OTTAWA – Satellite operator Telesat today reported third quarter revenue of $202 million for the three month period ended September 30th, a drop of 15% compared to Q3 of 2019.
The revenue decrease, said the company in its press release, was due to short-term services provided to another satellite operator in the third quarter of 2019 that did not recur in 2020, a reduction of service for one of Telesat’s North American DTH customers 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, the restructuring of certain customer contracts related to the COVID 19 pandemic negatively impacted revenue,” reads the press release.
Operating expenses for the quarter rose by $4 million to $42 million, partly driven by hiring for its low earth orbit (LEO) program and adjusted EBITDA dropped by 20% to $162 million. Q3 net income, however, was $107 million, compared to net loss of $123 million for 2019. “The positive variation for the quarter was principally the result of non-cash gains on the fair value of financial instruments in 2020, 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,” reads the release.
“Our reduced revenue and adjusted EBITDA over the first three quarters of this year relative to the prior period are the result of a number of factors that we have disclosed previously, including the non-renewal late last year of a North American DTH contract, the end of the revenue amortization period of another contract, a dearth of opportunities for the provision of short-term satellite services, and the adverse impact of COVID-19 on our customers providing broadband to the aeronautical and maritime markets,” said president and CEO Dan Goldberg
“Having said that, the overwhelming majority of our revenues has been unaffected by the pandemic and we continue to have robust operating margins and cash flow, which are underpinned by our significant contractual backlog. In addition, we are making substantial progress on the development of our revolutionary LEO satellite constellation as well as our other strategic objectives, including leveraging our valuable spectrum rights.”
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