OTTAWA – Despite a decline in second quarter revenues, Telesat saw profits rise by $86 million in the period ended June 30, 2017.
Reported consolidated revenues of $226 million declined 3% ($6 million) year-over-year, primarily due to short-term services provided to another satellite operator in the second quarter of 2016, partially offset by favorable foreign exchange rate changes on the conversion of U.S. dollar revenue, as the U.S. dollar was approximately 5% stronger on average against the Canadian dollar than it was during the second quarter of 2016. Excluding the impact of foreign exchange rate changes, revenue decreased by 5% ($12 million) compared to the same period in 2016.
Telesat’s net income for the quarter was $148 million, up from $62 million for the quarter ended June 30, 2016, as a result of a higher non-cash gain on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars and favorable changes in the fair value of financial instruments in the second quarter of 2017.
Operating expenses of $44 million for the quarter were 5% ($2 million) higher than the same period in 2016, or 2% ($1 million) higher excluding the impact of changes in foreign exchange rates.
Adjusted EBITDA for the quarter was $184 million, a decrease of 4% ($7 million) compared to the same period in 2016 and a decrease of 7% ($13 million) when adjusted for foreign exchange rate changes. The Adjusted EBITDA margin for the second quarter of 2017 was 81.3%, as compared to 82.5% in the same period in 2016.
At June 30, 2017, Telesat said it had contracted backlog for future services of approximately $3.9 billion, and fleet utilization was 94% for its North American fleet and 64% for its international fleet.
“Lower revenue and Adjusted EBITDA in the second quarter compared to the same period last year is a function principally of certain short-term satellite services we provided to another satellite operator in the prior period that did not recur in the second quarter of this year,” said Telesat president and CEO Dan Goldberg, in the news release. “Absent that item our results would have been more stable. Looking ahead, we are focused on increasing the utilization of our available in-orbit capacity, maintaining our operating discipline and executing on our key growth initiatives.”
In other company news, Telesat named Dolores Martos as regional vice-president for Latin America and Caribbean sales. The experienced sales executive has held senior positions in several leading satellite companies, and Telesat said that her expertise in both commercial and regulatory matters has facilitated the growth of satcom services across the Latin America region. She will be based in Telesat’s Washington, DC office and report to international sales VP Tom Eaton.
Telesat today has six GEO satellites with coverage of Latin America, but said it plans to significantly expand its GEO capacity over the region in the second half of next year with the launch of a new high throughput satellite called Telstar 19 Vantage that will be co-located with Telstar 14R at 63 degrees West.
The company added that it is also developing an innovative (patent pending) global, low earth orbit (LEO) satellite constellation and system architecture, and that this unique combination of GEO and LEO assets will position it for continued expansion across Latin America.
