Advanced Television

Telesat reports “modest” revenues

March 21, 2022

Telesat, the Canadian satellite operators, has published its financial results for the three-month and one-year periods ended December 31st 2021.

“I am pleased to report our 2021 fourth quarter and full year results as a dual-listed, public company,” commented Dan Goldberg, Telesat’s President and CEO. “Despite modestly lower year-over-year revenues and Adjusted EBITDA, adjusted for foreign exchange rate changes, Telesat continued to generate strong cash flows, ending the year with over C$1.4 billion (€1bn) in cash. We also continued to deliver industry-leading Adjusted EBITDA margins with high capacity utilisation and have a substantial contractual backlog of C$2.1 billion, providing high visibility into our future cash flows.”

Goldberg added: “I am also pleased that we made significant progress last year on our revolutionary Telesat Lightspeed constellation, including announcing C$1.44 billion and C$400 million of investment in the project by the Government of Canada and the Government of Quebec, respectively; making strong progress on the advanced technologies and systems underpinning the constellation; and concluding an agreement with the Government of Ontario to use Telesat Lightspeed to help bridge the Digital Divide, which, along with our Government of Canada agreement previously announced, contributes to the over C$750 million in contractual backlog we had in place for Telesat Lightspeed at the end of 2021. Our focus now is completing the financing of Telesat Lightspeed and commencing the full-scale construction of the programme. Although the programme has been delayed as a result of certain supply chain issues, we remain bullish that Telesat Lightspeed will position Telesat and its customers for strong future growth.”

For the year ended December 31st 2021, Telesat reported consolidated revenue of C$758 million, a decrease of 8 per cent (C$62 million) compared to the same period in 2020.

When adjusted for changes in foreign exchange rates, revenue declined 4 per cent (C$32 million) compared to 2020. The revenue decrease was primarily due to a reduction of service for one of Telesat’s North American DTH customers, the reduction or non-renewal of certain services in the enterprise segment, including as a result of the full-year effect of contract restructurings in 2020 for a mobility customer as a result of Covid-19, and lower consulting revenue. The revenue decline was partially offset by an increase in revenue associated with short-term services provided to another satellite operator in 2021, which had not occurred in 2020, as well as increased services provided to customers in the mobility market as it began to recover from the impact of Covid-19.

Operating expenses for full year 2021 were C$234 million, an increase of C$53 million from 2020. When adjusted for changes in foreign exchange rates, operating expenses increased by C$59 million from 2020. The increase was principally due to higher non-cash share-based compensation combined with higher wages due to the hiring of additional employees, primarily to support the Telesat Lightspeed programme. This was partially offset by higher capitalized engineering costs.

Adjusted EBITDA for full year 2021 was C$603 million, a decrease of 8 per cent (C$50 million) or, when adjusted for foreign exchange rates, a decrease of 4 per cent (C$25 million). The Adjusted EBITDA margin1 was 79.6 per cent, unchanged from 2020.

For the year ended December 31st 2021, net income was C$158 million, compared to C$246 million for 2020. The decline was the result of lower revenues, higher (mostly non-cash) operating expenses, and an increase in tax expense, driven by lower deferred tax recovery in 2021, partially offset by recognition of Phase I accelerated clearing payments for repurposing of US C-band spectrum.

For the quarter ended December 31st 2021, Telesat reported consolidated revenue of C$187 million, a decrease of 7 per cent (C$14 million) compared to the same period in 2020. When adjusted for changes in foreign exchange rates, revenue declined 5 per cent (C$9 million) compared to 2020. The revenue decrease was primarily due to lower equipment sales from certain government customers, the reduction or non-renewal of certain services in the enterprise segment, and a reduction of services for one of Telesat’s North American direct-to-home customers.

Operating expenses for the quarter were C$87 million, an increase of C$40 million from 2020. When adjusted for changes in foreign exchange rates, operating expenses increased by C$42 million. The increase in operating expenses was primarily due to higher non-cash share-based compensation.

Adjusted EBITDA was C$145 million, a decrease of 9 per cent (C$15 million) or, when adjusted for foreign exchange rates, a decrease of 7 per cent (C$12 million). The Adjusted EBITDA margin for the fourth quarter was 77.5 per cent, compared to 79.5 per cent in 2020.

For the quarter ended December 31st 2021, net income was C$97 million, compared to net income of C$255 million for 2020. The decline was the result of lower revenues, higher expenses, a significantly lower non-cash foreign exchange gain in 2021 compared to the gain in 2020, arising from the translation of Telesat’s US dollar denominated debt into Canadian dollars, and higher tax expense, driven by a deferred tax expense compared to a deferred tax recovery in 2020, partially offset by recognition of Phase I accelerated clearing payments for repurposing of US C-band spectrum.

Categories: Articles, Business, Results

Tags: , , , ,