Telesat turns Q3 profit despite dip in revenues

Dan Goldberg
Telesat CEO Dan Goldberg. File photo

Telesat’s revenues dipped in the third quarter after the company was forced to restructure customer contracts in the wake of the COVID-19 pandemic and other clients reduced services or declined to renew deals, it said Thursday.

The Ottawa-based satellite equipment provider reported revenues of $202 million for the period ending Sept. 30, a 15 per cent decline from a year earlier and a 14 per cent drop when adjusted for fluctuations in foreign exchange rates.

In a release, Telesat said the “restructuring of certain customer contracts related to the COVID-19 pandemic negatively impacted revenue” in the quarter. 

The company also noted that short-term services it had provided to another satellite operator in the third quarter of 2019 did not recur in 2020. In addition, a North American direct-to-home service provider reduced the amount of services it purchased from Telesat, while another major prepaid service agreement ended.

Although the firm’s adjusted earnings before interest expenses, taxation, depreciation and amortization were down 20 per cent to $162 million, Telesat posted a net income of $107 million in the quarter, compared with a net loss of $123 million a year earlier. 

$2.8B order backlog

The company attributed the turnaround to non-cash gains on the value of financial instruments, foreign exchange gains after translating Telesat’s debt from U.S. to Canadian dollars as well as lower interest expenses.

Telesat’s order backlog as of Sept. 30 stood at $2.8 billion, down from $3.3 billion at the end of 2019.

In a statement, Telesat CEO Dan Goldberg said the “overwhelming majority” of the company’s revenues have been unaffected by the pandemic, adding Telesat continues to have “robust operating revenues and cash flow.” 

Goldberg also said the company is making “substantial progress” on its ambitious plan to launch nearly 300 low-Earth-orbit satellites by the end of 2023. He said earlier this year Telesat hopes to have some of the state-of-the-art new equipment in operation by the end of 2022. 

The new satellites will be able to provide high-speed internet service to customers in remote areas who can’t be reliably served by existing fibre-optic networks.

In August, the Globe and Mail reported that Telesat is expected to announce plans for an initial public offering later this fall to help fund its multibillion-dollar LEO program. The report said the IPO would be announced after talks between Telesat’s two shareholders ​– Public Sector Pension Investments and Loral Space & Communications ​– are concluded.