Artist rendering of Telesat’s newest satellite Telstar 12 by Astrium. Image credit: Telesat

[Satellite TODAY 08-05-13] On Thursday, Telesat revealed its Q2 results for 2013, reporting consolidated revenues of CA $216 million ($208 million), an increase of approximately 7 percent (CA$14 million) compared to the same period in 2012.

“We had a strong second quarter and I’m pleased with our financial performance,” said Dan Goldberg, Telesat’s president and CEO during a conference call with investors on Thursday. “The strong revenue was driven principally by Nimiq 6 and to a lesser extent by Anik G1.” The Nimiq 6 and Anik G1 satellites entered into commercial service in June 2012 and May 2013, respectively.

Telesat’s recently announced deal with Axesat, a provider of VSAT services in South America, supports Goldberg’s statement. The companies signed a long-term contract for capacity on Telesat’s new Anik G1 multi-mission satellite, which is providing communications services across the Americas. For South America, Anik G1 brings new C-band and Ku-band capacity to a region where Telesat has been capacity constrained. Anik G1 is co-located with Telesat’s Anik F1 satellite at 107.3 degrees west, and effectively doubles the company’s capacity serving South America from this orbital position, the Telesat statement said.

      During an interview with Via Satellite, Mauricio Segovia, Axesat’s president, said the deal is significant. “[Telesat] needed the capacity on the T14R satellite for another client,” he said. “We followed their lead since we also thought this was beneficial to us. The move enabled us to set up an infrastructure connected to a satellite [Anik G1] that has growth potential. The capacity we had on the existing satellite [Telesat’s T14R] was really the only capacity we would have available. In the process of doing the migration from one satellite to another [from T14R to Anik G1], it gives us the flexibility reconfigure the use of our capacity. I think it was a win/win type of deal.”

      According to Segovia, while the demand for capacity in Latin America remains, “the growth is coming from the more robust requirements of customers, than by the number of sites being installed. I think in the high-end part of the market there is still a lot of opportunity to grow the business, even if the volumes are not what they were four or five years ago,” he said.

Meanwhile, in an interview with SatelliteTODAY.com, Sima Fishman, director of strategy consulting with Futron Corporation, said she “thinks we are seeing a future trend for HTS investment.” Telesat recently announced that its HTS Telstar 12 will be built by Astrium instead of Space Systems/Loral.

     Sergovia agreed that HTS (high throughput satellites) have become a real game changer in U.S. but said that in the Latin American marketplace, challenges still remain.

      “The evolution to HTS was more seamless in the United States. I think in the rest of the world, there is more confusion. They [HTS] will definitely play a role, but it is not clear what type of role they will play. We are seeing some other initiatives such as [Eutelsat’s] Ka-Sat, which is not doing nearly as well as expected. The industry is looking at this experience and wondering where it goes next. They are trying to set up different types of models to use that capacity. I think the verdict is still out on what impact HTS will have in other regions of the world,” Segovia said.

HTS aside, and despite expenditures for technological advancement, Telesat was able to reduce operating expenses. In Q2 of 2013, the company’s operating expenses of CA$49 million were 6 percent (CA$3 million) lower than for the same period in 2012, related primarily to lower compensation expenses. Adjusted EBITDA was CA$172 million, an increase of 10 percent (CA$16 million) over the same period in 2012, according to a written statement from Telesat officials.

The Adjusted EBITDA margin for the second quarter of 2013 was 80 percent, compared to 77 percent in the same period in 2012. For the six month period ending June 30, 2013, consolidated revenues were CA$435 million, an increase of approximately 9 percent (CA$37 million) compared to the same period in 2012, primarily reflecting the addition of the Nimiq 6 satellite in 2012, the addition of the Anik G1 satellite in 2013, and higher equipment sales.

Operating expenses were CA$99 million, a decrease of 27 percent (CA$36 million) compared to 2012, related primarily to special compensation payments to executives and certain employees in connection with the cash distribution made to Telesatâ??s shareholders in 2012, the written statement said. Additionally, the company’s net income for the quarter was CA$15 million compared to net loss of CA$244 million for the quarter ended June 30, 2012.

But despite mostly positive numbers, other challenges remain for Telesat including a dispute with a Russian satellite operator. RSCC plans to launch the Express AM8 satellite at 14 degrees West, which is only 1 degree away from Telesat’s Telstar 12, located at 15 degrees West. According to a source familiar with the dispute, negotiations between the Russian and Canadian companies are still in progress.

Meanwhile, according to a written statement, for the six-month period ending June 30, 2013, the company saw a net loss of CA$83 million, compared to a net loss of CA$145 million in 2012, still a gain for the company.

“Results in both the second quarter and first half of 2013 were favorably impacted by an increase in revenues, lower operating expenses, reduced losses on refinancing and by non-cash gains on changes in the fair value of financial instruments,” Telesat officials said.