WASHINGTON — Telesat has signed the largest contract in its history, a roughly $1.63 billion agreement to provide the Canadian military with secure communications across the Arctic and finance a substantial expansion of its Lightspeed satellite network.

The agreement with Canada’s Defence Investment Agency covers military Ka-band services beginning in 2028. It includes two five-year options valued at about $142 million each, which would bring the contract’s total value to approximately $1.92 billion and extend the service period to 15 years.

The contract gives Telesat an anchor defense customer before Lightspeed begins service and supplies funding to increase the number of fully financed satellites in the low Earth orbit constellation from 156 to 225. Telesat said the network remains on schedule to begin global service in the first quarter of 2028.

Telesat is a Canadian satellite operator with an established fleet in geostationary orbit. Lightspeed, its planned low Earth orbit network, is aimed primarily at government, defense and enterprise customers rather than the consumer broadband market served by larger constellations such as SpaceX’s Starlink.

MDA Space was already under contract to manufacture 198 Lightspeed satellites, but Telesat’s previous financing plan covered the first 156 needed to begin global service. The company had planned to pay for the remaining 42 spacecraft with cash generated by the network after it entered operation.

Milestone payments from the Canadian government, beginning in the third quarter of 2026, will instead fund those 42 satellites and 27 additional spacecraft. The agreement therefore increases the number of fully funded satellites by 69 while raising MDA’s manufacturing order by 27, from 198 to 225.

Under the contract, Lightspeed will provide military Ka-band connectivity between 65 and 90 degrees north latitude, covering Canada’s Arctic region. Military Ka-band refers to frequencies reserved for government and defense communications and used by Canada and its allies for secure, high-capacity satellite links.

“This contract ensures the Canadian Armed Forces will have access to secure, resilient and sovereign connectivity years earlier than originally planned,” Telesat’s chief executive Dan Goldberg said.

Focus on Arctic connectivity

The award represents the first phase of the military Ka-band portion of Canada’s Enhanced Satellite Communications Project–Polar, known as ESCP-P. A separate agreement is expected to cover user terminals, ground and control infrastructure, network integration, training and support.

ESCP-P is intended to provide wideband and narrowband communications to Canadian forces operating in the Arctic, where terrestrial infrastructure is limited and geostationary satellites sit close to the horizon, making reliable links more difficult. Canada has tied the program to Arctic sovereignty and its commitments to the North American Aerospace Defense Command and NATO.

The agreement also accelerates a broader shift in Telesat’s business toward military customers.

Goldberg told investors Aug. 4 that Telesat now expects defense customers to account for about 46% of the company’s revenue in 2032, compared with an earlier projection of 14%. The revised mix reflects the addition of military Ka-band to Lightspeed and the Canadian contract, which expand the network’s potential market among NATO members and other allied governments.

Telesat announced in March that it would replace 500 megahertz of planned commercial Ka-band spectrum on Lightspeed’s user links with an equal amount of military Ka-band. The frequencies are adjacent, allowing the company to make the change without altering its launch schedule and with what it described at the time as a modest increase in program costs.

Under the expanded plan, all 225 Lightspeed satellites will carry 500 megahertz of military Ka-band capacity alongside commercial spectrum. MDA will modify spacecraft already in production as part of the revised order.

The military spectrum will allow the constellation to communicate with compatible Canadian and allied terminals while supporting both defense and commercial users on the same underlying network. Lightspeed’s planned optical links will allow data to move between satellites before being routed to the ground.

MDA said the additional work increases the value of its Lightspeed contract by about $337 million. That amount includes the 27 newly ordered satellites, the military Ka-band modifications and other long-lead equipment.

The spacecraft will be assembled at MDA’s manufacturing facility in Montreal. Telesat said the added satellites will be launched on SpaceX Falcon 9 rockets, including launches already under contract and another mission that remains subject to completion of a launch services agreement.

The larger constellation gives Telesat more capacity to pursue military business beyond Canada while retaining capacity for enterprise and commercial customers.