Telesat Reports Results for the Quarter and Nine Months Ended September 30, 2024

Ottawa, Canada, November 14, 2024 –  Satellite operator Telesat (NASDAQ and TSX: TSAT) today announced its financial results for the three and nine month periods ended September 30, 2024. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (IFRS) unless otherwise noted.

“The third quarter showed strong progress in our build-out of Telesat Lightspeed, our state-of- the-art Low Earth Orbit (LEO) constellation,” commented Dan Goldberg, Telesat’s President and CEO. “During the quarter, we concluded our funding arrangements with the governments of Canada and Quebec, securing the financial resources necessary to fund the global Telesat Lightspeed network. Telesat Lightspeed will revolutionize broadband connectivity for enterprise and government users and represents a highly compelling growth and value creation opportunity for Telesat and its stakeholders.”

Goldberg added: “In addition to focusing on the Telesat Lightspeed build-out, we continue to show disciplined execution in managing our existing business. We are on track to meet or exceed our 2024 guidance and generated an 80% Adjusted EBITDA margin1 in our GEO segment, with a substantial contractual backlog2 of $1.0 billion.”

For the quarter ended September 30, 2024, Telesat reported consolidated revenue of $138 million, a decrease of 20.9% ($37 million) compared to the same period in 2023. When adjusted for changes in foreign exchange rates, revenue declined 21.6% ($38 million) compared to 2023. The decrease was primarily due to a reduction of services and lower rate on the renewal of a long- term agreement with a North American direct-to-home television customer and to non-renewals and reductions on renewal of services by certain mobility and Latin American customers.

Operating expenses for the quarter were $46 million, a decrease of $4 million from 2023. The impact from foreign exchange was minimal. The decrease was primarily due to lower non-cash share-based compensation and higher capitalized engineering related to Telesat Lightspeed, partially offset by higher bad debt expense, professional fees, and increased headcount in our LEO segment.

Adjusted EBITDA1 for the quarter was $96 million, a decrease of 27.5% ($37 million) or 28.6% ($38 million) when adjusted for foreign exchange rates. The Adjusted EBITDA margin1 was 69.5%, compared to 75.9% in the same period in 2023.

Telesat net income for the quarter was $68 million compared to a net loss of $4 million for the same period in the prior year. The change was primarily due to a gain associated with the impact of changes in foreign exchange rates during the quarter on the value of our US dollar denominated debt, compared with a loss in the same period in 2023.

For the nine-month period ended September 30, 2024, Telesat reported consolidated revenue of

$443 million, a decrease of 17.7% ($95 million) compared to the same period in 2023. When adjusted for changes in foreign exchange rates, revenue declined 18.3% ($98 million) compared to the same period in 2023.

The decrease was primarily due to a reduction of services and lower rate on the renewal of a long- term agreement with a North American direct-to-home television customer, non-renewals and reductions on renewal of services by certain mobility and Latin American customers, and lower equipment sales to Canadian government customers.

Operating expenses for the nine-month period were $149 million, a decrease of $5 million from 2023. The impact from foreign exchange was minimal. The decrease was primarily due to lower non-cash share-based compensation and higher capitalized engineering related to Telesat Lightspeed, partially offset by higher bad debt expense, professional fees, and increased headcount in our Lightspeed group.

Adjusted EBITDA1 for the nine-month period was $310 million, a decrease of 24.4% ($100 million) or 25.3% ($104 million) when adjusted for foreign exchange rates. The Adjusted EBITDA margin1 was 70.0%, compared to 76.2% in the same period in 2023.

For the nine months ended September 30, 2024, Telesat’s net income was $145 million compared to net income of $544 million for the same period in the prior year. The change was primarily due to the recognition of C-band clearing income in 2023.

Business Highlights

▲ On September 13, 2024, Telesat announced that Telesat LEO Inc. (a wholly-owned unrestricted subsidiary) had completed funding agreements with the Government of Canada and the Government of Quebec for its highly advanced Telesat Lightspeed LEO broadband satellite constellation.

• The loans are for a total of $2.54 billion, with $2.14 billion from the Government of Canada and $400 million from the Government of Quebec.

• The loans carry an interest rate of 4.75% above the Canadian Overnight Repo Rate Average (CORRA), with a 15-year maturity, and interest payable in-kind during the Telesat Lightspeed construction period, followed by a 10-year sculpted amortization.

• The Government of Canada and Government of Quebec will receive warrants to purchase 10% and 1.87%, respectively, of Telesat LEO Inc. based upon a US$3 billion equity valuation.

▲ At September 30, 2024:

• Telesat had contracted backlog2 for future services of approximately $1.0 billion (excluding revenue commitments associated with Telesat Lightspeed).

• Fleet utilization was 73.3%.

▲ Debt Repurchase:

• To date in 2024, Telesat has repurchased US$262 million of debt for an aggregate price of US$119 million (including US$5 million in accrued interest). Combined with the debt repurchases completed in 2022 and 2023, Telesat has repurchased a cumulative principal amount of US$849 million for an aggregate cost of US$459 million (including US$12 million in accrued interest).

2024 Financial Outlook

(assumes an average foreign exchange rate of US$1=C$1.35) For 2024, Telesat expects full year:

• Revenues to be toward the upper end of the guidance range of between $545 million and $565 million;

• Adjusted EBITDA1 to be at or above the upper end of our guidance range of between

$340 million and $360 million, which reflects Telesat Lightspeed operating expenses of between $65 million and $70 million, versus the prior guidance range of between $80 million and $90 million; and

• Capital expenditures (including both cash paid and accrued) to be in the range of $1,000 million to $1,400 million, which is nearly all related to expected Telesat Lightspeed capital expenditures.

Telesat’s quarterly report on Form 6-K for the quarter ended September 30, 2024 has been filed with the United States Securities and Exchange Commission (SEC) and the Canadian securities regulatory authorities, and may be accessed on the SEC’s website at www.sec.gov and on the System for Electronic Document Analysis and Retrieval + (SEDAR+) website at www.sedarplus.ca.

Telesat Corporation

Unaudited Interim Condensed Consolidated Statements of Income (Loss) For the periods ended September 30

Telesat Corporation

Unaudited Interim Condensed Consolidated Balance Sheets

Telesat’s Adjusted EBITDA margin(1):

The following table provides a quantitative reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA margin, each of which are non-IFRS measures.

End Notes

1 Non-IFRS Measures – Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS measures. EBITDA is defined as “Earnings Before Interest, Taxes, Depreciation and Amortization.” Adjusted EBITDA is used to measure Telesat’s financial performance. Adjusted EBITDA is defined as operating income (less certain operating expenses such as share-based compensation expenses and unusual and non-recurring items, including restructuring related expenses) before interest expense, taxes, depreciation and amortization. Adjusted EBITDA margin is used to measure Telesat’s operating performance. Adjusted EBITDA margin is defined as the ratio of Adjusted EBITDA to revenue.

Adjusted EBITDA and Adjusted EBITDA margin are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Adjusted EBITDA allows investors and Telesat to compare Telesat’s operating results with that of competitors exclusive of depreciation and amortization, interest and investment income, interest expense, taxes and certain other expenses. Financial results of competitors in the satellite services industry have significant variations that can result from timing of capital expenditures, the amount of intangible assets recorded, the differences in assets’ lives, the timing and amount of investments, the effects of other income (expense), and unusual and non-recurring items. The use of Adjusted EBITDA assists investors and Telesat to compare operating results exclusive of these items. Competitors in the satellite services industry have significantly different capital structures. Telesat believes that the use of Adjusted EBITDA improves comparability of performance by excluding interest expense.

Telesat believes that the use of Adjusted EBITDA and the Adjusted EBITDA margin along with IFRS financial measures enhances the understanding of our operating results and is useful to investors and us in comparing performance with competitors, estimating enterprise value and making investment decisions. Adjusted EBITDA and Adjusted EBITDA margin as used here may not be the same as similarly titled measures reported by competitors. Adjusted EBITDA and Adjusted EBITDA margin should be used in conjunction with IFRS financial measures and are not presented as a substitute for cash flows from operations as a measure of our liquidity or as a substitute for net income (loss) as an indicator of our operating performance.

2 Remaining performance obligations, which Telesat refers to as contracted revenue backlog (‘backlog’), represents Telesat’s expected future revenue from existing service contracts (without discounting for present value) including any deferred revenue that Telesat will recognize in the future in respect of cash already received. The calculation of the backlog reflects the revenue recognition policies adopted under IFRS 15. The majority of Telesat’s contracted revenue backlog is generated from contractual agreements for satellite capacity.

3 Includes severance payments and special compensation and benefits for executives and employees.