Telesat cautious on LEO plans

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Ottawa-based Telesat’s revenues for the quarter-year to June 30th were down 10 per cent at C$208 million (€131.8m).

The company, the world’s fourth-largest satellite operator, said: “Revenue decreases were primarily due to a reduction of service for one of Telesat’s North American DTH customers and lower revenue due to the completion of the term for prepaid services in a customer agreement that was accounted for as having a significant financing component. In addition, revenue associated with short-term services provided to another satellite operator in the second quarter of 2019 did not recur in 2020.”

For the six-month period ended June 30th 2020, Telesat reported consolidated revenue of C$417 million, a decrease of 8 per cent (C$37 million) compared to the same period in 2019.

“Our second quarter results reflect certain factors that we anticipated, namely the non-renewal late last year of a contract with a North American DTH customer and the end of the revenue amortisation period of a contract with another customer, as well as certain factors that we had not anticipated, namely the Covid-19 pandemic and a paucity of opportunities this year to provide short-term satellite services to other satellite operators,” commented Dan Goldberg, Telesat’s President/CEO.

“Having said that, the overwhelming majority of our revenues appears to be unaffected by the pandemic and we continue to have robust operating margins and strong cash flow, which is underpinned by our substantial contractual backlog. In addition, we continue to make substantial progress on the development of our planned revolutionary LEO satellite constellation as well as our other strategic objectives, including leveraging our valuable spectrum rights.”

Telesat’s backlog was C$2.9 billion, and fleet utilisation was good at 81 per cent.

However, during Dan Goldberg’s comments with analysts it emerged that the company had identified some C$2.5 million in bad-debt provisions.

Telesat is continuing to invest in its proposed LEO system. CFO Andrew Browne said the company would spend between C$60-C$80 million in capital expenditure this year, and had ringfenced C$486 million in a subsidiary company to help finance the LEO scheme. But it remains clear that Telesat is looking for a financial partner/investor to help with the LEO burden.

Bubbling under is a very long-held probability that one of its major backers, Loral Space & Communications (of New York), could buy the Canadian business.


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