[Satellite TODAY Insider 04-30-12] Canadian satellite operator Telesat reported a $7 million drop in revenues and a 14 percent decline in net profits during its 2012 first fiscal quarter due to a contractual rate reduction on one of its DTH satellites, according to its latest financial results issued April 27.
The Ottawa-based company earned $99 million in the 2012 first quarter that ended March 31, compared to $115 million in earnings recorded in the same period last year. In addition to the price reduction on the DTH satellite, Telesat said the decline also was due to lower revenues, higher operating expenses and a non-cash loss relating to write-offs and fees for its credit facilities. Telesat’s adjusted pre-tax earnings (EBITDA) also dropped 3 percent year-over-year to $153 million.
Telesat CEO Dan Goldberg said the company’s losses were partially offset by growth from its international satellite fleet and the additional revenue the operator received from the Canadian payload on ViaSat-1, which it provides to broadband company Barrett Xplore.
“Notwithstanding the significant contracted reduction in revenue from one of our direct-to-home satellites, revenue and adjusted EBITDA declined only modestly,” Goldberg said in a statement. “In addition, we improved our adjusted EBITDA margin and maintained our industry-leading contractual backlog.”
Goldberg added that the company also refinanced its senior secured credit facilities in the quarter and, in the process, extended its maturities at favorable interest rates. Telesat will pay its shareholders Loral and Red Isle $656 million this year after refinancing its credit facilities. Telesat already paid $375.2 million to Loral and $211 million to Red Isle during the first quarter. The company said the remaining $70.3 million of the total $656 million capital return would be paid later in 2012, along with $49 million in special payments to executives and certain employees.
“In connection with the refinancing, we made a significant cash payment to shareholders, allowing them to receive a portion of the substantial value we’ve created in Telesat over the past few years,” said Goldberg. “We also made meaningful 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 substantial contractual backlog and we are well positioned to grow our business this year and beyond.”
The launch of Nimiq 6 is scheduled for mid-May, followed by the launch of Anik G1 in the fourth quarter. Telesat’s contracted backlog for future services totaled approximately $5.5 billion at the end of March.