Telesat’s headquarters in downtown Ottawa, Ontario, Canada. Photo: Telesat

Telesat progressed in financing discussions for its Lightspeed constellation during the third quarter and the company is still “bullish” on the opportunity for the constellation, Telsat CEO Dan Goldberg said on a Tuesday call with investors. 

The Lightspeed Low-Earth Orbit (LEO) constellation has hit some speed bumps after Telesat downsized plans for the constellation earlier this year and previously reported delays in financing discussions with export credit agencies (ECA). Telesat previously expected to have a financing update in the second quarter, but now it is expected by the end of the year. 

Goldberg provided an update on Lightspeed financing discussions in a Tuesday call with investors after Telesat released its third quarter financial results, reporting 6% decrease in revenue during the quarter. 

Goldberg said Telesat is working to complete financing discussions with ECAs, and discussions on additional financing needed because of increased cost from inflation and a longer schedule. If this financing is secured, it will be at the Lightspeed subsidiary level and subordinate to ECA lenders and the government of Canada and Quebec investments.

“Since our last call, I’m pleased to say that we’ve made tangible progress in connection with securing this financing. And in addition, we’ve had regular and sustained engagement with the ECA lenders as we seek to finalize the financing. We remain extremely bullish about the opportunity Telesat Lightspeed gives us to grow our business,” Goldberg said. 

However, there is “no assurance” these discussions will “come to a successful conclusion,” he added.

Yet Goldberg is bullish on the constellation, and he said nothing in the competitive environment in regards to OneWeb and Amazon’s recent progress changes his perspective on the potential for Lightspeed. 

“We’ve got a great constellation, an enormous amount of support from our shareholders, an enormous amount of support from our government partners here in Canada, a significant amount of backlog already, and [we] are having really good discussions with the customer community. Our focus is finishing the financing, getting the program going and getting out there in the market with Lightspeed,” he said. 

Anik F2 Anomaly

Last quarter, Telesat shared there was an anomaly on the Anik F2 satellite. The satellite had anomalies on two of its thrusters, and cannot maintain station keeping past the end of this year, at which point it will be put into inclined orbit. 

Anik F2 represents approximately 8% of Telesat’s total revenue, and if the company is unable to provide continued service to customers, it could reduce Anik F2 revenue by one-third in 2023. 

Goldberg said Telsat has worked closely with customers and has a range of plans to continue service. “These plans include making changes to antennas communicating with the satellite in order to extend service, relying on other Telesat and third-party satellites, and even purchasing an existing in-orbit C-band satellite from another satellite operator that’s expected to be repositioned, and co-located with Anik F2 in the coming months,” he said. 

If all goes as plan, Telesat will retain more than 90% of Anik F2 expected revenue from next year, albeit with additional operating expenditures.  

Financial Results 

Telesat revenue was down 6% in the third quarter of 2022, compared to the same time last year. Consolidated revenue was $180 million Canadian dollars ($134 million). The revenue decrease was primarily due to the Dish partial capacity renewal and revenue from short-term services provided to another satellite operator in 2021 that did not recur in 2022. 

Telesat said the decline was partially offset by higher revenue from mobility customers and the NASA Communications Services Project (CSP) program, which it was awarded earlier this year. 

Goldberg said aviation and maritime capacity demand has rebounded after the pandemic as expected, but even stronger than expected. He said Telesat has an issue taking advantage of all of the opportunities to serve mobility customers “because of capacity limitations in the areas where the most demand exists — key maritime routes, the [Mediterranean], Caribbean for the cruise market, some of the key flight paths for the aero segment.”  

Operating expenses for the third quarter were CA$56 million ($42 million), a decrease of 7% from the same period in 2021. 

Telesat’s net loss for the third quarter was CA$229 million, compared to a net loss of CA$52 million for the third quarter of 2021. The difference was largely due to a higher non-cash foreign exchange loss arising from changing Telesat’s U.S. dollar debt into Canadian dollars

Telesat continues to expect its full year 2022 revenues to be between CA$740 million and CA$750 million, subject to the current exchange rate between U.S. and Canadian dollars. Goldberg said there is no expected impact from the Anik F2 anomaly this year. 

Contracted backlog for Telesat’s current business, not including Lightspeed, stands at CA$1.9 billion, and fleet utilization is at 87%.