Telesat Reports Results for the Quarter and Six Months Ended June 30, 2021

Ottawa, Canada, August 13, 2021--Telesat today announced its financial results for the three and six-month periods ended June 30, 2021. Adjusted EBITDA was CDN$ 149 million, a decrease of 10% ($16 million) or, when adjusted for foreign exchange rates, a decrease of 3% (CDN$5 million). The Adjusted EBITDA margin1 for the second quarter of 2021 was 79.2%, compared to 79.1% in 2020.

Note: All amounts below are in Canadian dollars.

For the quarter ended June 30, 2021, Telesat reported consolidated revenue of $188 million, a decrease of 10% ($20 million) compared to the same period in 2020. When adjusted for changes in foreign exchange rates, revenue declined 3% ($7 million) compared to 2020. Revenue decreases were primarily due to a slight reduction of service for one of Telesat’s North American DTH customers, non-renewals of certain enterprise contracts, and lower consulting revenue.

Operating expenses for the quarter were $57 million, an increase of $11 million from 2020. When adjusted for changes in foreign exchange rates, operating expenses increased by $14 million from 2020. The increase in operating expenses was principally the result of a $16 million increase in non-cash share-based compensation combined with higher wages due to the hiring of additional employees primarily to support our Telesat Lightspeed program. These increases were partially offset by higher capitalized engineering and lower bad debt expense in the three months ended June 30, 2021.

For the quarter ended June 30, 2021, net income was $61 million, compared to net income of $162 million for 2020. The negative variation for the quarter was principally the result of lower non-cash foreign exchange gains in 2021, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars and an increase in unusual/non-recurring items relating to share based compensation.

For the six-month period ended June 30, 2021, Telesat reported consolidated revenue of $378 million, a decrease of 9% ($38 million) or, when adjusted for foreign exchange rates, a decrease of 5% ($19 million) compared to the same period in 2020. Revenue decreases were primarily due to a slight reduction of service for one of Telesat’s North American DTH customers, decreases in the maritime and commercial aviation markets owing to the COVID pandemic as well as non-renewals from certain other customers in the enterprise segment, and lower consulting revenue.

Operating expenses for the six-month period were $97 million, an increase of $6 million from 2020 or, when adjusted for foreign exchange rates, an increase of $9 million. The increase in operating expenses was principally the result of a $15 million increase in non-cash share-based compensation expense combined with higher wages due to the hiring of additional employees primarily to support our Telesat Lightspeed program. These were partially offset by the $10 million impact of a reversal of a bad debt provision in the first half of 2021 relating to certain maritime and aeronautical customers that was recorded during the six months ended June 30, 2020.

Adjusted EBITDA was $301 million, a decrease of 9% ($29 million) or, when adjusted for foreign exchange rates, a decrease of 4% ($13 million). The Adjusted EBITDA margin for the first six months of 2021 was 79.6%, compared to 79.3% in 2020.

For the six months ended June 30, 2021, net income was $103 million, compared to a net loss of $116 million for 2020. The positive variation was principally the result of higher non-cash foreign exchange gains in the first quarter of 2021, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars. This was partially offset by an increase in unusual/non-recurring items relating to share-based compensation.

“I am pleased with our results for the second quarter and first six months of the year, particularly given the fact that the COVID pandemic continues to restrain certain business activities,” commented Dan Goldberg, Telesat’s President and CEO. “Although revenues and Adjusted EBITDA were down slightly, we continued to generate strong cash flows and maintained high operating margins, high fleet utilization, and a substantial contractual backlog, which provides good visibility into our future performance.”

Goldberg added: “I am also pleased with the meaningful progress we are making with our groundbreaking Telesat Lightspeed constellation, including the important announcement we made yesterday regarding the Government of Canada’s $1.44 billion investment in the program and the announcement last week that the Government of Ontario is committing $109 million to use Telesat Lightspeed to provide high capacity broadband connectivity to remote communities throughout the province. With the investment from the Government of Canada and other financing sources already in place, Telesat now has arrangements for approximately $4 billion in funding for the program. We expect to secure in the near term the remaining financial commitments required to fully finance Telesat Lightspeed.”

Goldberg concluded: “Lastly, we and our shareholders are making steady progress toward transforming Telesat into a publicly listed company, including obtaining last week the requisite approval from the Federal Communications Commission. At this point, we expect that Telesat will become publicly listed in the late third quarter or early fourth quarter of this year.”