Just a month after signing, the plug got pulled on MDA Space’s ~$2B satellite constellation deal with EchoStar - knocking 20-40% out of the backlog and 25% off of MDA’s share price.

Immediately after the deal was first announced, NTM EBITDA estimates jumped 8% and shares ran ~10%, so the pullback looks aggressive at first glance…

… with over two turns of multiple compression from pre-deal levels when bringing EBITDA estimates back to where they were before EchoStar.

But the competitive dynamics behind the termination warrants a haircut, with SpaceX acquiring EchoStar’s spectrum licenses and contracting out the network - waking the market up to the threat of a vertically integrated solution…

… that’s likely to pull some prospective network operators away from the ownership model that MDA has a strong foothold in.

The risk isn’t existential, especially given the geopolitical climate…

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… we’ve seen that same effect in space-based communications for sure, as nations and regions and corporations outside the United States wanted to make sure that they could take care of themselves a little bit more.

Mike Greenley (CEO) - MDA update call

… and there’s plenty of activity across the industry - with management reaffirming its full-year guide, $13B satellite opportunity set, and hinting at another constellation deal over the next year. Let’s see where MDA finds its footing.

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