Telesat Revenue Dips in Q1, Company Expects Pandemic Headwinds
Telesat released its First Quarter (Q1) financial results on Thursday, reporting $150 million in consolidated revenue, a decrease of 6% compared to the same time period in 2019. Q1 net loss was $199 million, compared to net income of $123 million for 2019.
The Canadian satellite operator attributed the decrease in revenue to reduced service for its North American Direct-to-Home customer Shaw Direct, and lower revenue due to the completion of the term for prepaid services in a customer agreement that was accounted for as having a significant financing component. Telesat said these decreases were partially offset by higher equipment sales and revenue from services provided to users impacted by the failure of Intelsat‘s 29e satellite.
In a Thursday earnings call, Telesat President and CEO Dan Goldberg said that Q1 results were consistent with the company’s expectations, notwithstanding the COVID-19 pandemic. Telesat expects to face headwinds during the pandemic from its aeronautical and maritime customers, but Goldberg said those markets represented roughly 10% of total 2019 revenue. Goldberg said the company has had an increase in business from certain customers, particularly rural Internet Service Providers (ISPs) servicing Canada and Alaska, but these increases are not expected to offset the decline from aeronautical and maritime.
Goldberg said the company is focused on entering its Low-Earth Orbit (LEO) constellation into service by the end of 2022, with full global service in 2023, and is also taking steps to transfer spectrum off the C-band to receive early incentive clearing payment set by the FCC.
Goldberg said although airlines and cruise ship companies are suffering right now, looking to the future, he thinks Telesat’s Low-Earth Orbit (LEO) constellation will have a competitive advantage to provide broadband to these businesses when they recover, and when the LEO constellation is fully in service.
“I think planes will be flying and people will be traveling, and ships will be out there, including cruise ships,” Goldberg said. “Maybe some of the customer precommitments that I thought we could have gotten, we’ll probably have to rethink that. But overall our LEO thesis remains intact — notwithstanding what happened to OneWeb and notwithstanding the impact that COVID is having right now, particularly on aero and maritime.”