[Satellite TODAY Insider 02-23-12] Canadian satellite operator Telesat’s 2011 consolidated full-year fiscal revenues decreased 2 percent from the previous year to $808 million, but the total represents a 1 percent increase when adjusted for foreign exchange rate changes, according to its latest financial results issued Feb. 22.
Telesat reported a 9 percent year-over-year drop in operating expenses at $188 million. Adjusted EBITDA increased 1 percent to $623 million, with an adjusted EBITDA margin for 2011 at 77 percent compared with 75 percent in 2010.
The operator’s net income fell from $286 million in 2010 to $237 million, primarily due to a net decrease of $133 million in losses on foreign exchange and changes in the fair value of financial instruments. Telesat’s North American fleet utilization was 91 percent with international fleet utilization at 81 percent.
The company’s losses were partially offset by higher operating gains due to the receipt of insurance proceeds in relation to the Telstar 14R/Estrela do Sul 2 satellite, which launched in May 2011. The satellite’s north solar array failed to fully deploy — an anomaly that diminished the amount of power available for the satellite’s transponders and reduced its life expectancy. Telesat filed a claim under its insurance policies and was awarded a $135 million settlement in December.
Telesat President and CEO Dan Goldberg said the proceeds of the claim would be reinvested in satellite procurements in accordance with the terms and conditions of its credit agreement.
“Notwithstanding the significant contracted rate reduction we experienced mid-year on one of our North American DTH satellites, and taking into account changes in exchange rates, we grew our revenue, reduced our operating expenses and increased our adjusted EBITDA and adjusted EBITDA margin relative to the prior year,” said Goldberg in a conference call. “We made substantial progress on the construction of the Nimiq 6 and Anik G1 satellites that we expect to launch later this year. In light of the significant investments we are making in our fleet and our industry-leading contractual backlog, we are well positioned to grow our business in 2012 and the years beyond.”
The operator also plans to refinance its existing senior secured credit facilities, which if consummated, could result in Telesat incurring incremental secured debt of up to $530 million. Goldberg said he expects the refinancing to occur within the next couple of months. “There will be a lot of strategic flexibility to make other investments or pursue other alternatives.”
Telesat acquired the Canadian payload on ViaSat’s ViaSat-1 satellite in April 2011 and signed a 15-year revenue contract with Xplornet Communications to make use of the payload. The ViaSat-1 satellite was successfully launched in October 2011 and entered into commercial service earlier this month.