Telesat Corp shares rose 5.6% on Monday after CIBC initiated coverage of the satellite communications provider with an Outperformer rating and a C$105 price target, citing the potential value of its planned Lightspeed low Earth orbit (LEO) satellite network.
CIBC said investors remained focused on Telesat’s legacy geostationary (GEO) debt despite the company nearing completion of a multi-year transition towards its fully funded, 225-satellite Lightspeed constellation.
With shares trading at about C$59, the brokerage estimated that public markets valued Lightspeed’s equity at approximately C$5.6 billion, implying a significant discount to its long-term earnings potential.
In its base-case assessment, CIBC valued the LEO network at C$9.5 billion and projected that Telesat could capture about 1% of the estimated US$359 billion enterprise LEO broadband addressable market by 2032.
The brokerage identified the resolution of Telesat’s legacy financial obligations ahead of a December 6 maturity deadline as a key catalyst for narrowing the valuation gap.
Its baseline scenario assumes a negotiated settlement in which 58% of the legacy GEO debt is exchanged for a 30% equity stake in Lightspeed. CIBC said such an arrangement would ease balance sheet pressures and allow investors to focus more closely on the network’s commercial execution.
Lightspeed is designed primarily for enterprise, government and defence customers that require guaranteed service-level performance, rather than the best-efforts capacity associated with consumer-focused satellite services.
The network has already secured a contractual backlog of C$5.6 billion, years ahead of its targeted commercial launch at the end of the first quarter of 2028.
CIBC also highlighted Telesat’s position in the sovereign communications market, supported by a 15-year, C$2.7 billion contract with the Canadian government under the Enhanced Satellite Communication Project – Polar (ESCP-P).
As allied nations seek trusted, non-US NATO alternatives for military Ka-band connectivity, the brokerage expects Lightspeed to become the first available allied low Earth orbit network of its kind.
CIBC believes this positioning could establish Telesat as a strategic provider of sovereign satellite communications and a long-term defence partner, adding to the commercial prospects of its Lightspeed network.
