Telesat Earnings Call: Mixed Results Amid Challenges

Telesat Corporation ((TSE:TSAT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Telesat Corporation’s recent earnings call painted a mixed picture of its financial health and strategic progress. While the company celebrated notable achievements in securing financing and advancing the Telesat Lightspeed project, these positives were overshadowed by significant challenges, including expected revenue declines, reduced adjusted EBITDA, foreign exchange losses, and a substantial net loss.

Above Guidance GEO Business Performance

Telesat’s GEO business delivered a strong performance, achieving revenue and adjusted EBITDA above the guidance for 2024. This success is attributed to the company’s focused and disciplined execution, which has been a bright spot amid other financial challenges.

Lightspeed Financing and Development Progress

A major highlight from the earnings call was the progress on Telesat Lightspeed. The company secured over $1 billion in financing from the governments of Canada and Quebec, marking a significant investment in the project’s development. Telesat has completed important milestones, underscoring its commitment to advancing this strategic initiative.

Debt Reduction Achievements

Telesat made significant strides in debt management by repurchasing $262 million in debt during 2024. This move resulted in $54 million in annual interest savings and reduced the total debt outstanding by 36%, reflecting the company’s proactive approach to improving its financial position.

Expected Revenue Decline in 2025

Looking ahead, Telesat anticipates a revenue decline of approximately $155 million in 2025, primarily due to challenges in the GEO business, particularly in the video and enterprise segments. This decline is influenced by factors such as the Nimiq 5 agreement renewal with Dish and the expiration of key contracts.

Decreased Adjusted EBITDA and Margin

The company reported a decrease in adjusted EBITDA by $50 million in Q4 2024 compared to the same quarter in 2023, with the margin dropping significantly. This decline highlights the financial pressures Telesat is facing as it navigates a challenging market environment.

Foreign Exchange Loss Impact

A foreign exchange loss of $177 million in Q4 2024, compared to a gain in the previous year, has adversely affected Telesat’s net income. This volatility in foreign exchange rates has been a significant factor in the company’s financial performance.

Consolidated Net Loss

Telesat recorded a substantial net loss of $447 million in Q4 2024, a stark contrast to the $39 million net income in the same period of the previous year. This loss underscores the financial hurdles the company is currently facing.

Forward-Looking Guidance

For fiscal year 2025, Telesat’s leadership provided guidance indicating an expected revenue decline of approximately $155 million, driven by continued pressure in the GEO business. The company also forecasts a drop in consolidated adjusted EBITDA by about $200 million, with increased operational expenses related to Lightspeed. Capital expenditures are projected to range between $900 million and $1.1 billion, primarily for Lightspeed development.

In summary, Telesat Corporation’s earnings call highlighted a complex financial landscape, with significant achievements in project financing and debt management being overshadowed by anticipated revenue declines and financial losses. The company faces a challenging path ahead, with strategic initiatives like Telesat Lightspeed playing a crucial role in its future trajectory.