MDA Space was awarded a 474 million Canadian dollar ($337.4 million) contract to build additional satellites for Telesat's low Earth orbit network, boosting the company's manufacturing backlog as Canada accelerates its space-based defense capabilities in the Arctic.

The follow-on order stems from an agreement between satellite operator Telesat and Canada's Defence Investment Agency valued at up to C$2.7 billion to deliver secure military satellite communications to the Canadian Armed Forces under the Enhanced Satellite Communications Project-Polar program.

To support the defense initiative, Telesat is expanding its Telesat Lightspeed constellation by 69 satellites, 27 of which fall under MDA Space's contract expansion, and bringing the low Earth orbit network to 225 satellites. The satellites will be built by MDA at its facility in Montreal and eventually launched on SpaceX Falcon 9 rockets.

The C$474 million increase to MDA's contract value will include the new satellite orders, as well as the addition of 500 megahertz of military Ka-band spectrum connectivity to Lightspeed satellites currently being built.

The news comes as growing government defense budgets and military initiatives in the High North are driving increased procurement of space-based communications and satellite infrastructure across North America and North Atlantic Treaty Organization allies.

Programs like Canada's Enhanced Satellite Communications Project-Polar prioritize low Earth orbit satellite constellations to deliver reliable military communication and Arctic regional awareness.

This expansion brings Telesat's total expected investment in its network of 225 satellites to just about C$7 billion, with C$2.7 billion invested to date.

Tuesday's announcements sent MDA's stock surging, up 13% to C$47.96, while Telesat's shares jumped over 23% to C$64.25.

For MDA, the expansion follows a strategic partnership agreement between MDA Space, the Department of National Defence, and Telesat to provide connectivity across the Canadian Arctic and increase the Canadian military's ability to operate effectively in the region.

"Reliable military communication in the Arctic is a necessity for protecting Canadian sovereignty, maintaining situational awareness, coordinating joint operations with allies, and responding quickly to emergencies in a region where every minute counts," said MDA Chief Executive Mike Greenley.