Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Telesat Corp (TSAT, Financial) exceeded its revenue and adjusted EBITDA guidance for 2024, demonstrating strong financial performance.
- The company successfully closed financing arrangements with the governments of Canada and Quebec for the Telesat Lightspeed project, securing necessary funding for global service.
- Significant progress was made in the development and deployment of the Lightspeed constellation, with over $1 billion invested in 2024.
- Telesat Corp (TSAT) has announced several new customer contracts for Lightspeed, indicating strong market interest and potential for future revenue growth.
- The company has been proactive in debt management, repurchasing a significant portion of its debt, which has resulted in annual interest savings of approximately USD54 million.
Negative Points
- Telesat Corp (TSAT) anticipates a challenging operating environment for its GEO business in 2025, with expected revenue declines of approximately CAD155 million.
- The company faces competitive pressures from Starlink, particularly impacting its enterprise and consulting revenues.
- There is a forecasted increase in Lightspeed operating expenses by approximately CAD40 million, driven by investments in engineering and commercial resources.
- Telesat Corp (TSAT) reported a significant net loss of $447 million in Q4 2024, primarily due to foreign exchange losses and reduced revenues.
- The GEO segment is experiencing revenue declines due to contract renewals at lower rates and the end of service for certain satellites, impacting overall financial performance.
Q & A Highlights
Q: Can you provide more details on how geopolitical shifts have impacted your discussions with sovereign customers?
A: Daniel Goldberg, President and CEO, explained that geopolitical shifts have accelerated discussions with sovereign customers about their need for advanced LEO networks. There's a greater focus on ensuring options for allied governments and service providers, particularly in Canada, where defense spending is being accelerated to meet NATO targets. This focus is also seen globally, with countries looking to diversify their suppliers for national security interests.
Q: Can you give us an update on the backlog for Lightspeed and its potential growth?
A: Daniel Goldberg noted that the current LEO backlog is around CAD600 million, including a significant agreement with the Canadian government. While recent contracts with companies like Orange and Bangladesh satellite services integrator are smaller, there are larger deals in the pipeline. Goldberg expects the Lightspeed backlog could surpass the CAD1.1 billion GEO backlog by the end of the year.
Q: What is the status of your debt restructuring efforts, and can it be resolved in 2025?
A: Daniel Goldberg stated that refinancing the restricted group debt is a priority for 2025, although the maturities are not imminent. The company aims to address this sooner rather than later, and Goldberg believes it is realistic to achieve this within the year.
Q: How do you see the future of the GEO business given the recent declines?
A: Daniel Goldberg acknowledged the challenges in the GEO business, particularly with contract renewals and satellite end-of-life issues. While the GEO business remains cash-generative, the company is focused on mitigating market pressures and managing costs. Goldberg did not provide specific projections for 2026 but emphasized the importance of Lightspeed in addressing these challenges.
Q: Can you elaborate on the potential partnership with Viasat for Lightspeed?
A: Daniel Goldberg confirmed advanced negotiations with Viasat, focusing on using Lightspeed for commercial aero market and in-flight connectivity. The discussions are converging, and Goldberg emphasized that the relationship would likely be a customer arrangement rather than an equity deal. If finalized, it would be announced as a significant partnership.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
