OTTAWA – For the quarter ended June 30, 2020, satellite company Telesat reported consolidated revenue of $208 million, a decrease of 10% compared to the same period in 2019.
Revenue decreases were primarily due to a reduction of service for one of Telesat’s North American DTH customers, which the company did not name, “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. In addition, revenue associated with short-term services provided to another satellite operator in the second quarter of 2019 did not recur in 2020,” said the company’s press release.
Operating expenses for the quarter were $46 million, an increase of $8 million from 2019. Approximately 50% of the increase in operating expenses was the result of a provision for bad debt primarily related to customers in the mobility sector whose business is under pressure from Covid-19. Other increased expenses include compensation associated with the low earth orbit (“LEO”) program, professional fees, and in-orbit insurance.
Adjusted EBITDA was $164 million, a decrease of 17%. The adjusted EBITDA margin for the second quarter of 2020 was 79.1%, compared to 85.2% in 2019.
For the quarter ended June 30, 2020, net income was $162 million, compared to net income of $135 million for 2019, which was due to higher non-cash foreign exchange gains in 2020, “arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars and lower interest expense, partially offset by non-cash losses on financial instruments in 2020 compared to gains in 2019,” reads the release.
“Our second quarter results reflect certain factors that we anticipated, namely the non-renewal late last year of a contract with a North American DTH customer and the end of the revenue amortization period of a contract with another customer, as well as certain factors that we had not anticipated, namely the Covid-19 pandemic and a paucity of opportunities this year to provide short-term satellite services to other satellite operators,” said Dan Goldberg, president and CEO, in the press release.
“The overwhelming majority of our revenues appears to be unaffected by the pandemic and we continue to have robust operating margins and strong cash flow, which is underpinned by our substantial contractual backlog. In addition, we continue to make substantial progress on the development of our planned revolutionary LEO satellite constellation as well as our other strategic objectives, including leveraging our valuable spectrum rights.”
As of June 30, Telesat had contracted backlog for future services of approximately $2.9 billion and its fleet utilization was at 81%.
