Telesat receives loan from federal government, reports declines for Q4 and fiscal year results

The federal government is loaning $2.14 billion to support Telesat Corp.’s development of its low-earth orbit (LEO) global broadband satellite constellation. The company made the announcement on Monday, four days after it reported a decline in revenues over its fourth quarter for the months ending Dec. 31, 2023. According to a press release, Telesat is expected to pay back the loan plus interest over a 15-year period, followed by a 10-year sculpted amortization. The government of Canada will receive 10 per cent of the common shares of Telesat LEO based on a $3 billion equity valuation This investment will help reduce borrowing costs for the company as it works towards bridging the digital divide for rural and remote communities, explained CEO Dan Goldberg in a press release. “We estimate that, in addition to the roughly US$2 billion of capital cost savings, we will realize roughly US$750 million of savings in reduced borrowing costs relative to the original Telesat Lightspeed program. Telesat Lightspeed will revolutionize broadband connectivity for enterprise and government users and represents a highly compelling growth and value creation opportunity for Telesat and its stakeholders,” said Goldberg. The loan follows a $1.44 billion investment from the federal government, as well as a $109 million deal with the government of Ontario, back in 2021. Last Thursday, Telesat released its fourth quarter and 2023 fiscal year results. Consolidated revenue for the quarter was $166 million, a decline of $41 million or 20 per cent for the same period in 2022. The decrease was attributed to the 2022 completion of an equipment sale to the US Defense Advanced Research Projects Agency (DARPA), which was not repeated in 2023. Quarterly operating expenses were $50 million, a fall of 38 per cent or $30 million from Q4 2022. Equipment sales to DARPA were again cited as the reason. Telesat’s net income for the quarter was $39 million, a 56.7 per cent decrease from $91 million in Q4 2022. The company said direct-to-home satellite video sales declined and there were fewer enterprise customers due to increased competition in the satellite services market. For the 2023 fiscal year, consolidated revenue was $704 million, a decline of $55 million, or seven per cent, for the year. Allowing for changes in foreign exchange rates, revenue fell nine per cent or $70 million from 2022. Operating expenses were $205 million, a decrease of 21 per cent or $54 million. Adjusted for the foreign exchange rate, expenses fell 22 per cent or $57 million. For the year 2023, Telesat’s net income was $583 million, compared to a loss of $82 million the year before. The company credited C-band proceeds in 2023 and positive foreign exchange for the massive turnaround. – Reporting by Phalen Tynes-MacDonald at pcreed@thewirereport.ca and Paul Park at ppark@thewirereport.ca

Telesat receives loan from federal government, reports declines for Q4 and fiscal year results

News | April 2, 2024

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Telesat receives loan from federal government, reports declines for Q4 and fiscal year results

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