Telesat’s Earnings Call: Strategic Gains Amid Financial Hurdles

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

Telesat Corporation’s recent earnings call presented a balanced narrative, highlighting significant strategic advancements alongside challenges in revenue and expenses. The company showcased progress in its LEO segment, debt management, and strategic partnerships, yet faced revenue declines and increased operating expenses, contributing to ongoing net losses.

Progress in LEO Segment

Telesat has made notable strides in its LEO segment, Telesat Lightspeed, amassing a backlog of nearly CAD 1.1 billion. A key highlight was the signing of a new multiyear agreement with ViaSat, underscoring the company’s commitment to expanding its LEO capabilities and securing long-term growth.

Debt Repurchase and Interest Savings

The company achieved significant interest savings of approximately USD 54 million annually through strategic debt repurchases. Telesat repurchased a cumulative principal amount of USD 849 million in debt at a cost of USD 459 million, showcasing effective financial management and a focus on reducing interest expenses.

Strategic Agreements and Partnerships

Telesat’s strategic agreements continue to bolster its market position. The company signed a significant multiyear agreement with ViaSat and established partnerships with Orange, ADN, and a term sheet with Space Norway, reflecting its strategic focus on collaboration and market expansion.

Cash Flow and Financing

In Q1 2025, Telesat generated $139 million in cash from operations and completed initial draws on financing facilities with the Canadian and Quebec governments, receiving CAD 340 million. This financial maneuvering highlights Telesat’s proactive approach to securing necessary funding for its operations and growth initiatives.

Revenue Decrease

Telesat’s revenues decreased by $25 million to $117 million in Q1 2025 compared to the same period in 2024. This decline was primarily due to the renewal of a long-term agreement with a North American direct-to-home customer at a reduced rate, impacting the company’s top line.

Increase in Operating Expenses

Operating expenses rose by $6 million to $53 million, driven by increased headcount at Telesat Lightspeed and higher legal and professional fees. This increase reflects the company’s investment in its workforce and necessary professional services to support its strategic initiatives.

Adjusted EBITDA Decline

Adjusted EBITDA fell by $43 million to $67 million in Q1 2025, with a margin of 57.7%. This decline in profitability indicates challenges in maintaining operational efficiency amid rising costs and revenue pressures.

Net Loss

Telesat reported a net loss of $51 million for Q1 2025, slightly improving from a net loss of $52 million in the same period last year. This marginal improvement suggests ongoing efforts to stabilize financial performance despite challenging market conditions.

Forward-Looking Guidance

Looking ahead, Telesat reiterated its guidance for the year, projecting full-year revenues between $405 million and $425 million, with adjusted EBITDA expected to range from CAD 170 million to CAD 190 million. Operating expenses for Telesat Lightspeed are anticipated to rise to between $110 million and $120 million. Capital expenditures for 2025 are projected to be between CAD 900 million and CAD 1.1 billion, primarily for Telesat Lightspeed, with the company confident in meeting its cash requirements through existing funding agreements.

In summary, Telesat Corporation’s earnings call highlighted a mix of strategic progress and financial challenges. While the company is advancing in its LEO segment and managing debt effectively, it faces hurdles in revenue generation and expense management. The forward-looking guidance reflects cautious optimism, with expectations of revenue growth and continued investment in strategic initiatives.