Telesat Q2 Earnings Call Highlights

Telesat (NASDAQ:TSAT) reported a second-quarter net loss of CAD 559 million as the satellite operator continued to invest in its Lightspeed low Earth orbit network, while its legacy geostationary-orbit business faced ongoing revenue pressure.

Chief Financial Officer Donald Tremblay said the quarterly loss reflected a CAD 475 million increase in the fair value of Telesat Lightspeed Financing Warrants and the effect of a weaker Canadian dollar on the company’s U.S. dollar-denominated debt. The warrants were valued at more than CAD 1.3 billion at quarter-end, following the expansion of the Lightspeed constellation and an accelerated deployment plan.

Consolidated revenue for the second quarter was CAD 79 million and adjusted EBITDA was CAD 22 million. Interest expense totaled CAD 50 million, down CAD 54 million from a year earlier, which Tremblay attributed to a lower interest rate on the company’s term loan.

Lightspeed contract expands backlog and constellation

President and Chief Executive Officer Dan Goldberg highlighted Telesat’s recently announced initial contract under Canada’s Enhanced Satellite Communications Project – Polar, or ESCP-P. The program is intended to provide Arctic satellite communications capability for the Canadian Armed Forces.

The agreement helped bring Telesat Lightspeed’s contractual backlog to approximately CAD 5.6 billion. Telesat also signed a five-year contract with Northwestel early in the second quarter to provide rural broadband connectivity in Canada.

Telesat has expanded its fully funded Lightspeed constellation to 225 satellites from 156 satellites. Goldberg said the company signed a firm contract with MDA for 69 additional satellites, which will be identical to the first 156 and will proceed directly through the production line without delaying the initial deployment.

The company has 14 Falcon 9 launches under contract with SpaceX and expects to sign an agreement for one additional Falcon 9 launch needed to deploy the full 225-satellite constellation. Goldberg said Telesat expects all launches to be completed by the end of 2028 and continues to target global commercial availability around the end of the first quarter of 2028.

Annual Lightspeed investment guidance was raised to CAD 1.3 billion to CAD 1.5 billion for 2026, from a prior range of CAD 1 billion to CAD 1.2 billion. Tremblay said the higher investment reflects the accelerated constellation expansion and will be funded by pre-service milestone payments from the Government of Canada.

• Telesat invested CAD 165 million in Lightspeed during the second quarter, including CAD 145 million of capital expenditures.
• Total Lightspeed investment reached CAD 336 million in the first half of 2026.
• The LEO segment ended the quarter with more than CAD 200 million of cash.
• Telesat said available Lightspeed funding includes CAD 1.6 billion under its financing facility, CAD 325 million in vendor financing and CAD 1.5 billion in ESCP-P-related milestone payments.

The company said those resources are expected to fully fund the project, including CAD 500 million of contingencies, through global commercial service.

Government, defense and relay opportunities

Goldberg said Telesat expects government, defense and sovereignty applications to represent a more significant portion of Lightspeed’s anticipated revenue mix than previously envisioned. The company changed the constellation’s frequency plan to include military Ka-band capacity, responding to Canadian government requirements and what Goldberg described as growing defense-related demand.

The expanded constellation is intended to restore commercial capacity that had been redirected toward military Ka-band use, while also adding redundancy, resiliency and network performance. Goldberg said Telesat sees commercial opportunities in aviation, maritime, rural broadband and enterprise connectivity.

Telesat is also working with NASA to demonstrate space-relay capabilities that would allow other satellites to relay data through Lightspeed’s global backbone in near real time. Goldberg said the company sees potential demand from Earth-observation businesses and governments, and noted that Lightspeed’s optical inter-satellite links meet the U.S. government’s SDA standard.

Regarding Canada’s separate UHF and X-band component of ESCP-P, Goldberg said MDA is expected to lead a medium Earth orbit constellation, with Telesat serving as a subcontractor. Telesat expects to provide network integration, ground-segment expertise and overall integration among military Ka-band, UHF and X-band capabilities. The company has not determined whether it could resell any excess capacity from that MEO system.

GEO revenue declines, but backlog rises

Telesat’s GEO segment generated CAD 78 million in second-quarter revenue, down 26% from the prior-year period. First-half GEO revenue totaled CAD 164 million, also down 26%.

Tremblay said the decline was driven primarily by broadcast revenue, including the expiration of a Nimiq 4 service contract in 2025 and lower capacity and pricing associated with a renewed Nimiq 5 contract. Enterprise revenue also declined, largely due to a lower-revenue Explorer contract renewed in October 2025. New aviation contracts partially offset those pressures.

GEO adjusted EBITDA was CAD 43 million in the quarter, down CAD 37 million year over year. Results included roughly CAD 14 million in debt refinancing costs. Excluding those costs, GEO adjusted EBITDA would have been CAD 57 million, down 30% from a year earlier.

The company retired its Anik F4 and Telstar 14R satellites during the quarter. While it transferred nearly half the traffic from those satellites to remaining GEO assets, Goldberg said their retirement will remain a headwind through the rest of 2026 and beyond. Satellite utilization was 60% at the end of the quarter; excluding the impact of the retirements, utilization declined about two percentage points from the first quarter.

GEO backlog rose to CAD 900 million, aided by a five-year extension of a broadcast service contract. Telesat reiterated full-year GEO guidance for revenue of CAD 300 million to CAD 320 million and adjusted EBITDA of CAD 210 million to CAD 230 million, excluding debt refinancing and related litigation expenses.

Liquidity and spectrum proceeds

Telesat GEO ended the quarter with approximately CAD 160 million in cash and entered a new CAD 120 million term loan agreement for general corporate purposes. Goldberg said the company remains focused on reaching a consensual refinancing outcome for upcoming GEO debt maturities and said a bankruptcy filing was not under consideration.

The company also said it expects to receive CAD 189 million in FCC incentive payments for clearing C-band spectrum for terrestrial wireless use, subject to meeting transition deadlines in 2030 and 2031. Goldberg said Telesat had successfully completed a prior C-band clearing process and was confident it could do so again.

About Telesat (NASDAQ:TSAT)

Telesat is a leading global satellite operator that designs, builds and delivers high-performance satellite communications solutions across multiple markets. The company operates a fleet of geostationary satellites to provide video distribution, data networking and managed broadband services to media companies, network operators, governments and enterprise customers. Telesat's infrastructure supports television distribution, cellular backhaul, rural broadband and corporate network applications.

In addition to its geostationary offerings, Telesat is developing a low Earth orbit (LEO) satellite constellation known as Lightspeed.

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