Canada Backs Starlink Rival Telesat, but $2 Billion Debt Dispute Threatens Lightspeed

Canada is backing Telesat’s effort to challenge Elon Musk’s Starlink, but a debt dispute with Wall Street creditors threatens the company’s Lightspeed satellite plan. According to Sina Finance, Telesat plans to deploy 225 low-Earth-orbit satellites for global high-speed internet and secure communications, but depends on Musk’s SpaceX rockets to launch them. Telesat has C$3.1 billion in debt approaching maturity, equivalent to about $2.2 billion, as its revenue declines. Creditors Silver Point Capital, GoldenTree Asset Management and Sound Point Capital Management have twice proposed rescue plans, including a C$1.7 billion equity placement and a C$1.5 billion secured loan. Their proposal would require Telesat to pledge all Lightspeed equity as first-priority collateral. Creditors allege the company transferred 62% of the project’s equity out of a restricted asset structure in September 2025 to benefit shareholders at lenders’ expense; Telesat disputes the claims and says it will defend itself against lawsuits filed in New York and Canada. C$2.3 billion of debt is due December 6, with another C$600 million due next year. Telesat says it remains focused on a refinancing plan that is fair to stakeholders. An analyst at ATB Cormark Capital Markets said the dispute could continue until the December 6 deadline and that Telesat could default. Canada has committed billions of Canadian dollars in financing and defense contracts to Lightspeed, including a 15-year contract worth C$2.3 billion awarded in August. Ottawa is seeking to reduce reliance on U.S. communications technology, and NATO allies have viewed Lightspeed as a potential alternative after Starlink service disruptions in Ukraine. Telesat’s existing fleet numbers about 14 to 15 older geostationary satellites; Lightspeed is not expected to enter service until early 2028.