Telesat reported its financial results last week for three months ending on March 31, 2021. The company saw revenue decrease 6%, adjusted for foreign exchange rates, to $190 million.
Telesat CEO Dan Goldberg said in a conference call that the revenue decrease was in part due to the COVID-19 pandemic which affected customers in “the commercial airline and cruise industries.”
“Telesat’s net income for the quarter was $42 million compared to a net loss of $278 million for the quarter ended March 31, 2020. The $320 million difference was the result of non-cash gains on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars in the first quarter of 2021, compared to non-cash losses on foreign exchange in the first quarter of 2020.”
IPO and Lightspeed update
Telesat provided an update on its IPO plans saying that the new company called Telesat Corporation is expected to be listed on the Nasdaq Global Select Market in Q3 after receiving regulatory approvals. They reiterated that they are still considering listing on a Canadian stock exchange as well.
One analyst question centred on Lightspeed customers and “how heavily engaged” Telesat is with them. To which Dan Goldberg responded “it’s all very positive. But you know, folks, the feedback has been been very, very positive. And as I’ve said before, I mean, we already have a substantial amount of committed backlog associated with LEO.” This would fit with Telesat’s traditional model of trying to maximize the sales of capacity of a satellite, or in this case, a constellation, so that when the system goes operational that the constellations utilization is high. Low latency associated with the constellation is a key benefit and clearly a driver of sales.
Unproven launch partners
Dan Goldberg was very positive when answering a question related to launch providers, in particular referencing his faith in Blue Origin. Telesat has contracted launches with Blue Origin and Relativity Space. Neither have launched before. In referencing Blue Origin, Goldberg said “but for us, yeah, we have real conviction that they’re going to be in the game when we need them to be in the game.”
Having said that Goldberg did also state that they are in discussions with other launch providers, and based on his comments that would include SpaceX. An announcement of some type about other launch providers would “certainly (be) before the end of year.”
In a related question on the number of satellites per launch, Goldberg did provide some information. First he stressed that the Lightspeed satellites are substantial in size without providing details. However, he stated that on the New Glenn, which is a sizeable launch vehicle, they could put “30 plus satellites.” He then mentioned a SpaceX Falcon 9 saying in an inclined orbit they could launch 15-16 satellites and for polar launches “around 13.”
Even with its faith in an unproven launch company like Blue Origin, Telesat is a conservative company and won’t take chances with something so critical to the future of its business. And Goldberg did reiterate that he expects the first launches within two years. The only way to safely meet that deadline would seem to be contracting with either SpaceX, ULA or Arianespace to launch several of the first batches of satellites.
Business highlights
- Telesat had contracted backlog for future services of approximately $2.5 billion.
- Fleet utilization was 79% across Telesat’s fleet.
- Public Company
- On November 23, 2020, Telesat Canada announced that it entered into an agreement with Loral Space & Communications Inc. (NASDAQ: LORL) (“Loral”) and Public Sector Pension Investment Board pursuant to which Telesat Canada and Loral will become subsidiaries of Telesat Corporation, a new publicly traded Canadian incorporated and controlled company.
- In furtherance of the proposed transaction, on April 26, 2021, Telesat Corporation and Telesat Partnership L.P. filed a Registration Statement on Form F-4 with the United States Securities and Exchange Commission (“SEC”).
- The shares of Telesat Corporation will be listed on the Nasdaq Global Select Market at the closing of the transaction and Telesat is also considering a listing on a Canadian stock exchange. The transaction is expected to close in the third quarter of 2021, subject to the receipt of required regulator approvals, the approval of Loral’s stockholders, and other customary conditions.
- Lightspeed Constellation
- On February 9, 2021, Telesat announced that it selected Thales Alenia Space (“TAS”) to be the prime manufacturer of the Telesat Lightspeed constellation and that TAS and its affiliate Telespazio have made a Lightspeed capacity commitment in connection with the agreement. Under the terms of the agreement, the parties provided for continued advancement of the program while Telesat progresses the financing for the project.
- On February 18, 2021, Telesat announced that it selected MDA Ltd. (“MDA”) to manufacture the phased array antennas to be incorporated into the Lightspeed satellites. Under the terms of the agreement executed with MDA, the parties provided for continued advancement of the program while Telesat progresses the financing for the project.
- On February 18, 2021, Telesat also announced that it entered into a Memorandum of Understanding (“MOU”) with the Government of Québec for an investment of $400 million into Telesat Lightspeed. Under the terms of the MOU, the investment by the Government of Québec will consist of $200 million in preferred equity as well as a $200 million loan. It is expected that a final agreement will be completed in the coming months.
- Secured Notes Offering
- On April 27th, 2021 Telesat Canada announced the issuance of US$500 million in aggregate principal amount of 5.625% senior secured notes, which will mature on December 6, 2026, pursuant to an indenture, dated as of April 27, 2021, by and among Telesat and Telesat LLC, as co-issuer, the guarantors named therein, and The Bank of New York Mellon, as trustee and notes collateral agent and the other collateral agents party thereto (the “Offering”).
- Telesat Canada intends to use the net proceeds from the Offering to fund additional investment into one or more unrestricted subsidiaries for the development of Telesat Lightspeed.