Telesat Earnings Call: GEO Pressure, LEO Ambition

Telesat Corporation ((TSE:TSAT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Telesat’s latest earnings call struck a cautiously optimistic tone, with management highlighting an adjusted EBITDA beat, strong liquidity and tangible progress on its Lightspeed LEO constellation. However, the upbeat strategy narrative was tempered by a sharply higher net loss, a steep projected drop in GEO revenue and heavy near-term Lightspeed spending that amplifies refinancing risk into 2026.

Adjusted EBITDA Beat and Bolstered Cash Cushion

Telesat reported 2025 adjusted EBITDA of $213 million, surpassing its prior guidance range of $170–$190 million and signaling tighter cost control in a challenged revenue environment. The company closed the year with $510 million of consolidated cash, split between roughly $206 million in the GEO business and $337 million in LEO, giving it room to navigate its capital-intensive transition.

Revenue Performance In Line with Prior Guidance

Full-year 2025 revenue came in at $418 million, essentially matching management’s expectations despite structural headwinds in the legacy GEO segment. Fourth-quarter revenue of $94 million underlined the steady but pressured nature of the top line as Telesat prepares for a more LEO-centric future.

Lightspeed LEO Program Marks Milestones and New Timeline

Management reported solid progress across satellites, software, user terminals and gateways in the Lightspeed LEO program, with initial launches targeted for late 2026 and a heavy launch cadence in 2027. The goal for full global commercial service has slipped by roughly three months to around the first quarter of 2028, by which time Telesat aims to have about 96 satellites in orbit for global coverage.

Mil Ka Spectrum Addition Targets Defense Demand

Telesat has added 500 MHz of military Ka-band to the first 156 Lightspeed satellites, representing roughly a quarter of the constellation’s user-link spectrum and sharply enhancing its appeal to government and defense customers. The upgrade comes at a modest incremental cost of about $25 million, less than 0.5% of the initial Lightspeed program budget, and management said it does not affect the schedule.

Commercial and Government Wins Build Strategic Credibility

The company highlighted several notable commercial and government engagements, including a substantial arrangement with Viasat to support aero connectivity services. Telesat also secured a position on a key U.S. defense contracting vehicle, signed an MOU with Korea’s Hanwha Systems and was selected with MDA for Canada’s ESCaPE Arctic program, collectively underscoring traction ahead of Lightspeed’s commercial debut.

Interest Expense Down as Debt Buybacks Gain Traction

Interest expense fell to $200 million in 2025, down from $240 million in 2024 and $270 million in 2023, reflecting the impact of an $857 million repurchase of Telesat Canada debt. The company also capitalized $29 million of non-cash interest related to Lightspeed financing, which reduces current-period expense but adds complexity to the capital structure.

CapEx Discipline and Timing on Lightspeed Build

Accrued capital expenditures reached $708 million in 2025, almost entirely directed to the Lightspeed constellation yet below the prior $900 million to $1.1 billion guidance range. Management attributed the shortfall primarily to deferring certain milestone payments into 2026, underscoring its ability to modulate cash outflows as the project advances.

Financing in Place to Carry Lightspeed to Service

Telesat ended the year with $337 million of LEO cash and access to $1.82 billion under its Lightspeed financing facilities, plus an expected $325 million in vendor financing. Management indicated this funding stack should be sufficient to carry the Lightspeed program through to the start of global commercial service, easing near-term project funding uncertainty even as execution risk remains.

Net Loss Swells on Revenue Pressure and Non-Cash Charges

The company’s net loss widened to $530 million in 2025 from $302 million in 2024, a negative swing of about $220 million. Drivers included lower revenue and EBITDA, impairment of GEO goodwill and a larger derivative liability tied to the higher valuation of the Lightspeed project, amplifying earnings volatility despite being largely non-cash.

Sharp GEO Revenue Contraction Ahead

Management’s 2026 GEO revenue guidance of $300–$320 million signals a drop of $90–$110 million from 2025, or roughly 21.5% to 26.3%, as legacy contracts roll off and satellites reach end of life. The decline is expected to be evenly split between broadcast and enterprise segments, with the loss of DISH and Bell elements, restructuring at Explorer and the end of life of Telstar 14R all weighing on the outlook.

Lightspeed to Drive Heavy Near-Term Losses and Spend

For 2026, Telesat plans to invest $1.0–$1.2 billion in Lightspeed, encompassing capital expenditures, capitalized labor, operating costs and interest, highlighting the scale of the LEO bet. In 2025, the LEO segment posted a loss before interest, taxes, depreciation and amortization of $67 million on operating expenses of $72 million, modestly better than guidance but a reminder of the cash burn before revenue ramps.

Debt Maturities Concentrated in 2026 Raise Refinancing Stakes

Telesat Canada faces $1.7 billion of debt maturing in December 2026, and management is proactively pursuing refinancing options to address this wall. While executives expressed confidence that current cash and cash flow can meet obligations up to maturity, the concentrated refinancing need represents a key execution and market-risk overhang for equity and credit investors.

GEO Margin Compression Highlights Structural Headwinds

Legacy GEO EBITDA margin slipped to 77% in 2025 from 80% in 2024, reflecting structural revenue pressure as customers migrate to alternative technologies and contracts expire. Even though the segment remains highly profitable, this erosion underscores why Telesat is pushing aggressively into LEO while managing the cash-generating GEO franchise in runoff.

Component Supply Risks Nudge Lightspeed Schedule

The roughly three-month delay in Lightspeed’s expected global service start to around the first quarter of 2028 stems mainly from readiness of critical chips for onboard processors and phased-array antennas. These components, sourced from providers including SatixFy, now part of MDA, remain a potential schedule risk even as management voiced confidence in suppliers’ ability to deliver on time.

Valuation-Linked Derivatives Add Earnings Volatility

An increase in the derivative liability tied to Lightspeed financing warrants produced significant non-cash charges that inflated the reported net loss. As the perceived value of Lightspeed changes, these instruments will likely continue to introduce quarter-to-quarter swings in earnings that may obscure underlying operating trends for investors.

Guidance Signals GEO Decline and Elevated Lightspeed Spend

For 2026, Telesat guides GEO revenue to $300–$320 million and GEO adjusted EBITDA to $210–$220 million, excluding refinancing costs, reinforcing expectations for a leaner but still cash-generative legacy business. At the same time, Lightspeed investment is projected at $1.0–$1.2 billion with operating expenses of about $90–$110 million, as the company pushes toward an expected global commercial service launch around early 2028 underpinned by existing financing.

Telesat’s earnings call painted a picture of a company in full transition, combining a still-profitable but shrinking GEO franchise with an ambitious and capital-intensive LEO buildout. Investors will weigh the solid EBITDA beat, ample Lightspeed funding and growing strategic partnerships against GEO revenue erosion, rising losses and the looming 2026 refinancing, making execution over the next two years critical for the equity story.