Canada's $2.54 Billion Bet on Satellite Company Telesat vs. Elon Musk's Starlink: A Tale of Two Paths to Internet Access

Last weekend, on Sept. 15, tech-billionaire Elon Musk said that it would take “less than half” the amount to provide Starlink to every Canadian household

Elon Musk has said that providing Starlink to every Canadian household would cost “less than half” the amount the country's government has provided to its competitor Telesat to achieve the same goal.

The response came after Michael Barrett, a Member of the House of Commons of Canada and Conservative Party Member, condemned the multi-billion dollar deal between the Canadian government and satellite operator Telesat.

“If this $2.14 BILLION plan is the panacea of expanding access, competition, and service — where is the interest from private investors and banks?”

– Barrett on X (previously Twitter)

He further asked Musk to share his remarks on the matter and, on the suggestion of lower cost, opined that Starlink sounds like a “common sense solution” for Canada.

Canada's industry minister, François-Philippe Champagne, dismissed it all as “nonsense.”

“They'd prefer giving money to foreign billionaires instead of supporting our industry and our workers. This loan will help build a world-class Canadian-made satellite network and support thousands of jobs in Quebec! Now that's common sense!”

– Minister of innovation, science and industry

Back in July, Musk shared on X that Starlink has been serving “more than 400k active Canadian customers,” about 3% of households across the country. The people of Quebec City are currently paying about C$140 per month to avail of Starlink's service, while the hardware needed to use the service at home costs C$299.

Starlink is a subsidiary of Musk's SpaceX, which is a company that designs, manufactures, and launches advanced rockets and spacecraft. Internet speeds across its satellites range from 25 to 220 MBps. SpaceX plans to have over 40,000 satellites in orbit, with more than 7,000 already orbiting space.

In response to Champagne's comment, Musk said this week that the Canadian government doesn't want to rely on Starlink but rather wants its “own system” to provide connectivity throughout the country.

While Musk hasn't shared just how he can achieve Telesat's goal at half the amount that it has received from the Canadian government, there are some seemingly obvious ways it can be done.

For starters, SpaceX has already been mass-producing satellites. Building satellites at scale has allowed Starlink to develop efficient satellite manufacturing processes that enable cost savings.

Not to mention, SpaceX's reusable rocket technology drastically cuts launch costs by reusing the same rocket multiple times, and most of its rocket components are also manufactured in-house. These factors allow for tighter control over costs and reduce reliance on external suppliers that may have higher markups.

Musk's US-based company also has advanced launch capabilities, controlling a significant portion of its supply chain, reducing overhead, and cutting middleman costs. Not to mention, having experience with similar projects gives the company an advantage in both experience and cost optimization.

A Deeper Look at Telesat's $2.54 Billion Government Funding

Last week, the Canadian satellite communications company Telesat, with its headquarters in Ottawa, secured investment agreements worth $2.54 billion with the Government of Canada and the Government of Quebec. This funding, Prime Minister Justin Trudeau said, showcases the government's commitment to focus on Canadians in action.

“Designed, manufactured, and operated in Canada – the Telesat Lightspeed satellite network will be the largest in Canadian history – creating thousands of jobs, growing our economy, and getting high-speed internet to Canadians. We're putting Canada at the forefront of opportunity, with a fair chance for everyone to succeed.”

– Trudeau

For a clear picture, the Canadian government loaned Telesat $1.57 billion (CAD 2.14 billion), maturing it by 15 years. The government is also receiving warrants for 10% of the common shares of the company based on a $3 billion equity valuation of Telesat LEO, which is a Telesat subsidiary and the official borrower.

Meanwhile, the loan from the Quebec Government is for $294 million (CAD 400 million) with warrants for 1.87% of the common shares. According to Dan Goldberg, the President and CEO of Telesat:

“We are pleased to conclude these funding arrangements with the governments of Canada and Quebec as we make strong progress on the build-out of the revolutionary Telesat Lightspeed constellation, the largest space program in Canada's history.”

With this funding, Telesat has all its bases covered to pay for its $3.5 billion Lightspeed network, which includes satellites, launch vehicles, landing stations, and operational support systems. The launch of the company's first Lightspeed satellites, however, won't come until mid-2026, with 2027 as the go-live date.

The Lightspeed network of Telesat is made of