical, but I am wondering if that is right and how we should think through their availability?
We are progressing a whole family of user terminals in parallel. So there will be user terminals that can support fixed land applications, and those are well under development. There are user terminals, and these are flat panel antennas that I am talking about. There is also a parabolic antenna, too. Those are very useful for call it remote communities that need lots and lots of capacity. On the flat panel side, and we are seeing the market very much wanting the flat panels, we are progressing in parallel the FPAs, flat panel antennas, for the fixed land market for enterprise applications. Same with maritime. They are basically the same antenna, but with some modifications to support a maritime and mobile environment.
We are working also in parallel on the aeronautical antennas that could go on large commercial planes, but also biz jets as well. Those are two different kinds of antennas. And then some particular types of antennas, I'd say more ruggedized, sometimes multi-frequency even, for defense applications. So those are all progressing, I'd say well, and we fully expect them to be available, of course, when we're coming online for the various customers that we have.
Thank you.
Your next question comes from the line of Walter Piecyk with LightShed. Your line is open.
Hey, Dan. How's it going? Question follow-up on Viasat. That was one of your early sign-offs for Lightspeed. Just curious, if you look out to 2030, 2035, a customer like that, what percent do you think they represent of the total? Would they be the largest, or would they just be one of many customers that you would be generating services or revenue from on Lightspeed?
We don't really do our projections customer by customer like that. We do it more vertical by vertical, region by region. Then if there are big chunky, if we're tying for particular customers, for sure, if we've got a contract with them already, we just roll out the backlog, and that underpins the projections. Then you do that with countries as well, the governments, because those are big, chunky opportunities. So with Viasat, I'd say it depends. Viasat, obviously a large provider in the commercial in-flight connectivity market for aeronautical. But they're also a meaningful provider to governments, including the U.S. government, of course. They've got ambitions in the maritime space, so we'll have to see. We've got what I think is a very good partnership with Viasat. We've worked with Viasat for decades.
Sometimes they're a customer of ours, sometimes we're a customer of theirs, sometimes we do things together. So in any event, I'd say they're a channel for us in a lot of those different verticals.
Got it. Then I think just following up on Chris's question, that contract is take or pay, so that if Amazon purchased Viasat, and I'd also be interested in your views on the industrial logic of an acquisition like that, but if that did occur and they wanted to integrate Amazon's future LEO as well, does that contract still get paid out, or is there an ability for them to step away from it?
No. The contract is a take or pay commitment. So long as we meet our obligations, they need to meet their obligations, which is to say pay us. And we intend to meet our obligations. And certainly today for Viasat, having access to Lightspeed, I think, is an important strategic focus of theirs. So yeah, that's kind of how we think about it.
Got it. Thank you.
Okay. Thank you.
Your next question comes from the line of Chris Quilty with Quilty Space. Your line is open.
Thank you. How did you let Caleb in before me and ask questions? Never mind.
Yeah.
He pressed star one first, Chris. Get on the ball.
I know. Okay. I did have a follow-up question or maybe a commentary on the terminals. We do not have to go through it here, but it would be helpful on future calls or in your deck if you kind of run through who those vendors are. Just knowing the history, whether it was Inmarsat rolling out BGAN, and they did not have terminals, or Iridium rolling out Certus, and they did not have terminals. The Navy, the MUOS system was up for years, they did not have terminals. It is historically been a big challenge, and I think having some visibility on that would be super helpful?
Yeah. No, we take the point. We have made some announcements about the folks that we are working with. In the past, we have, I think, made some announcements around Intellian, around Farcast, which used to be called UTVate, I believe. So we have been pretty transparent about the folks that we are working with out there. We have done some demos with others. We tend to make press releases when we do that. Yeah. Listen, we share your view. It is critical. Having satellites in orbit and ground stations rolled out and software managing all the traffic is great, and it is necessary, but it is not sufficient. You need capable, affordable, high-performing user terminals out there that can support a range of use cases. The use cases are kind of multiplying with the passage of time, including for these defense requirements.
We are very focused around here on making sure that Lightspeed can support those various use cases and that there are terminals available for our customers, timely available to our customers to support all that. I would say go back and look at some of the things that we have said before about the folks that we are working with. There are good developments on the user terminal side in terms of new technologies, new chipsets that are coming out, and all of that just make it better and better.
Yeah. I guess I should have qualified. As you go forward and those vendors go through the testing and whatnot, keeping us updated on the status to make sure everything's aligned.
Yeah.
Also a follow-up question.
That's fair.
I think you mentioned bringing the polar service in. How many satellites do you need for that?
I think we estimate around 45.
A 45. Okay. Another question.
Just to do the math, that is three launches for us.
Yeah.
Sorry.
I think you are talking about a three-month timing between the Pathfinder and operational satellites. Is that enough time to test out a satellite? I could not look, but I do not know how long it was with Globalstar before they had the reaction wheel problems. I think it was more like three to six months.
No. We've got what we consider to be a very comprehensive test campaign. It's more like in the 60-day kind of range. We've said it before, but I'll say it again, we're going to do an enormous amount of testing on the ground. It doesn't obviate the need to do testing with real satellites in orbit. No, we feel confident that and we'll have all the ground stations around the world that we need to support the testing. We've got a detailed kind of testing validation protocol for all the various network elements, including the spacecraft, of course. I would say Telesat is many things, but one thing we're very good at is bringing new spacecraft into service. The team, I think, has a robust approach for that.
Got you. Final one, if I can, just on the sovereign deals, I think there's sort of two models we're generally seeing in the market where either you sell a system to the customer and maybe use the Starlink example, right? SpaceX sold satellites to the NRO for their proliferate LEO, which was a sale transfer to the government, even though they fly them, versus Starshield running across the Starlink as a service. Then perhaps again, the ESCP-P almost looks kind of like the WGS type arrangement where allied countries contributed for capacity. Which of those models, or are there others that you're talking about with sovereign customers? Are you able to meet all those models?
Yeah, maybe a couple of thoughts on that. In many instances, and again, I'll go back to something I said earlier, we've been serving the sovereign market for decades. So one model is we're just providing a service on the Lightspeed network to an allied government. That's one. Two, we're providing the service to a trusted service provider of the allied government. So pick a country and imagine a satellite services provider in that country that has a very close relationship with their own government and has served that government for decades. That's another model. We contract with their trusted service provider, who in turn provides a service to them. Sometimes it could be government to government. We're providing the capability, for instance, to the government of Canada, and they enter into their own arrangement with one of their allied governments, and it goes that way.
Some of these things aren't mutually exclusive. You can mix and match on a particular opportunity. That's kind of what it's looking like to us right now.
Very good. Thanks for the details.
Okay. Thank you.
I will now turn the call back over to Dan Goldberg, CEO, for closing remarks.
Okay. Well, operator, thank you very much, and thank you all for joining us this morning, and we look forward to chatting with you again when we release our full year numbers. Thank you again.
Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.