Quebec signs preliminary deal to invest C$400 million in Telesat satellite network

By Steve Scherer and Allison Lampert

MONTREAL (Reuters) - Quebec's provincial government has signed a preliminary agreement to invest C$400 million ($315 million) in Telesat's low earth orbit (LEO) telecommunications satellite network, the parties said on Thursday.

Telesat is owned by Pension Investment Board and Loral Space & Communications Inc, but it plans to merge Telesat Canada with Loral to become a public entity on the Nasdaq this summer.

Under a memorandum of understanding, Quebec's investment "will consist of C$200 million in preferred equity as well as a C$200 million loan," the parties said in a statement.

The deal is expected to be finalized "in coming months," they added.

"It's a good opportunity to diversify in satellites," Quebec Premier Francois Legault told reporters at a press conference.

Earlier this month, Telesat tapped Thales Alenia Space to build some 300 satellites in a contract worth $3 billion.

On Thursday, Telesat said Canada's space technology company MDA would manufacture phased array antennas for those satellites, but did not give a value for the contract.

While the first satellites are to be built in France, MDA Chief Executive Mike Greenley said the company is "very close" to a deal with Thales Alenia Space to take on final assembly and manufacturing in Quebec, Canada's aerospace hub.

Legault said the province is now studying other possible investments in the satellite business as the COVID-19 pandemic weighs on the aviation sector.

The so-called Lightspeed network will base its operations at a "new campus" in Gatineau, Quebec, Telesat President and Chief Executive Dan Goldberg said in an interview.

"Kudos to the government of Quebec for identifying this as a promising sector," Goldberg said.

Telesat plans C$1.6 billion in total investments in Quebec that, together with MDA, would create 600 high-skilled jobs, the company said.

Canada's federal government has already put up C$600 million in a partnership with Telesat to provide broadband in remote areas.

($1 = 1.2698 Canadian dollars)

(Reporting by Steve Scherer in Ottawa and Allison Lampert in Montreal; Editing by Richard Chang and Grant McCool)