Telesat Posts US$140.64 Million 4th Quarter Loss; Ends 2018 With US$68.44 Million Loss

Ottawa, Canada, March 1, 2019 — Telesat Canada reported today consolidated revenues of US$174.48 million (Ca$232 million) for the 4th quarter ending December 31, 2018, a decrease of 8% US$15.79 million (Ca$21 million) compared to the same period in 2017. When adjusted for the impact of foreign exchange rate changes, the revenue decreased by 9% or US$16.55 million (Ca$22 million) compared to the same period in 2017.

Telesat said the decrease was primarily due to short-term services provided to other satellite operators in the 4th quarter of 2017 that did not re-occur in 2018, and the end of service or service reductions for certain customers, partially offset by the impact of the implementation of a new revenue measure and revenue related to the Telstar 19 VANTAGE satellite, which entered commercial service in August 2018.

Operating expenses was US$53.4 million (Ca$71 million) for the quarter, which were 52% or US$18.05 million (Ca$24 million) higher than the same period in 2017. Adjusted earnings before earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter was US$142.9 million (Ca$190 million); a decrease of 8% or US$12.79 million (Ca$17 million) compared to the same period in 2017. The adjusted EBITDA margin for the fourth quarter of 2018 was 82.2%, compared to 82.0% in the same period in 2017.

On January 1, 2018, Telesat adopted IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts with Customers. For the three-month period ended December 31, 2018, the adoption of IFRS 15 had a net positive impact of approximately US$5.26 million (Ca$7 million) on revenues, an approximately US$3.76 million (Ca$5 million reduction) in operating expenses and a positive impact of approximately US$9.02 million (Ca$12 million) on adjusted EBITDA.

Telesat’s net income for the quarter was a loss of US$140.64 milllion (Ca$187 million) compared to net income of US$54.15 million ($72 million) for the quarter ended December 31, 2017. The USD$194.79 million (Ca$259 million) difference was the result of a higher non-cash loss on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars, losses on financial instruments, and lower operating income in the fourth quarter of 2018.

For the year ended December 31, 2018, revenue was US$679.13 million (Ca$903 million), a decrease of 3% US$18.05 million (Ca$24 million) compared to the same period in 2017. When adjusted for changes in foreign exchange rates, revenues declined 2% US$12.03 million (Ca$16 million) compared to 2017.

Operating expenses were US$139.89 million (Ca$186 million), a decrease of 1% US$1.5 million (Ca$2 million) from 2017. Adjusted EBITDA was US$565.56 million (Ca$752 million), a decrease of 1% US$3.76 million (Ca$5 million) or, when adjusted for foreign exchange rates, an increase of US$2.26 million ($3 million). The Adjusted EBITDA margin for 2018 was 83.3%, compared to 81.6% in 2017.

The adoption of IFRS 15 had a net positive impact of approximately US$14.29 million (Ca$19 million) on revenues, approximately US$15.79 million (Ca$21 million) reduction in operating expenses and a positive impact of approximately US$30.08 million (Ca$40 million) on adjusted EBITDA for the year ended December 31, 2018.

For the year ended December 31, 2018, the net loss was US$68.44 million (Ca$91 million), compared to net income of US$379.80 milllion (Ca$505 million) for 2017. The decrease in net income for the year was principally the result of foreign exchange losses in 2018, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars compared to foreign exchange gains in 2017, and losses on financial instruments in 2018, compared to gains in 2017.

“2018 was a busy year and I am pleased with both our financial and operational performance,” commented Dan Goldberg, Telesat’s president and CEO. “As a result of our continued operating discipline, we maintained our favorable Adjusted EBITDA margin, achieved strong free cash flow generation, and meaningfully increased our cash balances year over year. We also launched and brought into service two new geostationary satellites – Telstar 18 VANTAGE and Telstar 19 VANTAGE – and launched our first Low Earth Orbit (LEO) satellite, an important step in moving forward with our planned revolutionary global LEO broadband satellite constellation. Looking ahead we remain heavily focused on increasing the utilization of our in-orbit satellites and executing on our key growth initiatives, particularly our LEO program.”

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