In a shocking turn of events, shares of MDA Space Ltd. plummeted on Monday after the tech manufacturer lost a crucial contract with EchoStar Corp. This abrupt cancellation comes on the heels of EchoStar's announcement to sell its spectrum licenses to SpaceX for a staggering $17 billion in a cash and stock deal.

Elon Musk's SpaceX is aggressively pushing towards offering satellite-based internet services directly to smartphones, which suddenly shifted EchoStar's strategic direction. CEO Mike Greenley expressed his disbelief during an emergency analyst call, stating, "This is a very unexpected event. This is obviously very sudden and a drastic change to the entire trajectory of EchoStar's business. This is a highly unusual situation."

With EchoStar’s decision to scrap plans for its own space-based network, MDA Space is left without a key opportunity to be the primary supplier for EchoStar's low Earth orbit satellite constellation. Initially announced on August 1, this contract was valued at around $1.3 billion, with potential growth to $2.5 billion.

Despite the termination of the EchoStar contract, MDA Space assured stakeholders that it remains financially sound. The company will receive compensation for termination costs, though specific amounts remain undisclosed. MDA Space also has a robust backlog of $4.6 billion in contracts, excluding EchoStar, and upheld its 2025 financial outlook. Nevertheless, shares tumbled by $8.76, or 20%, trading at $35.25 on the Toronto Stock Exchange.

This setback puts MDA Space’s shares back to levels comparable to early summer but still represents more than double the price they were a year ago. EchoStar was expected to be a cornerstone customer for MDA's new 5G-capable satellites. However, Greenley noted that the company is pursuing new partnerships amid a rapidly evolving market.

As SpaceX takes over the spectrum that EchoStar planned to utilize, Greenley sees potential excitement in the market. He remarked, "If SpaceX is going to build the network EchoStar was set to create, it adds urgency for companies in the industry to ramp up their efforts."

Interest in satellite technology is also surging in light of growing global geopolitical tensions, pushing nations to enhance their high-tech capabilities and security measures. Greenley emphasized that 2025 is already seeing significant geopolitical activity, with governments and corporations striving for greater sovereignty.

MDA Space, formerly MacDonald, Dettwiler & Associates, is not just resting on its laurels; it has secured additional contracts to develop the flight system for the Canadarm3, satellites for Globalstar’s broadband network, and robotics for the International Space Station.