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Telesat Reports Results for the Quarter Ended March 31, 2019

OTTAWA, May 02, 2019 (GLOBE NEWSWIRE) -- Telesat today announced its financial results for the three-month period ended March 31, 2019. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (“IFRS”) unless otherwise noted.

For the quarter ended March 31, 2019, Telesat reported consolidated revenues of $222 million, a decrease of 4% ($10 million) compared to the same period in 2018. When adjusting for the impact of foreign exchange rate changes, revenue decreased by 6% ($14 million) compared to the same period in 2018. The decrease was primarily due to a decrease in short-term services provided to other satellite operators, lower equipment sales to a North American customer and lower revenue from certain customers in the resource sector, partially offset by revenues from the Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites, which entered commercial service in late 2018.

Operating expenses of $39 million for the quarter were 3% ($1 million) higher than the same period in 2018. When adjusting for the impact of foreign exchange rate changes, operating expenses were unchanged.  Adjusted EBITDA1 for the quarter was $187 million; a decrease of 4% ($8 million) compared to the same period in 2018. When adjusting for the impact of foreign exchange rates, Adjusted EBITDA1 declined by 6% ($11 million).  The Adjusted EBITDA margin1 for the first quarter of 2019 was 84.2%, compared to 83.9% in the same period in 2018.

Telesat’s net income for the quarter was $172 million compared to a loss of $15 million for the quarter ended March 31, 2018. The $187 million difference was the result of higher non-cash gains on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars combined with gains on financial instruments.

“The first quarter of 2019 was an active one and I am pleased with both our financial and operational performance,” commented Dan Goldberg, Telesat’s President and CEO. “We signed a number of important customer contracts in the quarter, including a significant renewal for direct to home satellite services in Canada, a meaningful contract on our new Telstar 18 VANTAGE satellite for rural broadband services in Indonesia, and a range of contracts for mobility services, including our first customer contract on our planned Low Earth Orbit (LEO) satellite constellation, which is an exciting development. We are seeing strong demand for the disruptive, ultra low latency, broadband offering that our advanced LEO constellation will provide and, in this regard, were pleased to see the commitment by the Government of Canada in the recent 2019 Federal budget to make use of LEO satellite services to help bridge the digital divide in Canada. Looking ahead we remain heavily focused on increasing the utilization of our in-orbit satellites and executing on our key growth initiatives, particularly our LEO program.”

Business Highlights

  • At March 31, 2019:
    • Telesat had contracted backlog2 for future services of approximately $3.7 billion.
    • Fleet utilization was 83% across Telesat’s fleet.
  • In February 2019 Telesat signed a contract with its long-time DTH customer Shaw Communications, under which Shaw will extend its use of satellite capacity on the Anik F2 satellite and consolidate capacity it currently uses on Anik F2 with much of the capacity it currently uses on the Anik F1R satellite.
  • In March 2019 Telesat signed a multi-year contract with OmniAccess, a leader in specialized maritime connectivity solutions, pursuant to which it will provide broadband services on Telesat’s planned global LEO satellite constellation.
  • In March 2019 Telesat welcomed the Government of Canada’s commitment to deliver high speed Internet broadband service to all Canadians through leveraging innovative and disruptive technologies, including Low Earth Orbit (LEO) satellite constellations.
  • In April 2019 Telesat announced that PT iForte Solusi Infotek (iForte), a leading Indonesian telecommunications service provider, signed significant contracts for Ku-band high throughput spot beam and C-band capacity on Telesat’s new Telstar 18 VANTAGE satellite in support of the Indonesian government’s rural broadband program. 

Telesat’s quarterly report on Form 6-K for the quarter ended March 31, 2019, has been filed with the United States Securities and Exchange Commission (“SEC”) and may be accessed on the SEC’s website at

/EIN News/ -- Conference Call

Telesat has scheduled a conference call on Thursday, May 2, 2019, at 10:30 a.m. ET to discuss its financial results for the three-month period ended March 31, 2019 and other recent developments. The call will be hosted by Daniel S. Goldberg, President and Chief Executive Officer, and Michel Cayouette, Chief Financial Officer, of Telesat.

Dial-in Instructions:
The toll-free dial-in number for the teleconference is +1 (800) 377-0758.  Callers outside of North America should dial +1 (416) 340-2218. The conference reference number is 4304162.  Please allow at least 15 minutes prior to the scheduled start time to connect to the teleconference.

Dial-in Audio Replay:
A replay of the teleconference will be available one hour after the end of the call on May 2, 2019 until 11:59 p.m. ET on May 16, 2019.  To access the replay, please call +1 (800) 408-3053.  Callers outside of North America should dial +1 (905) 694-9451.  The access code is 1048090 followed by the number sign (#).

Forward-Looking Statements Safe Harbor

This news release contains statements that are not based on historical fact and are ‘‘forward-looking statements’’ within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words “looking ahead”, “will“, “planned”, “commitment”, “executing” and “initiatives”, or other variations of these words or other similar expressions are intended to identify forward-looking statements and information. Actual results may differ materially from the expectations expressed or implied in the forward-looking statements as a result of known and unknown risks and uncertainties. Detailed information about some of the known risks and uncertainties is included in the “Risk Factors” section of Telesat Canada’s Annual Report on Form 20-F for the fiscal year ended December 31, 2018 which can be obtained on the SEC website at Known risks and uncertainties include but are not limited to: risks associated with operating satellites and providing satellite services, including satellite construction or launch delays, launch failures, in-orbit failures or impaired satellite performance, the ability to successfully deploy an advanced global LEO satellite constellation, the availability of government funding for the LEO satellite constellation, volatility in exchange rates and risks associated with domestic and foreign government regulation. The foregoing list of important factors is not exhaustive. The information contained in this news release reflects Telesat’s beliefs, assumptions, intentions, plans and expectations as of the date of this news release. Except as required by law, Telesat disclaims any obligation or undertaking to update or revise the information herein.  

About Telesat (

Telesat is a leading global satellite operator, providing reliable and secure satellite-delivered communications solutions worldwide to broadcast, telecom, corporate and government customers. Headquartered in Ottawa, Canada, with offices and facilities around the world, the company’s state-of-the-art fleet consists of 17 GEO satellites, the Canadian payload on ViaSat-1 and one Phase 1 LEO satellite which is the start of Telesat’s planned advanced global LEO satellite constellation that will offer ultra-low latency, extremely high throughput, affordable broadband services. Telesat is also a leading technical consultant providing high value expertise and support to satellite operators, insurers and other industry participants on a global basis. Privately held, Telesat’s principal shareholders are Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc. (NASDAQ: LORL)

For further information:
Michael Bolitho, Telesat, +1 (613) 748-8700 ext. 2336;

Telesat Canada  
Unaudited Interim Condensed Consolidated Statements of Income (Loss)    
For the three months ended March 31  
(in thousands of Canadian dollars)     2019
Revenue   $ 222,313     $ 232,354  
Operating expenses     (39,120 )     (38,152 )
      183,193       194,202  
Depreciation     (62,291 )     (54,029 )
Amortization     (5,664 )     (6,396 )
Other operating (losses) gains, net     (73 )     3  
Operating income     115,165       133,780  
Interest expense     (65,082 )     (58,629 )
Interest income and other expenses     4,675       (527 )
Gain on changes in fair value of financial instruments     57,336       13,164  
Gain (loss) on foreign exchange     70,340       (77,444 )
Income before tax     182,434       10,344  
Tax expense     (10,534 )     (25,619 )
Net income (loss)   $ 171,900     $ (15,275 )

Telesat Canada
Unaudited Interim Condensed Consolidated Balance Sheets
(in thousands of Canadian dollars)
    March 31, 2019     March 31, 2018  
Cash and cash equivalents   $ 846,401   $ 768,433  
Trade and other receivables     46,882     45,631  
Other current financial assets     12,803     18,779  
Prepaid expenses and other current assets     20,847     16,381  
Total current assets     926,933     849,224  
Satellites, property and other equipment     1,651,783     1,703,039  
Deferred tax assets     10,849     10,799  
Other long-term financial assets     123,724     55,755  
Other long-term assets     7,747     7,912  
Intangible assets     817,841     811,154  
Goodwill     2,446,603     2,446,603  
Total assets   $ 5,985,480   $ 5,884,486  
Trade and other payables   $ 28,329   $ 30,659  
Other current financial liabilities     40,410     26,386  
Other current liabilities     101,355     113,289  
Current indebtedness     6,754     7,888  
Total current liabilities     176,848     178,222  
Long-term indebtedness     3,634,084     3,716,340  
Deferred tax liabilities     395,254     406,900  
Other long-term financial liabilities     52,727     54,521  
Other long-term liabilities     474,024     435,518  
Total liabilities     4,732,937     4,791,501  
Shareholders' Equity              
Share capital     154,091     153,706  
Accumulated earnings     1,015,036     843,601  
Reserves     83,416     95,678  
Total shareholders' equity     1,252,543     1,092,985  
Total liabilities and shareholders' equity   $ 5,985,480   $ 5,884,486  

Telesat Canada 
Unaudited Interim Condensed Consolidated Statements of Cash Flows
For the three months ended March 31  
(in thousands of Canadian dollars)   2019
Cash flows from operating activities            
Net income (loss)   $ 171,900     $ (15,275 )
Adjustments to reconcile net income (loss) to cash flows from operating activities            
  Depreciation     62,291       54,029  
  Amortization     5,664       6,396  
  Tax expense     10,534       25,619  
  Interest expense     65,082       58,629  
  Interest income     (4,960 )     (2,377 )
  (Gain) loss on foreign exchange     (70,340 )     77,444  
  Gain on changes in fair value of financial instruments     (57,336 )     (13,164 )
  Share-based compensation     3,652       382  
  Loss (gain) loss on disposal of assets     73       (3 )
  Other     (27,402 )     (16,668 )
Income taxes paid, net of income taxes received     (30,958 )     (27,584 )
Interest paid, net of capitalized interest and interest received     (31,320 )     (30,499 )
Operating assets and liabilities     21,427       9,264  
Net cash from operating activities     118,307       126,193  
Cash flows used in investing activities            
Satellite programs, including capitalized interest     (1,669 )     (21,971 )
Purchase of property and other equipment     (3,215 )     (2,346 )
Purchase of intangible assets     (12,500 )     (4,144 )
Net cash used in investing activities     (17,384 )     (28,461 )
Cash flows used in financing activities            
Repayment of indebtedness     (7,717 )     (71,930 )
Payments of principal on lease liabilities     (287 )     (7 )
Satellite performance incentive payments     (2,407 )     (2,142 )
Dividends paid on preferred shares     (10 )      
Net cash used in financing activities     (10,421 )     (74,079 )
Effect of changes in exchange rates on cash and cash equivalents     (12,534 )     14,114  
Increase in cash and cash equivalents     77,968       37,767  
Cash and cash equivalents, beginning of period     768,433       479,045  
Cash and cash equivalents, end of period   $ 846,401     $ 516,812  

Telesat’s Adjusted EBITDA margin(1):

    Three months ended
March 31,
(in thousands of Canadian dollars) (unaudited)   2019     2018  
Net income (loss)   $ 171,900     $ (15,275 )
Tax expense     10,534       25,619  
Gain on changes in fair value of financial instruments     (57,336 )     (13,164 )
(Gain) loss on foreign exchange     (70,340 )     77,444  
Interest income and other expenses     (4,675 )     527  
Interest expense     65,082       58,629  
Depreciation     62,291       54,029  
Amortization     5,664       6,396  
Other operating losses (gains), net     73       (3 )
Non-recurring compensation expenses(3)     411       319  
Non-cash expense related to share-based compensation     3,652       382  
Adjusted EBITDA   $ 187,256     $ 194,903  
Revenue   $ 222,313     $ 232,354  
Adjusted EBITDA Margin     84.2 %     83.9 %

End Notes

1    The common definition of EBITDA is “Earnings Before Interest, Taxes, Depreciation and Amortization.” In evaluating financial performance, Telesat uses revenue and deducts certain operating expenses (including share-based compensation expense and unusual and non-recurring items, including restructuring related expenses) to obtain operating income before interest expense, taxes, depreciation and amortization (“Adjusted EBITDA”) and the Adjusted EBITDA margin (defined as the ratio of Adjusted EBITDA to revenue) as measures of Telesat’s operating performance.
  Adjusted EBITDA allows Telesat and investors to compare Telesat’s operating results with that of competitors exclusive of depreciation and amortization, interest and investment income, interest expense, taxes and certain other expenses. Financial results of competitors in the satellite services industry have significant variations that can result from timing of capital expenditures, the amount of intangible assets recorded, the differences in assets’ lives, the timing and amount of investments, the effects of other income (expense), and unusual and non-recurring items. The use of Adjusted EBITDA assists Telesat and investors to compare operating results exclusive of these items. Competitors in the satellite services industry have significantly different capital structures. Telesat believes the use of Adjusted EBITDA improves comparability of performance by excluding interest expense.
  Telesat believes the use of Adjusted EBITDA and the Adjusted EBITDA margin along with IFRS financial measures enhances the understanding of Telesat’s operating results and is useful to Telesat and investors in comparing performance with competitors, estimating enterprise value and making investment decisions. Adjusted EBITDA as used here may not be the same as similarly titled measures reported by competitors. Adjusted EBITDA should be used in conjunction with IFRS financial measures and is not presented as a substitute for cash flows from operations as a measure of Telesat’s liquidity or as a substitute for net income as an indicator of Telesat’s operating performance.
  Remaining performance obligations, which we refer to as contracted revenue backlog (‘‘backlog’’), represents Telesat’s expected future revenue from existing service contracts (without discounting for present value) including any deferred revenue that Telesat will recognize in the future in respect of cash already received. The calculation of the backlog reflects the revenue recognition policies adopted under IFRS 15. The majority of Telesat’s contracted revenue backlog is generated from contractual agreements for satellite capacity.
Includes severance payments and special compensation and benefits for executives and employees.


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