Telesat Corp — Call Transcript 2025

Thank you for standing by. At this time, I would like to welcome everyone to the Telesat Second Quarter 2025 Financial Results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Thank you. I would now like to turn the conference over to James Ratcliffe, Vice President, Investor Relations. Please go ahead. Thank you, Demi. Good morning, everyone, and thank you for joining us today. Earlier this morning, we filed our quarterly report for the period ending June 30, 2025, on Form 6-K with the SEC and on SEDAR+. Our remarks today may contain forward-looking statements. The risks that Telesat's actual results may differ materially from the results contemplated by the forward-looking statements are a result of known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat's annual report and updates filed with the SEC. Telesat assumes no responsibility to update or revise these forward-looking statements. I'd now like to turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer. Okay, thanks, James, and thank you all for joining us this morning. Q2 is in line with our expectations, and I'm pleased with Telesat's performance in the first half of this year in both our GEO and LEO segments. In GEO, our team continues to execute in a highly disciplined, focused manner, with the Nimiq 5 renewal with DISH in Q4 last year providing the biggest top-line headwind as far as year-over-year comparisons are concerned. In LEO, we're moving forward rapidly on both the technical and commercial aspects of Telesat Lightspeed. We're making steady progress on the development of the satellites, ground infrastructure, and the software for the network. I'm very pleased with the work that's taking place. On the commercial side, we're seeing strong interest in Telesat Lightspeed from customers across our target segments, particularly with respect to Aero and government users at this time. We have a robust pipeline of opportunities at various stages of development, and we're working hard to turn them into completed deals and committed backlog, which for Telesat Lightspeed was above CAD 1 billion at the end of the second quarter and up slightly from the last time we spoke, adjusting for movements in FX. We'll update you on our progress as the year unfolds. Lastly, as we've noted before, we remain focused on refinancing the restricted group debt that begins to come due in December next year and expect to engage with our lenders in the near term. We've also been progressing with our search for a new CFO, given Andrew's planned retirement, and we expect to have some clarity there in the near future as well. Speaking of Andrew, I'll hand over to him now so that he can speak to the numbers in more detail before opening the call up to questions. Thank you, Dan. Good morning, everyone. I would now like to focus on the highlights from this morning's press release and filings. In the second quarter of 2025, Telesat reported consolidated revenues of CAD 106 million, Adjusted EBITDA of CAD 59 million, and year-to-date generated cash from operations of CAD 108 million, closing in the quarter with CAD 547 million in cash. In the second quarter of 2025, revenues decreased by CAD 46 million to CAD 106 million from the second quarter of 2024. Operating expenses decreased by CAD 6 million to CAD 51 million, and Adjusted EBITDA decreased by CAD 45 million to CAD 59 million. The Adjusted EBITDA margin was 55%. I would also note that the margin in the GEO segment was approximately 70%. The revenue decrease for the quarter was primarily due to a lower rate on the renewal of a long-term agreement with a North American direct-to-home customer. Other factors included reductions in services for certain enterprise customers, particularly an Indonesian rural broadband program, lower consulting revenues, and a reduction in services to another North American direct-to-home customer. The decrease in operating expenses was primarily due to higher capitalized engineering costs, lower consulting costs, lower share-based compensation, and offset by higher Telesat Lightspeed headcount, along with higher legal and professional fees. As usual, we'll break out the performance of our LEO and GEO segments separately in all four of our financial statements filed on Form 6-K. Interest expense decreased by CAD 8 million during the second quarter when compared to the same period in 2025. The decrease in interest expense was primarily due to the impact of our debt repurchases. To note, a cumulative amount of debt repurchased is CAD 857 million at a cost of CAD 462 million, an average price of just under CAD 0.53. This also results in interest savings of approximately CAD 53 million annually, including previous repayments of approximately CAD 356 million of a term loan B. Our overall debt has reduced by approximately 26%. In the second quarter, we recorded a gain on foreign exchange of CAD 115 million as compared to a loss of CAD 34 million in the second quarter of 2024. Our net income for the second quarter was CAD 76 million compared to a net income of CAD 129 million for the same period in the prior year. The variance was due to low revenues, loss related to the change in the fair value of financial instruments, smaller gain on debt repurchases, partially offset by the foreign exchange gain I’ve mentioned a little bit earlier. For the first half of 2025, the cash inflows from operating activities were CAD 108 million, and cash flows used by investing activities were CAD 413 million. In terms of capital expenditures incurred, almost all were related to Telesat Lightspeed. During the first half of 2025, we completed the first two draws on our financing facilities with the Government of Canada and the Government of Quebec, thus receiving CAD 340 million. Guidance. As you will also have noted in our earnings release this morning, we have reiterated our guidance for 2025. This guidance assumes a Canadian dollar to U.S. dollar exchange rate of CAD 1.42. For 2025, we continue to expect full-year revenues to be between CAD 405 million and CAD 425 million. In terms of operating expenses, excluding share-based compensation, we expect to spend approximately CAD 110 million to CAD 120 million on Telesat Lightspeed this year, compared with CAD 74 million in 2024. In terms of Adjusted EBITDA, we expect to be between CAD 170 million to CAD 119 million. In respect to capital expenditures, and as previously disclosed, we continue to expect our 2025 capital expenditures to be in the range of CAD 900 million to CAD 1.1 billion, which is nearly all related to Telesat Lightspeed. To meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures, we have approximately CAD 550 million of cash in short-term investments at the end of June, as well as CAD 2.2 billion available under our funding agreements with the Governments of Canada and Quebec. At the end of the second quarter, the total leverage ratio is calculated under the terms of the amended senior secured credit facilities of 7.51 times. Telesat is in compliance with all the covenants and our credit agreements on indentures. A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning. Our 6K provides the unaudited interim condensed consolidated financial information in the MD&A. The non-guarantor subsidiaries are essentially the unrestricted subsidiaries with some minor differences. With this, I conclude our prepared remarks for the call. I'm very happy now to turn back to the operator and address any questions you may have. Thank you very much. If, as a reminder, to ask a question, you need to press star then the number one on your telephone keypad. To withdraw your question, press star one again. We will pause for just a moment to compile the Q&A roster. Our first question comes from the line of David McFadden with Cormark Securities. Your line is open. Oh, great. Hi guys, a couple of questions. Just first of all, on the LEO backlog, when you reported Q1, you said the backlog was about CAD 1.1 billion, but this time you say it's over a billion. Dan, you said that it's up slightly from when you reported Q1. Is it like slightly above CAD 1.1 billion then, I guess? No, the deal is we report our, and David, by the way, thanks for the questions. We report the backlog in Canadian dollars, but for both GEO and LEO, it's a mix of different currencies. For LEO, it's a mix of U.S. and Canadian, and fundamentally over the quarter, and relative to where the U.S. dollar and the Canadian dollar sat at the end of Q1, the Canadian dollar's gotten a little bit stronger. When we take the U.S. dollar backlog and convert it into Canadian dollars, it wasn't showing up with as many Canadian dollars at the end of Q2 as it did at the end of Q1. That's really what it was. We added a little bit of a small incremental LEO contract, which on an apples-to-apples basis would have made Lightspeed backlog a little bit higher at the end of Q2 than it was at the end of Q1. Anyway, that's what was going on there. Yeah, because you guys announced Arabsat and Vocus after you reported your Q1. Vocus, I think Vocus might have been a little something, wasn't massively material. Arabsat, I think we just signed a term sheet or a letter of intent with them, so that has no backlog contribution at this point. Okay. I think Space Norway as well is a term sheet. Have you concluded anything with them yet? No, not yet. Okay, same thing. You know, the term, we don't count term sheets as, until we have a final definitive agreement, it doesn't go in the backlog. All right. On the debt negotiations, restructuring the debt, I believe that you're talking to your debt holders. I was just wondering if you can give us any update there and whether you still think it's possible to include this in 2025. I think I would say that we really haven't started to engage with the restricted group debt holders at this point. We will soon is what our expectation is, but we haven't yet. As far as how long it will take to reach an agreement on refinancing, I think it's conceivable that it could get done by the end of this year, but until we engage and get a better sense of it, I'd say hard to tell. Okay, I'm just wondering why it's taking so long to start engaging with them. Can you provide any information on why it's taking so long? Yeah, there's no great mystery. I'd say that it's a process that we need to go through on our side, working with our advisors, working with our board. It is absolutely a priority for us, but obviously we've got a lot of other things going on at the company as well. It's a combination of all of that. I think that, as I said, I think we'll be in a position to engage in the near term. Okay. On the GEO business, you referenced a couple of big contracts. You renegotiated those, and that's why the business is declining the way it is. When do you lap that or those two deals, and do you think the decline would ease up? Yeah, you know, so look, the declines, I mean, I was looking at the numbers earlier, obviously, you know, and we highlight in the earnings release basically two North American DTH customers. One was DISH on the Nimiq 5 renewal. The other one would be Shaw, now Rogers, which is no longer using Anik F2. The other two that we highlighted were a rural broadband program in Indonesia, where some Indonesian domestic satellites have come online and are taking some more of that business. I also think just that whole broadband program was sort of getting refinanced, or there were some questions around its funding. Lastly, on the LEO consulting side, we had been doing some work with NASA, but that is sort of a lumpy contract. Those four things, DISH, Shaw, Indonesia broadband, and NASA account for roughly three quarters of the decrease in revenue. As far as when things kind of flush out, I think we did the DISH renewal. That's been the biggest headwind this year. We did that in October of last year. Come Q4, we'll start to kind of get even with that, not entirely. I'd say the other thing that, and again, not giving guidance for 2026, but I'd say the other North America DTH contract that will provide a headwind would be Nimiq 4. Nimiq 4 is with Bell. That satellite has about another year plus of life on it, but it's not our expectation that Bell will renew when that contract comes up in October. They'll consolidate their activities on Nimiq 6. That will be the next contract that's coming up that I think will provide a headwind. In any event, we'll give guidance for 2026. I'd say that, yeah, some of the big headwinds on the North America DTH side, with the exception of that Nimiq 4 contract, will have flushed their way through, and then we'll go from there. Okay. Lastly, on the Q1 call, you seem pretty optimistic on the interest or demand for Lightspeed, just given what's happening geopolitically or just what's happening in the market. Do you still have the same level of optimism? Yeah, 100%. I noted in my remarks that the pipeline for Lightspeed is robust. I noted that that's particularly the case for Aero and for government. Obviously, we did the Viasat deal. It was technically in Q2, although we announced it when we did our Q1 numbers, and we see more opportunities there. Viasat is, I'd say, principally about commercial Aero connectivity, although I believe they'll leverage Lightspeed for some of their other verticals as well. We see more opportunities out there on the commercial Aero broadband front and then government. I've said before, it's always a little bit harder to handicap exactly when these government opportunities will land. We see very meaningful opportunities out there for government, including here in Canada. Canada, like the rest of the U.S. allies, is looking to spend more money on defense in part to meet NATO contribution commitments. I think Telesat Lightspeed is very well-positioned to meet the government's requirements in terms of northern sovereignty, NORAD modernization, making capabilities available to their allies. Yes, I think Telesat has a really meaningful opportunity there, but we've got work to do and nothing's done until it's done. Yeah, we remain very bullish on our commercial prospects. Okay. All right. Thank you. Next question comes from the line of Caleb Henry with Quilty Space. Your line is open. Hi, good morning everyone. A couple of questions. First is just on the OpEx for Lightspeed. Can you provide some visibility into how that's expected to trend throughout 2026 as the constellation moves closer to service entry? In 2026. Hey Caleb, thanks for the question. Lightspeed expenses are ramping, particularly driven by headcount. I'd say we're a little bit slower off the mark for the first half of the year. We expect to, we've hired a lot of people, but we're expecting to hire even more people. We believe we'll catch up from a headcount perspective toward the back end of the year. Yes, that will continue to ramp into 2026. Again, we're not giving guidance on 2026 numbers, but our technical staff will continue to grow. We'll be starting to scale our commercial team in a more meaningful way starting in 2026. So much of the headcount growth that we've had has been mostly around technical staff to support the build-out of satellites, gateways, writing software, modems, user terminals, and the like. As we get closer to in-service, we've got to scale the commercial organization as well. We've been doing that, but that'll accelerate in the next year. Again, we'll provide guidance on that as we get closer to it. All right, thanks. I know we talked last call a little about the state of user terminals and gateways and things, but can you provide a little more clarity on when you think the user terminals will be available? I think we talked about ThinKom and Quest and some others. Are you expecting those to be ready the day Lightspeed turns on, or are they ready now? How is that pacing alongside the constellation's development? Yeah, to talk about user terminals, you kind of need to go vertical by vertical. You have to, you know, there are flat panel antennas, there are dual parabolic for certain applications. For Aero, there are the more mechanically steered antennas that exist today. The mechanically steered antennas are obviously here now, and Lightspeed is sort of backwards compatible with those provided that they're operating in Ka-band and recognizing also that they'll require a Lightspeed modem. Those are available today. On the flat panel side for Aero, there are flat panel Aero antennas today. We are, I'm trying to remember what we've announced and what we haven't announced. The development with CAST. Thank you, Michelle. We've announced, on flat panel antennas for the Aero segment, development effort with CAST, which has a promising antenna. There are others as well who are developing flat panel antennas. Yes, we expect those will be, frankly, all of our user terminals, whether they're flat panel antennas or in some cases for, I don't know, kind of community aggregator applications, that all of our user terminals, including the antennas, obviously will be available in advance of our entry into commercial service. We've announced some of that already. We announced development with Intellian. We've just now referenced the development with CAST. I'd say stay tuned. We'll make some other announcements too on that front. It feels good. We always expected there would be good developments on the user terminal front, particularly with respect to flat panel antennas. That is very much materializing. Okay, thanks. Last question, just sort of in an obligatory, Golden Dome question. I know there's been some discussion about Canada being involved. Is there any opportunity for Telesat Lightspeed to be involved in that, or is that kind of too, too far out or too speculative? You know, it's probably all of that. I think it's fair to say that Golden Dome is something that's still being defined. It looks like it will be a network of networks and that space-based architectures at various orbits will form an important part of Golden Dome. Whether Canada participates or not, I think is still an open question. From what I just read, the U.S. is receptive to Canada participating. I'd say that's still an open question. I believe that Lightspeed, given its capabilities, given the orbit that we're flying at up at around 1,300 kilometers, yes, I think that Lightspeed could make valuable contributions to Golden Dome. That's something that we're watching. We're certainly making sure that decision makers are aware of the capabilities of Lightspeed. I think there's a reason we're investing billions of dollars in LEO. We're absolutely convinced that the world and our industry is moving to LEO in all of these different verticals that we're talking about: broadband connectivity, broadband to planes, to ships, to rural communities, to moving vehicles. For government users, it's just that for us, the overall trends are pointing to LEO. LEO's hard, and there aren't that many of them. Particularly when you talk about architectures like Golden Dome, they need to be multiple networks to ensure resiliency. We're very bullish about the positioning that Lightspeed will have. Thanks for the question. Thank you. Next question comes from the line of Edison Yu with Deutsche Bank. Your line is open. Hey, good morning everyone. Thanks for taking our questions. One, start off on Lightspeed. You highlighted Aero and government. Could you shed some light on the discussions around pricing and usage dynamics going on? Obviously, you had put out some forecasts in the past about the kind of revenue you're going to generate. I assume there was some pricing embedded in that. Are those kind of discussions implying pricing is where you think it is? Is it better or worse? Also, in terms of the usage patterns, is it, you know, fixed versus variable? Just curious if you could shed more light on those elements. Yeah, I mean, I'll tell you what we see right now. For sure, we've got a model for Lightspeed. It goes vertical by vertical. We've got pricing assumed on a basically per megabit basis in every vertical. It depends on what user terminal one uses as well. Obviously, the bigger the antenna, the more efficiency you get on the link. If someone's using a big antenna, tend to give them a lower rate per megabit. If they have a little antenna, it means there are more inefficiencies in the link and you try. Just to give you a sense of how that model's built up. For the deals that we've closed to date, I'd say probably on balance, the pricing that we're seeing in the market and deals that we've closed is consistent with or higher than our price. I'd say we've been not pessimistic on our pricing, but we built a model that we think we can execute on. We envisioned a world where pricing would be lower than where it is today and would come down over time. I'd love to be proven wrong on that, but that's what we've assumed. The pricing that has been in the contracts that we've closed on has been either consistent with or north of what's in our model. I'd say that's true of the conversations that we're having in terms of opportunities in the pipeline. As I said before, where we're seeing the most opportunities at this stage of Lightspeed, and by that I mean we're not going to be in service until the end of 2027, where we're seeing the most opportunities right now, the most concrete opportunities are in Aero because there, you need a longer horizon for our partners to equip those airlines to be ready for Lightspeed. The planning cycles in Aero tend to be among the longest, shorter in maritime, shorter in terrestrial backhaul. Then there's government, and the governments tend to plan well in advance. Those are the two verticals right now I'd say we're getting the most traction. As far as volumes, I've been pleasantly surprised. I'm glad to see that we're getting as much real traction as we're getting, even with Lightspeed still not coming online until basically another, what is it, a year and a half or something like that? Or more. Two and a half. Understood. I appreciate the detailed caller. Wanted to ask about maritime. I know you said, you just said that, you know, it's kind of shorter cycle time. Is that a market you think you will pursue, I guess, fairly aggressively? I would assume the pricing dynamics there are probably less favorable than Aero government. Perhaps to your point, is it just cycle time or do you think that it's more of a pricing or pricing competitive there? No, we will absolutely be pursuing maritime. Today, you know, maritime probably represents, I don't know, a little bit more than 5% of our total revenues, and that's down. That's down a lot. It's been cannibalized by Starlink because the maritime users, from what the market is telling us, they like the LEO value proposition. They like the low latency. They like the high throughput. They like the smaller antennas. Maritime is a great market for LEO and we will absolutely be addressing that market with Lightspeed. Cruise, maritime transport, high-end yachts, the energy kind of offshore market, all of that we think is very promising. Understood. I actually wanted to shift to the GEO side. I realize you're not providing kind of exact numbers going forward, but can we assume that GEO should at least be, from a kind of standalone basis, cash flow accretive or cash flow positive in the next two years? If so, when do you think that kind of becomes neutral or drag? You know, I understand it could be quite a few years away, but how do you think about, I guess, the cash generation ability of GEO as it sort of trickles down? I am no finance guy, but it's pretty straightforward, I think, on GEO. The reality is it's generating a lot of cash right now, and because we haven't been building new GEO satellites, it means there's not a lot of CapEx going out. There's very little maintenance CapEx in terms of GEO. I think we do a really good job managing the operating expenses around GEO. We report our segments separately, and you can see that GEO still has a very favorable EBITDA margin. We run that business very efficiently, and we still have almost CAD 1 billion of backlog left on GEO. Every quarter, we've got new stuff that comes up for renewal. Net net, we've been running backlog down, but we replenish some of it along the way with some renewals. In terms of the foreseeable future, it's free cash flow positive. It's accretive to our cash position, and that would, I think, only change in the next couple of years if we had a new opportunity to invest in GEO. Then we're building a new GEO satellite, so there's cash flows out that would offset the cash flows in. That's what it looks like right now, and we'd love to build a new GEO satellite provided that we feel good about the business case. For the last 10 years, we haven't been able to close a business case on either a new GEO satellite or even a replacement GEO satellite, just given everything that's been going on in the market. We still see some opportunities out there potentially, and we continue to work hard to develop a sound GEO business case. That, I think, is what the outlook looks like. Yeah, absolutely. Dan, yeah, I agree. Thank you very much. Again, if you would like to ask a question, press on your telephone keypad. Our next question comes from the line of Walt Piecyk with LightShed Partners. Your line is open. Thanks. Hey Dan, with Kuiper kind of getting a little momentum, at least in launches, just curious if you can update us on, and they seemingly are going after a similar market, just kind of your competitive analysis there and whether they're under consideration for any of the business that you've been attempting to win ahead of your LEO launch. Hey Walt. Yeah, so look, we always knew Kuiper was coming. Every once in a while, somebody would question how committed Amazon was to Kuiper. I was always convinced that this was something that they were very, very serious about, and I continue to believe that. I think it will be, like Starlink, a very capable constellation. You're right, they're like Starlink, you know, focused on the same verticals that we're focused on, plus consumer broadband. Again, like Starlink, we're not, as you know, focused on the B2C direct-to-consumer market. Yeah, we see Kuiper out there in the market pitching, you know, themselves in all these different verticals that we're focused on, which is all to say, as far as I'm concerned, nothing's changed. We knew they were coming. Maybe on balance, they're coming a little bit later than we had anticipated, but they're, you know, they're starting to launch now. Do you see them in RFP processes, though, or no? Yeah, that's a good question. I mean, the folks that kind of do more formal RFPs, it seems like the airlines certainly do that. We tend to support our channel partners in those RFPs. I have a little less visibility there, but I would say I assume they're pitching in the Aero segment. To date, that segment is being successfully won by the incumbent operators, so the Viasat of the world, the Gogo, Panasonic, Hughes has made some inroads there, and, of course, Starlink. I assume that Amazon, I'm sorry, Project Kuiper is out there as well. We see them, there are different government opportunities all around the world. It is as we expected. I think that they'll have a great offering. I think that they'll get a lot of traction in the market. I continue to believe that we will too. It's a big market. We've got certain capabilities that are differentiated. So yeah. Is their value proposition enhanced because of their ability to tie it into AWS? I think, I mean, look, they leverage a large ecosystem, and they will benefit from that. They leverage a large ecosystem in terms of AWS. They have deep capabilities in terms of obviously software development, development of devices. I mean, Amazon's obviously one of the largest companies in the world. They've got Amazon Prime. They'll leverage all of those things, I think, in a pretty effective way. Okay. On the technical side, you have this company, AST, that is in the process of sourcing some spectrum from Ligado, something I've asked you about historically on past calls, as you know. I think there's some other S-Band that they identified today. Also, Starlink, I think, has been attempting to acquire additional spectrum from what's now EchoStar through an FCC process. We'll see how that goes, but it seems like there's some momentum there. I'm just curious, and again, I know this is a question I've asked you many times over the years, but I just want to refresh not just because if your peer's doing it, it doesn't necessarily mean you have to do it. Is there any interest or discussion or kind of where are you in the development process of your birds that you could integrate additional spectrum and why or why is that not important for the future of connectivity when you're seeing some of your peers? Let's put AST aside for a second, but even Starlink, right, looking to add additional spectrum to their constellation. We're still sticking to our knitting in terms of enterprise broadband connectivity. We're well aware of what others are doing in the direct-to-device market, and we wish them well. We don't really have the spectrum for that. Our satellites that we're building today are absolutely optimized. Every amp, every kilo of mass is absolutely devoted to our core mission. We do not have the capability to modify them in a way to add antennas or payloads to do direct-to-device. The satellites would look massively different than they do. We'd lose schedules. That's not something that we're being distracted by. To come back to it, Lightspeed is a significant undertaking from an engineering perspective, a commercial perspective, a regulatory perspective, a CapEx perspective. We've got to stay focused on that, and we are 1,000% focused on that. I think making really good progress. I think the value creation opportunity for Telesat, if we execute well on our Lightspeed plan, is massive. We have to stay focused to capture that. On the spectrum front, the FCC, it sounds like, is going to take another look at the portion of the C-band that they did not claw back and auction for 5G services. We continue to operate on C-band in North America. Maybe there's an opportunity there, but I don't think that's Telesat building a direct-to-device constellation. That's not on our radar. Got it. Thank you. Thank you. Seeing no further questions, that concludes our Q&A session. I'd like to turn the call back over to Dan Goldberg for closing remarks. Okay. Operator, thank you, and thank you all for joining us this morning. We look forward to chatting with you again when we release our third quarter numbers. Thank you. Thank you very much. Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Speaker 8: Thank you for standing by. At this time, I would like to welcome everyone to the Telesat Second Quarter 2025 Financial Results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Thank you. I would now like to turn the conference over to James Ratcliffe, Vice President, Investor Relations. Please go ahead. Thank you for standing by. thank you for standing by At this time, I would like to welcome everyone to the Telesat Second Quarter 2025 Financial Results call. at this time i would like to welcome everyone to the telesat second quarter 2025 financial results call All lines have been placed on mute to prevent any background noise. all lines have been placed on mute to prevent any background noise After the speaker's remarks, there will be a question and answer session. after the speaker's remarks there will be a question and answer session If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad Thank you. thank you I would now like to turn the conference over to James Ratcliffe, Vice President, Investor Relations. i would now like to turn the conference over to james ratcliffe vice president investor relations Please go ahead. please go ahead

Speaker 5: Thank you, Demi. Good morning, everyone, and thank you for joining us today. Earlier this morning, we filed our quarterly report for the period ending June 30, 2025, on Form 6-K with the SEC and on SEDAR+. Our remarks today may contain forward-looking statements. The risks that Telesat's actual results may differ materially from the results contemplated by the forward-looking statements are a result of known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat's annual report and updates filed with the SEC. Telesat assumes no responsibility to update or revise these forward-looking statements. I'd now like to turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer. Thank you, Demi. thank you demi Good morning, everyone, and thank you for joining us today. good morning everyone and thank you for joining us today Earlier this morning, we filed our quarterly report for the period ending June 30, 2025, on Form 6-K with the SEC and on SEDAR+. earlier this morning we filed our quarterly report for the period ending june 30 2025 on form 6-k with the sec and on sedar+ Our remarks today may contain forward-looking statements. our remarks today may contain forward-looking statements The risks that Telesat's actual results may differ materially from the results contemplated by the forward-looking statements are a result of known and unknown risks and uncertainties. the risks that telesat's actual results may differ materially from the results contemplated by the forward-looking statements are a result of known and unknown risks and uncertainties For a discussion of known risks, please see Telesat's annual report and updates filed with the SEC. for a discussion of known risks please see telesat's annual report and updates filed with the sec Telesat assumes no responsibility to update or revise these forward-looking statements. telesat assumes no responsibility to update or revise these forward-looking statements I'd now like to turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer. i'd now like to turn the call over to dan goldberg telesat's president and chief executive officer

Speaker 7: Okay, thanks, James, and thank you all for joining us this morning. Q2 is in line with our expectations, and I'm pleased with Telesat's performance in the first half of this year in both our GEO and LEO segments. In GEO, our team continues to execute in a highly disciplined, focused manner, with the Nimiq 5 renewal with DISH in Q4 last year providing the biggest top-line headwind as far as year-over-year comparisons are concerned. In LEO, we're moving forward rapidly on both the technical and commercial aspects of Telesat Lightspeed. We're making steady progress on the development of the satellites, ground infrastructure, and the software for the network. I'm very pleased with the work that's taking place. On the commercial side, we're seeing strong interest in Telesat Lightspeed from customers across our target segments, particularly with respect to Aero and government users at this time. Okay, thanks, James, and thank you all for joining us this morning. okay thanks james and thank you all for joining us this morning Q2 is in line with our expectations, and I'm pleased with Telesat's performance in the first half of this year in both our GEO and LEO segments. q2 is in line with our expectations and i'm pleased with telesat's performance in the first half of this year in both our geo and leo segments In GEO, our team continues to execute in a highly disciplined, focused manner, with the Nimiq 5 renewal with DISH in Q4 last year providing the biggest top-line headwind as far as year-over-year comparisons are concerned. in geo our team continues to execute in a highly disciplined focused manner with the nimiq 5 renewal with dish in q4 last year providing the biggest top-line headwind as far as year-over-year comparisons are concerned In LEO, we're moving forward rapidly on both the technical and commercial aspects of Telesat Lightspeed. in leo we're moving forward rapidly on both the technical and commercial aspects of telesat lightspeed We're making steady progress on the development of the satellites, ground infrastructure, and the software for the network. we're making steady progress on the development of the satellites ground infrastructure and the software for the network I'm very pleased with the work that's taking place. i'm very pleased with the work that's taking place On the commercial side, we're seeing strong interest in Telesat Lightspeed from customers across our target segments, particularly with respect to Aero and government users at this time. on the commercial side we're seeing strong interest in telesat lightspeed from customers across our target segments particularly with respect to aero and government users at this time We have a robust pipeline of opportunities at various stages of development, and we're working hard to turn them into completed deals and committed backlog, which for Telesat Lightspeed was above CAD 1 billion at the end of the second quarter and up slightly from the last time we spoke, adjusting for movements in FX. We'll update you on our progress as the year unfolds. Lastly, as we've noted before, we remain focused on refinancing the restricted group debt that begins to come due in December next year and expect to engage with our lenders in the near term. We've also been progressing with our search for a new CFO, given Andrew's planned retirement, and we expect to have some clarity there in the near future as well. We have a robust pipeline of opportunities at various stages of development, and we're working hard to turn them into completed deals and committed backlog, which for Telesat Lightspeed was above CAD 1 billion at the end of the second quarter and up slightly from the last time we spoke, adjusting for movements in FX. we have a robust pipeline of opportunities at various stages of development and we're working hard to turn them into completed deals and committed backlog which for telesat lightspeed was above cad 1 billion at the end of the second quarter and up slightly from the last time we spoke adjusting for movements in fx We'll update you on our progress as the year unfolds. we'll update you on our progress as the year unfolds Lastly, as we've noted before, we remain focused on refinancing the restricted group debt that begins to come due in December next year and expect to engage with our lenders in the near term. lastly as we've noted before we remain focused on refinancing the restricted group debt that begins to come due in december next year and expect to engage with our lenders in the near term We've also been progressing with our search for a new CFO, given Andrew's planned retirement, and we expect to have some clarity there in the near future as well. we've also been progressing with our search for a new cfo given andrew's planned retirement and we expect to have some clarity there in the near future as well Speaking of Andrew, I'll hand over to him now so that he can speak to the numbers in more detail before opening the call up to questions. Speaking of Andrew, I'll hand over to him now so that he can speak to the numbers in more detail before opening the call up to questions. speaking of andrew i'll hand over to him now so that he can speak to the numbers in more detail before opening the call up to questions

Speaker 3: Thank you, Dan. Good morning, everyone. I would now like to focus on the highlights from this morning's press release and filings. In the second quarter of 2025, Telesat reported consolidated revenues of CAD 106 million, Adjusted EBITDA of CAD 59 million, and year-to-date generated cash from operations of CAD 108 million, closing in the quarter with CAD 547 million in cash. In the second quarter of 2025, revenues decreased by CAD 46 million to CAD 106 million from the second quarter of 2024. Operating expenses decreased by CAD 6 million to CAD 51 million, and Adjusted EBITDA decreased by CAD 45 million to CAD 59 million. The Adjusted EBITDA margin was 55%. I would also note that the margin in the GEO segment was approximately 70%. The revenue decrease for the quarter was primarily due to a lower rate on the renewal of a long-term agreement with a North American direct-to-home customer. Thank you, Dan. thank you dan Good morning, everyone. good morning everyone I would now like to focus on the highlights from this morning's press release and filings. i would now like to focus on the highlights from this morning's press release and filings In the second quarter of 2025, Telesat reported consolidated revenues of CAD 106 million, Adjusted EBITDA of CAD 59 million, and year-to-date generated cash from operations of CAD 108 million, closing in the quarter with CAD 547 million in cash. in the second quarter of 2025 telesat reported consolidated revenues of cad 106 million adjusted ebitda of cad 59 million and year-to-date generated cash from operations of cad 108 million closing in the quarter with cad 547 million in cash In the second quarter of 2025, revenues decreased by CAD 46 million to CAD 106 million from the second quarter of 2024. in the second quarter of 2025 revenues decreased by cad 46 million to cad 106 million from the second quarter of 2024 Operating expenses decreased by CAD 6 million to CAD 51 million, and Adjusted EBITDA decreased by CAD 45 million to CAD 59 million. operating expenses decreased by cad 6 million to cad 51 million and adjusted ebitda decreased by cad 45 million to cad 59 million The Adjusted EBITDA margin was 55%. the adjusted ebitda margin was 55% I would also note that the margin in the GEO segment was approximately 70%. i would also note that the margin in the geo segment was approximately 70% The revenue decrease for the quarter was primarily due to a lower rate on the renewal of a long-term agreement with a North American direct-to-home customer. the revenue decrease for the quarter was primarily due to a lower rate on the renewal of a long-term agreement with a north american direct-to-home customer Other factors included reductions in services for certain enterprise customers, particularly an Indonesian rural broadband program, lower consulting revenues, and a reduction in services to another North American direct-to-home customer. The decrease in operating expenses was primarily due to higher capitalized engineering costs, lower consulting costs, lower share-based compensation, and offset by higher Telesat Lightspeed headcount, along with higher legal and professional fees. As usual, we'll break out the performance of our LEO and GEO segments separately in all four of our financial statements filed on Form 6-K. Interest expense decreased by CAD 8 million during the second quarter when compared to the same period in 2025. The decrease in interest expense was primarily due to the impact of our debt repurchases. To note, a cumulative amount of debt repurchased is CAD 857 million at a cost of CAD 462 million, an average price of just under CAD 0.53. Other factors included reductions in services for certain enterprise customers, particularly an Indonesian rural broadband program, lower consulting revenues, and a reduction in services to another North American direct-to-home customer. other factors included reductions in services for certain enterprise customers particularly an indonesian rural broadband program lower consulting revenues and a reduction in services to another north american direct-to-home customer The decrease in operating expenses was primarily due to higher capitalized engineering costs, lower consulting costs, lower share-based compensation, and offset by higher Telesat Lightspeed headcount, along with higher legal and professional fees. the decrease in operating expenses was primarily due to higher capitalized engineering costs lower consulting costs lower share-based compensation and offset by higher telesat lightspeed headcount along with higher legal and professional fees As usual, we'll break out the performance of our LEO and GEO segments separately in all four of our financial statements filed on Form 6-K. as usual we'll break out the performance of our leo and geo segments separately in all four of our financial statements filed on form 6-k Interest expense decreased by CAD 8 million during the second quarter when compared to the same period in 2025. interest expense decreased by cad 8 million during the second quarter when compared to the same period in 2025 The decrease in interest expense was primarily due to the impact of our debt repurchases. the decrease in interest expense was primarily due to the impact of our debt repurchases To note, a cumulative amount of debt repurchased is CAD 857 million at a cost of CAD 462 million, an average price of just under CAD 0.53. to note a cumulative amount of debt repurchased is cad 857 million at a cost of cad 462 million an average price of just under cad 0.53 This also results in interest savings of approximately CAD 53 million annually, including previous repayments of approximately CAD 356 million of a term loan B. Our overall debt has reduced by approximately 26%. In the second quarter, we recorded a gain on foreign exchange of CAD 115 million as compared to a loss of CAD 34 million in the second quarter of 2024. Our net income for the second quarter was CAD 76 million compared to a net income of CAD 129 million for the same period in the prior year. The variance was due to low revenues, loss related to the change in the fair value of financial instruments, smaller gain on debt repurchases, partially offset by the foreign exchange gain I’ve mentioned a little bit earlier. For the first half of 2025, the cash inflows from operating activities were CAD 108 million, and cash flows used by investing activities were CAD 413 million. This also results in interest savings of approximately CAD 53 million annually, including previous repayments of approximately CAD 356 million of a term loan B. this also results in interest savings of approximately cad 53 million annually including previous repayments of approximately cad 356 million of a term loan b Our overall debt has reduced by approximately 26%. our overall debt has reduced by approximately 26% In the second quarter, we recorded a gain on foreign exchange of CAD 115 million as compared to a loss of CAD 34 million in the second quarter of 2024. in the second quarter we recorded a gain on foreign exchange of cad 115 million as compared to a loss of cad 34 million in the second quarter of 2024 Our net income for the second quarter was CAD 76 million compared to a net income of CAD 129 million for the same period in the prior year. our net income for the second quarter was cad 76 million compared to a net income of cad 129 million for the same period in the prior year The variance was due to low revenues, loss related to the change in the fair value of financial instruments, smaller gain on debt repurchases, partially offset by the foreign exchange gain I’ve mentioned a little bit earlier. the variance was due to low revenues loss related to the change in the fair value of financial instruments smaller gain on debt repurchases partially offset by the foreign exchange gain i’ve mentioned a little bit earlier For the first half of 2025, the cash inflows from operating activities were CAD 108 million, and cash flows used by investing activities were CAD 413 million. for the first half of 2025 the cash inflows from operating activities were cad 108 million and cash flows used by investing activities were cad 413 million In terms of capital expenditures incurred, almost all were related to Telesat Lightspeed. During the first half of 2025, we completed the first two draws on our financing facilities with the Government of Canada and the Government of Quebec, thus receiving CAD 340 million. Guidance. As you will also have noted in our earnings release this morning, we have reiterated our guidance for 2025. This guidance assumes a Canadian dollar to U.S. dollar exchange rate of CAD 1.42. For 2025, we continue to expect full-year revenues to be between CAD 405 million and CAD 425 million. In terms of operating expenses, excluding share-based compensation, we expect to spend approximately CAD 110 million to CAD 120 million on Telesat Lightspeed this year, compared with CAD 74 million in 2024. In terms of Adjusted EBITDA, we expect to be between CAD 170 million to CAD 119 million. In terms of capital expenditures incurred, almost all were related to Telesat Lightspeed. in terms of capital expenditures incurred almost all were related to telesat lightspeed During the first half of 2025, we completed the first two draws on our financing facilities with the Government of Canada and the Government of Quebec, thus receiving CAD 340 million. during the first half of 2025 we completed the first two draws on our financing facilities with the government of canada and the government of quebec thus receiving cad 340 million Guidance. guidance As you will also have noted in our earnings release this morning, we have reiterated our guidance for 2025. as you will also have noted in our earnings release this morning we have reiterated our guidance for 2025 This guidance assumes a Canadian dollar to U.S. dollar exchange rate of CAD 1.42. this guidance assumes a canadian dollar to u.s dollar exchange rate of cad 1.42 For 2025, we continue to expect full-year revenues to be between CAD 405 million and CAD 425 million. for 2025 we continue to expect full-year revenues to be between cad 405 million and cad 425 million In terms of operating expenses, excluding share-based compensation, we expect to spend approximately CAD 110 million to CAD 120 million on Telesat Lightspeed this year, compared with CAD 74 million in 2024. in terms of operating expenses excluding share-based compensation we expect to spend approximately cad 110 million to cad 120 million on telesat lightspeed this year compared with cad 74 million in 2024 In terms of Adjusted EBITDA, we expect to be between CAD 170 million to CAD 119 million. in terms of adjusted ebitda we expect to be between cad 170 million to cad 119 million In respect to capital expenditures, and as previously disclosed, we continue to expect our 2025 capital expenditures to be in the range of CAD 900 million to CAD 1.1 billion, which is nearly all related to Telesat Lightspeed. To meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures, we have approximately CAD 550 million of cash in short-term investments at the end of June, as well as CAD 2.2 billion available under our funding agreements with the Governments of Canada and Quebec. At the end of the second quarter, the total leverage ratio is calculated under the terms of the amended senior secured credit facilities of 7.51 times. Telesat is in compliance with all the covenants and our credit agreements on indentures. A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning. In respect to capital expenditures, and as previously disclosed, we continue to expect our 2025 capital expenditures to be in the range of CAD 900 million to CAD 1.1 billion, which is nearly all related to Telesat Lightspeed. in respect to capital expenditures and as previously disclosed we continue to expect our 2025 capital expenditures to be in the range of cad 900 million to cad 1.1 billion which is nearly all related to telesat lightspeed To meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures, we have approximately CAD 550 million of cash in short-term investments at the end of June, as well as CAD 2.2 billion available under our funding agreements with the Governments of Canada and Quebec. to meet our expected cash requirements for the next 12 months including interest payments and capital expenditures we have approximately cad 550 million of cash in short-term investments at the end of june as well as cad 2.2 billion available under our funding agreements with the governments of canada and quebec At the end of the second quarter, the total leverage ratio is calculated under the terms of the amended senior secured credit facilities of 7.51 times. at the end of the second quarter the total leverage ratio is calculated under the terms of the amended senior secured credit facilities of 7.51 times Telesat is in compliance with all the covenants and our credit agreements on indentures. telesat is in compliance with all the covenants and our credit agreements on indentures A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning. a reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning Our 6K provides the unaudited interim condensed consolidated financial information in the MD&A. The non-guarantor subsidiaries are essentially the unrestricted subsidiaries with some minor differences. With this, I conclude our prepared remarks for the call. I'm very happy now to turn back to the operator and address any questions you may have. Thank you very much. Our 6K provides the unaudited interim condensed consolidated financial information in the MD&A. our 6k provides the unaudited interim condensed consolidated financial information in the md&a The non-guarantor subsidiaries are essentially the unrestricted subsidiaries with some minor differences. the non-guarantor subsidiaries are essentially the unrestricted subsidiaries with some minor differences With this, I conclude our prepared remarks for the call. with this i conclude our prepared remarks for the call I'm very happy now to turn back to the operator and address any questions you may have. i'm very happy now to turn back to the operator and address any questions you may have Thank you very much. thank you very much

Speaker 8: If, as a reminder, to ask a question, you need to press star then the number one on your telephone keypad. To withdraw your question, press star one again. We will pause for just a moment to compile the Q&A roster. Our first question comes from the line of David McFadden with Cormark Securities. Your line is open. If, as a reminder, to ask a question, you need to press star then the number one on your telephone keypad. if as a reminder to ask a question you need to press star then the number one on your telephone keypad To withdraw your question, press star one again. to withdraw your question press star one again We will pause for just a moment to compile the Q&A roster. we will pause for just a moment to compile the q&a roster Our first question comes from the line of David McFadden with Cormark Securities. our first question comes from the line of david mcfadden with cormark securities Your line is open. your line is open

Speaker 4: Oh, great. Hi guys, a couple of questions. Just first of all, on the LEO backlog, when you reported Q1, you said the backlog was about CAD 1.1 billion, but this time you say it's over a billion. Dan, you said that it's up slightly from when you reported Q1. Is it like slightly above CAD 1.1 billion then, I guess? Oh, great. oh great Hi guys, a couple of questions. hi guys a couple of questions Just first of all, on the LEO backlog, when you reported Q1, you said the backlog was about CAD 1.1 billion, but this time you say it's over a billion. just first of all on the leo backlog when you reported q1 you said the backlog was about cad 1.1 billion but this time you say it's over a billion Dan, you said that it's up slightly from when you reported Q1. dan you said that it's up slightly from when you reported q1 Is it like slightly above CAD 1.1 billion then, I guess? is it like slightly above cad 1.1 billion then i guess

Speaker 7: No, the deal is we report our, and David, by the way, thanks for the questions. We report the backlog in Canadian dollars, but for both GEO and LEO, it's a mix of different currencies. For LEO, it's a mix of U.S. and Canadian, and fundamentally over the quarter, and relative to where the U.S. dollar and the Canadian dollar sat at the end of Q1, the Canadian dollar's gotten a little bit stronger. When we take the U.S. dollar backlog and convert it into Canadian dollars, it wasn't showing up with as many Canadian dollars at the end of Q2 as it did at the end of Q1. That's really what it was. No, the deal is we report our, and David, by the way, thanks for the questions. no the deal is we report our and david by the way thanks for the questions We report the backlog in Canadian dollars, but for both GEO and LEO, it's a mix of different currencies. we report the backlog in canadian dollars but for both geo and leo it's a mix of different currencies For LEO, it's a mix of U.S. and Canadian, and fundamentally over the quarter, and relative to where the U.S. dollar and the Canadian dollar sat at the end of Q1, the Canadian dollar's gotten a little bit stronger. for leo it's a mix of u.s and canadian and fundamentally over the quarter and relative to where the u.s dollar and the canadian dollar sat at the end of q1 the canadian dollar's gotten a little bit stronger When we take the U.S. dollar backlog and convert it into Canadian dollars, it wasn't showing up with as many Canadian dollars at the end of Q2 as it did at the end of Q1. when we take the u.s dollar backlog and convert it into canadian dollars it wasn't showing up with as many canadian dollars at the end of q2 as it did at the end of q1 That's really what it was. that's really what it was We added a little bit of a small incremental LEO contract, which on an apples-to-apples basis would have made Lightspeed backlog a little bit higher at the end of Q2 than it was at the end of Q1. Anyway, that's what was going on there. We added a little bit of a small incremental LEO contract, which on an apples-to-apples basis would have made Lightspeed backlog a little bit higher at the end of Q2 than it was at the end of Q1. we added a little bit of a small incremental leo contract which on an apples-to-apples basis would have made lightspeed backlog a little bit higher at the end of q2 than it was at the end of q1 Anyway, that's what was going on there. anyway that's what was going on there

Speaker 4: Yeah, because you guys announced Arabsat and Vocus after you reported your Q1. Yeah, because you guys announced Arabsat and Vocus after you reported your Q1. yeah because you guys announced arabsat and vocus after you reported your q1

Speaker 7: Vocus, I think Vocus might have been a little something, wasn't massively material. Arabsat, I think we just signed a term sheet or a letter of intent with them, so that has no backlog contribution at this point. Vocus, I think Vocus might have been a little something, wasn't massively material. vocus i think vocus might have been a little something wasn't massively material Arabsat, I think we just signed a term sheet or a letter of intent with them, so that has no backlog contribution at this point. arabsat i think we just signed a term sheet or a letter of intent with them so that has no backlog contribution at this point

Speaker 4: Okay. I think Space Norway as well is a term sheet. Have you concluded anything with them yet? Okay. okay I think Space Norway as well is a term sheet. i think space norway as well is a term sheet Have you concluded anything with them yet? have you concluded anything with them yet

Speaker 7: No, not yet. Okay, same thing. You know, the term, we don't count term sheets as, until we have a final definitive agreement, it doesn't go in the backlog. No, not yet. no not yet Okay, same thing. okay same thing You know, the term, we don't count term sheets as, until we have a final definitive agreement, it doesn't go in the backlog. you know the term we don't count term sheets as until we have a final definitive agreement it doesn't go in the backlog

Speaker 4: All right. On the debt negotiations, restructuring the debt, I believe that you're talking to your debt holders. I was just wondering if you can give us any update there and whether you still think it's possible to include this in 2025. All right. all right On the debt negotiations, restructuring the debt, I believe that you're talking to your debt holders. on the debt negotiations restructuring the debt i believe that you're talking to your debt holders I was just wondering if you can give us any update there and whether you still think it's possible to include this in 2025. i was just wondering if you can give us any update there and whether you still think it's possible to include this in 2025

Speaker 7: I think I would say that we really haven't started to engage with the restricted group debt holders at this point. We will soon is what our expectation is, but we haven't yet. As far as how long it will take to reach an agreement on refinancing, I think it's conceivable that it could get done by the end of this year, but until we engage and get a better sense of it, I'd say hard to tell. I think I would say that we really haven't started to engage with the restricted group debt holders at this point. i think i would say that we really haven't started to engage with the restricted group debt holders at this point We will soon is what our expectation is, but we haven't yet. we will soon is what our expectation is but we haven't yet As far as how long it will take to reach an agreement on refinancing, I think it's conceivable that it could get done by the end of this year, but until we engage and get a better sense of it, I'd say hard to tell. as far as how long it will take to reach an agreement on refinancing i think it's conceivable that it could get done by the end of this year but until we engage and get a better sense of it i'd say hard to tell

Speaker 4: Okay, I'm just wondering why it's taking so long to start engaging with them. Can you provide any information on why it's taking so long? Okay, I'm just wondering why it's taking so long to start engaging with them. okay i'm just wondering why it's taking so long to start engaging with them Can you provide any information on why it's taking so long? can you provide any information on why it's taking so long

Speaker 7: Yeah, there's no great mystery. I'd say that it's a process that we need to go through on our side, working with our advisors, working with our board. It is absolutely a priority for us, but obviously we've got a lot of other things going on at the company as well. It's a combination of all of that. I think that, as I said, I think we'll be in a position to engage in the near term. Yeah, there's no great mystery. yeah there's no great mystery I'd say that it's a process that we need to go through on our side, working with our advisors, working with our board. i'd say that it's a process that we need to go through on our side working with our advisors working with our board It is absolutely a priority for us, but obviously we've got a lot of other things going on at the company as well. it is absolutely a priority for us but obviously we've got a lot of other things going on at the company as well It's a combination of all of that. it's a combination of all of that I think that, as I said, I think we'll be in a position to engage in the near term. i think that as i said i think we'll be in a position to engage in the near term

Speaker 4: Okay. On the GEO business, you referenced a couple of big contracts. You renegotiated those, and that's why the business is declining the way it is. When do you lap that or those two deals, and do you think the decline would ease up? Okay. okay On the GEO business, you referenced a couple of big contracts. on the geo business you referenced a couple of big contracts You renegotiated those, and that's why the business is declining the way it is. you renegotiated those and that's why the business is declining the way it is When do you lap that or those two deals, and do you think the decline would ease up? when do you lap that or those two deals and do you think the decline would ease up

Speaker 7: Yeah, you know, so look, the declines, I mean, I was looking at the numbers earlier, obviously, you know, and we highlight in the earnings release basically two North American DTH customers. One was DISH on the Nimiq 5 renewal. The other one would be Shaw, now Rogers, which is no longer using Anik F2. The other two that we highlighted were a rural broadband program in Indonesia, where some Indonesian domestic satellites have come online and are taking some more of that business. I also think just that whole broadband program was sort of getting refinanced, or there were some questions around its funding. Lastly, on the LEO consulting side, we had been doing some work with NASA, but that is sort of a lumpy contract. Those four things, DISH, Shaw, Indonesia broadband, and NASA account for roughly three quarters of the decrease in revenue. Yeah, you know, so look, the declines, I mean, I was looking at the numbers earlier, obviously, you know, and we highlight in the earnings release basically two North American DTH customers. yeah you know so look the declines i mean i was looking at the numbers earlier obviously you know and we highlight in the earnings release basically two north american dth customers One was DISH on the Nimiq 5 renewal. one was dish on the nimiq 5 renewal The other one would be Shaw, now Rogers, which is no longer using Anik F2. the other one would be shaw now rogers which is no longer using anik f2 The other two that we highlighted were a rural broadband program in Indonesia, where some Indonesian domestic satellites have come online and are taking some more of that business. the other two that we highlighted were a rural broadband program in indonesia where some indonesian domestic satellites have come online and are taking some more of that business I also think just that whole broadband program was sort of getting refinanced, or there were some questions around its funding. i also think just that whole broadband program was sort of getting refinanced or there were some questions around its funding Lastly, on the LEO consulting side, we had been doing some work with NASA, but that is sort of a lumpy contract. lastly on the leo consulting side we had been doing some work with nasa but that is sort of a lumpy contract Those four things, DISH, Shaw, Indonesia broadband, and NASA account for roughly three quarters of the decrease in revenue. those four things dish shaw indonesia broadband and nasa account for roughly three quarters of the decrease in revenue As far as when things kind of flush out, I think we did the DISH renewal. That's been the biggest headwind this year. We did that in October of last year. Come Q4, we'll start to kind of get even with that, not entirely. I'd say the other thing that, and again, not giving guidance for 2026, but I'd say the other North America DTH contract that will provide a headwind would be Nimiq 4. Nimiq 4 is with Bell. That satellite has about another year plus of life on it, but it's not our expectation that Bell will renew when that contract comes up in October. They'll consolidate their activities on Nimiq 6. That will be the next contract that's coming up that I think will provide a headwind. In any event, we'll give guidance for 2026. As far as when things kind of flush out, I think we did the DISH renewal. as far as when things kind of flush out i think we did the dish renewal That's been the biggest headwind this year. that's been the biggest headwind this year We did that in October of last year. we did that in october of last year Come Q4, we'll start to kind of get even with that, not entirely. come q4 we'll start to kind of get even with that not entirely I'd say the other thing that, and again, not giving guidance for 2026, but I'd say the other North America DTH contract that will provide a headwind would be Nimiq 4. i'd say the other thing that and again not giving guidance for 2026 but i'd say the other north america dth contract that will provide a headwind would be nimiq 4 Nimiq 4 is with Bell. nimiq 4 is with bell That satellite has about another year plus of life on it, but it's not our expectation that Bell will renew when that contract comes up in October. that satellite has about another year plus of life on it but it's not our expectation that bell will renew when that contract comes up in october They'll consolidate their activities on Nimiq 6. they'll consolidate their activities on nimiq 6 That will be the next contract that's coming up that I think will provide a headwind. that will be the next contract that's coming up that i think will provide a headwind In any event, we'll give guidance for 2026. in any event we'll give guidance for 2026 I'd say that, yeah, some of the big headwinds on the North America DTH side, with the exception of that Nimiq 4 contract, will have flushed their way through, and then we'll go from there. I'd say that, yeah, some of the big headwinds on the North America DTH side, with the exception of that Nimiq 4 contract, will have flushed their way through, and then we'll go from there. i'd say that yeah some of the big headwinds on the north america dth side with the exception of that nimiq 4 contract will have flushed their way through and then we'll go from there

Speaker 4: Okay. Lastly, on the Q1 call, you seem pretty optimistic on the interest or demand for Lightspeed, just given what's happening geopolitically or just what's happening in the market. Do you still have the same level of optimism? Okay. okay Lastly, on the Q1 call, you seem pretty optimistic on the interest or demand for Lightspeed, just given what's happening geopolitically or just what's happening in the market. lastly on the q1 call you seem pretty optimistic on the interest or demand for lightspeed just given what's happening geopolitically or just what's happening in the market Do you still have the same level of optimism? do you still have the same level of optimism

Speaker 7: Yeah, 100%. I noted in my remarks that the pipeline for Lightspeed is robust. I noted that that's particularly the case for Aero and for government. Obviously, we did the Viasat deal. It was technically in Q2, although we announced it when we did our Q1 numbers, and we see more opportunities there. Viasat is, I'd say, principally about commercial Aero connectivity, although I believe they'll leverage Lightspeed for some of their other verticals as well. We see more opportunities out there on the commercial Aero broadband front and then government. I've said before, it's always a little bit harder to handicap exactly when these government opportunities will land. We see very meaningful opportunities out there for government, including here in Canada. Canada, like the rest of the U.S. allies, is looking to spend more money on defense in part to meet NATO contribution commitments. Yeah, 100%. yeah 100% I noted in my remarks that the pipeline for Lightspeed is robust. i noted in my remarks that the pipeline for lightspeed is robust I noted that that's particularly the case for Aero and for government. i noted that that's particularly the case for aero and for government Obviously, we did the Viasat deal. obviously we did the viasat deal It was technically in Q2, although we announced it when we did our Q1 numbers, and we see more opportunities there. it was technically in q2 although we announced it when we did our q1 numbers and we see more opportunities there Viasat is, I'd say, principally about commercial Aero connectivity, although I believe they'll leverage Lightspeed for some of their other verticals as well. viasat is i'd say principally about commercial aero connectivity although i believe they'll leverage lightspeed for some of their other verticals as well We see more opportunities out there on the commercial Aero broadband front and then government. we see more opportunities out there on the commercial aero broadband front and then government I've said before, it's always a little bit harder to handicap exactly when these government opportunities will land. i've said before it's always a little bit harder to handicap exactly when these government opportunities will land We see very meaningful opportunities out there for government, including here in Canada. we see very meaningful opportunities out there for government including here in canada Canada, like the rest of the U.S. allies, is looking to spend more money on defense in part to meet NATO contribution commitments. canada like the rest of the u.s allies is looking to spend more money on defense in part to meet nato contribution commitments I think Telesat Lightspeed is very well-positioned to meet the government's requirements in terms of northern sovereignty, NORAD modernization, making capabilities available to their allies. Yes, I think Telesat has a really meaningful opportunity there, but we've got work to do and nothing's done until it's done. Yeah, we remain very bullish on our commercial prospects. I think Telesat Lightspeed is very well-positioned to meet the government's requirements in terms of northern sovereignty, NORAD modernization, making capabilities available to their allies. i think telesat lightspeed is very well-positioned to meet the government's requirements in terms of northern sovereignty norad modernization making capabilities available to their allies Yes, I think Telesat has a really meaningful opportunity there, but we've got work to do and nothing's done until it's done. yes i think telesat has a really meaningful opportunity there but we've got work to do and nothing's done until it's done Yeah, we remain very bullish on our commercial prospects. yeah we remain very bullish on our commercial prospects

Speaker 4: Okay. All right. Thank you. Okay. okay All right. all right Thank you. thank you

Speaker 8: Next question comes from the line of Caleb Henry with Quilty Space. Your line is open. Next question comes from the line of Caleb Henry with Quilty Space. next question comes from the line of caleb henry with quilty space Your line is open. your line is open

Speaker 2: Hi, good morning everyone. A couple of questions. First is just on the OpEx for Lightspeed. Can you provide some visibility into how that's expected to trend throughout 2026 as the constellation moves closer to service entry? Hi, good morning everyone. hi good morning everyone A couple of questions. a couple of questions First is just on the OpEx for Lightspeed. first is just on the opex for lightspeed Can you provide some visibility into how that's expected to trend throughout 2026 as the constellation moves closer to service entry? can you provide some visibility into how that's expected to trend throughout 2026 as the constellation moves closer to service entry

Speaker 7: In 2026. Hey Caleb, thanks for the question. Lightspeed expenses are ramping, particularly driven by headcount. I'd say we're a little bit slower off the mark for the first half of the year. We expect to, we've hired a lot of people, but we're expecting to hire even more people. We believe we'll catch up from a headcount perspective toward the back end of the year. Yes, that will continue to ramp into 2026. Again, we're not giving guidance on 2026 numbers, but our technical staff will continue to grow. We'll be starting to scale our commercial team in a more meaningful way starting in 2026. So much of the headcount growth that we've had has been mostly around technical staff to support the build-out of satellites, gateways, writing software, modems, user terminals, and the like. In 2026. in 2026 Hey Caleb, thanks for the question. hey caleb thanks for the question Lightspeed expenses are ramping, particularly driven by headcount. lightspeed expenses are ramping particularly driven by headcount I'd say we're a little bit slower off the mark for the first half of the year. i'd say we're a little bit slower off the mark for the first half of the year We expect to, we've hired a lot of people, but we're expecting to hire even more people. we expect to we've hired a lot of people but we're expecting to hire even more people We believe we'll catch up from a headcount perspective toward the back end of the year. we believe we'll catch up from a headcount perspective toward the back end of the year Yes, that will continue to ramp into 2026. yes that will continue to ramp into 2026 Again, we're not giving guidance on 2026 numbers, but our technical staff will continue to grow. again we're not giving guidance on 2026 numbers but our technical staff will continue to grow We'll be starting to scale our commercial team in a more meaningful way starting in 2026. we'll be starting to scale our commercial team in a more meaningful way starting in 2026 So much of the headcount growth that we've had has been mostly around technical staff to support the build-out of satellites, gateways, writing software, modems, user terminals, and the like. so much of the headcount growth that we've had has been mostly around technical staff to support the build-out of satellites gateways writing software modems user terminals and the like As we get closer to in-service, we've got to scale the commercial organization as well. We've been doing that, but that'll accelerate in the next year. Again, we'll provide guidance on that as we get closer to it. As we get closer to in-service, we've got to scale the commercial organization as well. as we get closer to in-service we've got to scale the commercial organization as well We've been doing that, but that'll accelerate in the next year. we've been doing that but that'll accelerate in the next year Again, we'll provide guidance on that as we get closer to it. again we'll provide guidance on that as we get closer to it

Speaker 2: All right, thanks. I know we talked last call a little about the state of user terminals and gateways and things, but can you provide a little more clarity on when you think the user terminals will be available? I think we talked about ThinKom and Quest and some others. Are you expecting those to be ready the day Lightspeed turns on, or are they ready now? How is that pacing alongside the constellation's development? All right, thanks. all right thanks I know we talked last call a little about the state of user terminals and gateways and things, but can you provide a little more clarity on when you think the user terminals will be available? i know we talked last call a little about the state of user terminals and gateways and things but can you provide a little more clarity on when you think the user terminals will be available I think we talked about ThinKom and Quest and some others. i think we talked about thinkom and quest and some others Are you expecting those to be ready the day Lightspeed turns on, or are they ready now? are you expecting those to be ready the day lightspeed turns on or are they ready now How is that pacing alongside the constellation's development? how is that pacing alongside the constellation's development

Speaker 7: Yeah, to talk about user terminals, you kind of need to go vertical by vertical. You have to, you know, there are flat panel antennas, there are dual parabolic for certain applications. For Aero, there are the more mechanically steered antennas that exist today. The mechanically steered antennas are obviously here now, and Lightspeed is sort of backwards compatible with those provided that they're operating in Ka-band and recognizing also that they'll require a Lightspeed modem. Those are available today. On the flat panel side for Aero, there are flat panel Aero antennas today. We are, I'm trying to remember what we've announced and what we haven't announced. Yeah, to talk about user terminals, you kind of need to go vertical by vertical. yeah to talk about user terminals you kind of need to go vertical by vertical You have to, you know, there are flat panel antennas, there are dual parabolic for certain applications. you have to you know there are flat panel antennas there are dual parabolic for certain applications For Aero, there are the more mechanically steered antennas that exist today. for aero there are the more mechanically steered antennas that exist today The mechanically steered antennas are obviously here now, and Lightspeed is sort of backwards compatible with those provided that they're operating in Ka- band and recognizing also that they'll require a Lightspeed modem. the mechanically steered antennas are obviously here now and lightspeed is sort of backwards compatible with those provided that they're operating in ka- band and recognizing also that they'll require a lightspeed modem Those are available today. those are available today On the flat panel side for Aero, there are flat panel Aero antennas today. on the flat panel side for aero there are flat panel aero antennas today We are, I'm trying to remember what we've announced and what we haven't announced. we are i'm trying to remember what we've announced and what we haven't announced

Speaker 3: The development with CAST. The development with CAST. the development with cast

Speaker 7: Thank you, Michelle. We've announced, on flat panel antennas for the Aero segment, development effort with CAST, which has a promising antenna. There are others as well who are developing flat panel antennas. Yes, we expect those will be, frankly, all of our user terminals, whether they're flat panel antennas or in some cases for, I don't know, kind of community aggregator applications, that all of our user terminals, including the antennas, obviously will be available in advance of our entry into commercial service. We've announced some of that already. We announced development with Intellian. We've just now referenced the development with CAST. I'd say stay tuned. We'll make some other announcements too on that front. It feels good. We always expected there would be good developments on the user terminal front, particularly with respect to flat panel antennas. That is very much materializing. Thank you, Michelle. thank you michelle We've announced, on flat panel antennas for the Aero segment, development effort with CAST, which has a promising antenna. we've announced on flat panel antennas for the aero segment development effort with cast which has a promising antenna There are others as well who are developing flat panel antennas. there are others as well who are developing flat panel antennas Yes, we expect those will be, frankly, all of our user terminals, whether they're flat panel antennas or in some cases for, I don't know, kind of community aggregator applications, that all of our user terminals, including the antennas, obviously will be available in advance of our entry into commercial service. yes we expect those will be frankly all of our user terminals whether they're flat panel antennas or in some cases for i don't know kind of community aggregator applications that all of our user terminals including the antennas obviously will be available in advance of our entry into commercial service We've announced some of that already. we've announced some of that already We announced development with Intellian. we announced development with intellian We've just now referenced the development with CAST. we've just now referenced the development with cast I'd say stay tuned. i'd say stay tuned We'll make some other announcements too on that front. we'll make some other announcements too on that front It feels good. it feels good We always expected there would be good developments on the user terminal front, particularly with respect to flat panel antennas. we always expected there would be good developments on the user terminal front particularly with respect to flat panel antennas That is very much materializing. that is very much materializing

Speaker 2: Okay, thanks. Last question, just sort of in an obligatory, Golden Dome question. I know there's been some discussion about Canada being involved. Is there any opportunity for Telesat Lightspeed to be involved in that, or is that kind of too, too far out or too speculative? Okay, thanks. okay thanks Last question, just sort of in an obligatory, Golden Dome question. last question just sort of in an obligatory golden dome question I know there's been some discussion about Canada being involved. i know there's been some discussion about canada being involved Is there any opportunity for Telesat Lightspeed to be involved in that, or is that kind of too, too far out or too speculative? is there any opportunity for telesat lightspeed to be involved in that or is that kind of too too far out or too speculative

Speaker 7: You know, it's probably all of that. I think it's fair to say that Golden Dome is something that's still being defined. It looks like it will be a network of networks and that space-based architectures at various orbits will form an important part of Golden Dome. Whether Canada participates or not, I think is still an open question. From what I just read, the U.S. is receptive to Canada participating. I'd say that's still an open question. I believe that Lightspeed, given its capabilities, given the orbit that we're flying at up at around 1,300 kilometers, yes, I think that Lightspeed could make valuable contributions to Golden Dome. That's something that we're watching. We're certainly making sure that decision makers are aware of the capabilities of Lightspeed. I think there's a reason we're investing billions of dollars in LEO. You know, it's probably all of that. you know it's probably all of that I think it's fair to say that Golden Dome is something that's still being defined. i think it's fair to say that golden dome is something that's still being defined It looks like it will be a network of networks and that space-based architectures at various orbits will form an important part of Golden Dome. it looks like it will be a network of networks and that space-based architectures at various orbits will form an important part of golden dome Whether Canada participates or not, I think is still an open question. whether canada participates or not i think is still an open question From what I just read, the U.S. is receptive to Canada participating. from what i just read the u.s is receptive to canada participating I'd say that's still an open question. i'd say that's still an open question I believe that Lightspeed, given its capabilities, given the orbit that we're flying at up at around 1,300 kilometers, yes, I think that Lightspeed could make valuable contributions to Golden Dome. i believe that lightspeed given its capabilities given the orbit that we're flying at up at around 1,300 kilometers yes i think that lightspeed could make valuable contributions to golden dome That's something that we're watching. that's something that we're watching We're certainly making sure that decision makers are aware of the capabilities of Lightspeed. we're certainly making sure that decision makers are aware of the capabilities of lightspeed I think there's a reason we're investing billions of dollars in LEO. i think there's a reason we're investing billions of dollars in leo We're absolutely convinced that the world and our industry is moving to LEO in all of these different verticals that we're talking about: broadband connectivity, broadband to planes, to ships, to rural communities, to moving vehicles. For government users, it's just that for us, the overall trends are pointing to LEO. LEO's hard, and there aren't that many of them. Particularly when you talk about architectures like Golden Dome, they need to be multiple networks to ensure resiliency. We're very bullish about the positioning that Lightspeed will have. Thanks for the question. We're absolutely convinced that the world and our industry is moving to LEO in all of these different verticals that we're talking about: broadband connectivity, broadband to planes, to ships, to rural communities, to moving vehicles. we're absolutely convinced that the world and our industry is moving to leo in all of these different verticals that we're talking about broadband connectivity broadband to planes to ships to rural communities to moving vehicles For government users, it's just that for us, the overall trends are pointing to LEO. for government users it's just that for us the overall trends are pointing to leo LEO's hard, and there aren't that many of them. leo's hard and there aren't that many of them Particularly when you talk about architectures like Golden Dome, they need to be multiple networks to ensure resiliency. particularly when you talk about architectures like golden dome they need to be multiple networks to ensure resiliency We're very bullish about the positioning that Lightspeed will have. we're very bullish about the positioning that lightspeed will have Thanks for the question. thanks for the question

Speaker 4: Thank you. Thank you. thank you

Speaker 8: Next question comes from the line of Edison Yu with Deutsche Bank. Your line is open. Next question comes from the line of Edison Yu with Deutsche Bank. next question comes from the line of edison yu with deutsche bank Your line is open. your line is open

Speaker 6: Hey, good morning everyone. Thanks for taking our questions. One, start off on Lightspeed. You highlighted Aero and government. Could you shed some light on the discussions around pricing and usage dynamics going on? Obviously, you had put out some forecasts in the past about the kind of revenue you're going to generate. I assume there was some pricing embedded in that. Are those kind of discussions implying pricing is where you think it is? Is it better or worse? Also, in terms of the usage patterns, is it, you know, fixed versus variable? Just curious if you could shed more light on those elements. Hey, good morning everyone. hey good morning everyone Thanks for taking our questions. thanks for taking our questions One, start off on Lightspeed. one start off on lightspeed You highlighted Aero and government. you highlighted aero and government Could you shed some light on the discussions around pricing and usage dynamics going on? could you shed some light on the discussions around pricing and usage dynamics going on Obviously, you had put out some forecasts in the past about the kind of revenue you're going to generate. obviously you had put out some forecasts in the past about the kind of revenue you're going to generate I assume there was some pricing embedded in that. i assume there was some pricing embedded in that Are those kind of discussions implying pricing is where you think it is? are those kind of discussions implying pricing is where you think it is Is it better or worse? is it better or worse Also, in terms of the usage patterns, is it, you know, fixed versus variable? also in terms of the usage patterns is it you know fixed versus variable Just curious if you could shed more light on those elements. just curious if you could shed more light on those elements

Speaker 7: Yeah, I mean, I'll tell you what we see right now. For sure, we've got a model for Lightspeed. It goes vertical by vertical. We've got pricing assumed on a basically per megabit basis in every vertical. It depends on what user terminal one uses as well. Obviously, the bigger the antenna, the more efficiency you get on the link. If someone's using a big antenna, tend to give them a lower rate per megabit. If they have a little antenna, it means there are more inefficiencies in the link and you try. Just to give you a sense of how that model's built up. For the deals that we've closed to date, I'd say probably on balance, the pricing that we're seeing in the market and deals that we've closed is consistent with or higher than our price. Yeah, I mean, I'll tell you what we see right now. yeah i mean i'll tell you what we see right now For sure, we've got a model for Lightspeed. for sure we've got a model for lightspeed It goes vertical by vertical. it goes vertical by vertical We've got pricing assumed on a basically per megabit basis in every vertical. we've got pricing assumed on a basically per megabit basis in every vertical It depends on what user terminal one uses as well. it depends on what user terminal one uses as well Obviously, the bigger the antenna, the more efficiency you get on the link. obviously the bigger the antenna the more efficiency you get on the link If someone's using a big antenna, tend to give them a lower rate per megabit. if someone's using a big antenna tend to give them a lower rate per megabit If they have a little antenna, it means there are more inefficiencies in the link and you try. if they have a little antenna it means there are more inefficiencies in the link and you try Just to give you a sense of how that model's built up. just to give you a sense of how that model's built up For the deals that we've closed to date, I'd say probably on balance, the pricing that we're seeing in the market and deals that we've closed is consistent with or higher than our price. for the deals that we've closed to date i'd say probably on balance the pricing that we're seeing in the market and deals that we've closed is consistent with or higher than our price I'd say we've been not pessimistic on our pricing, but we built a model that we think we can execute on. We envisioned a world where pricing would be lower than where it is today and would come down over time. I'd love to be proven wrong on that, but that's what we've assumed. The pricing that has been in the contracts that we've closed on has been either consistent with or north of what's in our model. I'd say that's true of the conversations that we're having in terms of opportunities in the pipeline. I'd say we've been not pessimistic on our pricing, but we built a model that we think we can execute on. i'd say we've been not pessimistic on our pricing but we built a model that we think we can execute on We envisioned a world where pricing would be lower than where it is today and would come down over time. we envisioned a world where pricing would be lower than where it is today and would come down over time I'd love to be proven wrong on that, but that's what we've assumed. i'd love to be proven wrong on that but that's what we've assumed The pricing that has been in the contracts that we've closed on has been either consistent with or north of what's in our model. the pricing that has been in the contracts that we've closed on has been either consistent with or north of what's in our model I'd say that's true of the conversations that we're having in terms of opportunities in the pipeline. i'd say that's true of the conversations that we're having in terms of opportunities in the pipeline As I said before, where we're seeing the most opportunities at this stage of Lightspeed, and by that I mean we're not going to be in service until the end of 2027, where we're seeing the most opportunities right now, the most concrete opportunities are in Aero because there, you need a longer horizon for our partners to equip those airlines to be ready for Lightspeed. The planning cycles in Aero tend to be among the longest, shorter in maritime, shorter in terrestrial backhaul. Then there's government, and the governments tend to plan well in advance. Those are the two verticals right now I'd say we're getting the most traction. As far as volumes, I've been pleasantly surprised. As I said before, where we're seeing the most opportunities at this stage of Lightspeed, and by that I mean we're not going to be in service until the end of 2027, where we're seeing the most opportunities right now, the most concrete opportunities are in Aero because there, you need a longer horizon for our partners to equip those airlines to be ready for Lightspeed. as i said before where we're seeing the most opportunities at this stage of lightspeed and by that i mean we're not going to be in service until the end of 2027 where we're seeing the most opportunities right now the most concrete opportunities are in aero because there you need a longer horizon for our partners to equip those airlines to be ready for lightspeed The planning cycles in Aero tend to be among the longest, shorter in maritime, shorter in terrestrial backhaul. the planning cycles in aero tend to be among the longest shorter in maritime shorter in terrestrial backhaul Then there's government, and the governments tend to plan well in advance. then there's government and the governments tend to plan well in advance Those are the two verticals right now I'd say we're getting the most traction. those are the two verticals right now i'd say we're getting the most traction As far as volumes, I've been pleasantly surprised. as far as volumes i've been pleasantly surprised I'm glad to see that we're getting as much real traction as we're getting, even with Lightspeed still not coming online until basically another, what is it, a year and a half or something like that? I'm glad to see that we're getting as much real traction as we're getting, even with Lightspeed still not coming online until basically another, what is it, a year and a half or something like that? i'm glad to see that we're getting as much real traction as we're getting even with lightspeed still not coming online until basically another what is it a year and a half or something like that

Speaker 3: Or more. Or more. or more

Speaker 7: Two and a half. Two and a half. two and a half

Speaker 6: Understood. I appreciate the detailed caller. Wanted to ask about maritime. I know you said, you just said that, you know, it's kind of shorter cycle time. Is that a market you think you will pursue, I guess, fairly aggressively? I would assume the pricing dynamics there are probably less favorable than Aero government. Perhaps to your point, is it just cycle time or do you think that it's more of a pricing or pricing competitive there? Understood. understood I appreciate the detailed caller. i appreciate the detailed caller Wanted to ask about maritime. wanted to ask about maritime I know you said, you just said that, you know, it's kind of shorter cycle time. i know you said you just said that you know it's kind of shorter cycle time Is that a market you think you will pursue, I guess, fairly aggressively? is that a market you think you will pursue i guess fairly aggressively I would assume the pricing dynamics there are probably less favorable than Aero government. i would assume the pricing dynamics there are probably less favorable than aero government Perhaps to your point, is it just cycle time or do you think that it's more of a pricing or pricing competitive there? perhaps to your point is it just cycle time or do you think that it's more of a pricing or pricing competitive there

Speaker 7: No, we will absolutely be pursuing maritime. Today, you know, maritime probably represents, I don't know, a little bit more than 5% of our total revenues, and that's down. That's down a lot. It's been cannibalized by Starlink because the maritime users, from what the market is telling us, they like the LEO value proposition. They like the low latency. They like the high throughput. They like the smaller antennas. Maritime is a great market for LEO and we will absolutely be addressing that market with Lightspeed. Cruise, maritime transport, high-end yachts, the energy kind of offshore market, all of that we think is very promising. No, we will absolutely be pursuing maritime. no we will absolutely be pursuing maritime Today, you know, maritime probably represents, I don't know, a little bit more than 5% of our total revenues, and that's down. today you know maritime probably represents i don't know a little bit more than 5% of our total revenues and that's down That's down a lot. that's down a lot It's been cannibalized by Starlink because the maritime users, from what the market is telling us, they like the LEO value proposition. it's been cannibalized by starlink because the maritime users from what the market is telling us they like the leo value proposition They like the low latency. they like the low latency They like the high throughput. they like the high throughput They like the smaller antennas. they like the smaller antennas Maritime is a great market for LEO and we will absolutely be addressing that market with Lightspeed. maritime is a great market for leo and we will absolutely be addressing that market with lightspeed Cruise, maritime transport, high-end yachts, the energy kind of offshore market, all of that we think is very promising. cruise maritime transport high-end yachts the energy kind of offshore market all of that we think is very promising

Speaker 6: Understood. I actually wanted to shift to the GEO side. I realize you're not providing kind of exact numbers going forward, but can we assume that GEO should at least be, from a kind of standalone basis, cash flow accretive or cash flow positive in the next two years? If so, when do you think that kind of becomes neutral or drag? You know, I understand it could be quite a few years away, but how do you think about, I guess, the cash generation ability of GEO as it sort of trickles down? Understood. understood I actually wanted to shift to the GEO side. i actually wanted to shift to the geo side I realize you're not providing kind of exact numbers going forward, but can we assume that GEO should at least be, from a kind of standalone basis, cash flow accretive or cash flow positive in the next two years? i realize you're not providing kind of exact numbers going forward but can we assume that geo should at least be from a kind of standalone basis cash flow accretive or cash flow positive in the next two years If so, when do you think that kind of becomes neutral or drag? if so when do you think that kind of becomes neutral or drag You know, I understand it could be quite a few years away, but how do you think about, I guess, the cash generation ability of GEO as it sort of trickles down? you know i understand it could be quite a few years away but how do you think about i guess the cash generation ability of geo as it sort of trickles down

Speaker 7: I am no finance guy, but it's pretty straightforward, I think, on GEO. The reality is it's generating a lot of cash right now, and because we haven't been building new GEO satellites, it means there's not a lot of CapEx going out. There's very little maintenance CapEx in terms of GEO. I think we do a really good job managing the operating expenses around GEO. We report our segments separately, and you can see that GEO still has a very favorable EBITDA margin. We run that business very efficiently, and we still have almost CAD 1 billion of backlog left on GEO. Every quarter, we've got new stuff that comes up for renewal. Net net, we've been running backlog down, but we replenish some of it along the way with some renewals. In terms of the foreseeable future, it's free cash flow positive. I am no finance guy, but it's pretty straightforward, I think, on GEO. i am no finance guy but it's pretty straightforward i think on geo The reality is it's generating a lot of cash right now, and because we haven't been building new GEO satellites, it means there's not a lot of CapEx going out. the reality is it's generating a lot of cash right now and because we haven't been building new geo satellites it means there's not a lot of capex going out There's very little maintenance CapEx in terms of GEO. there's very little maintenance capex in terms of geo I think we do a really good job managing the operating expenses around GEO. i think we do a really good job managing the operating expenses around geo We report our segments separately, and you can see that GEO still has a very favorable EBITDA margin. we report our segments separately and you can see that geo still has a very favorable ebitda margin We run that business very efficiently, and we still have almost CAD 1 billion of backlog left on GEO. we run that business very efficiently and we still have almost cad 1 billion of backlog left on geo Every quarter, we've got new stuff that comes up for renewal. every quarter we've got new stuff that comes up for renewal Net net, we've been running backlog down, but we replenish some of it along the way with some renewals. net net we've been running backlog down but we replenish some of it along the way with some renewals In terms of the foreseeable future, it's free cash flow positive. in terms of the foreseeable future it's free cash flow positive It's accretive to our cash position, and that would, I think, only change in the next couple of years if we had a new opportunity to invest in GEO. Then we're building a new GEO satellite, so there's cash flows out that would offset the cash flows in. That's what it looks like right now, and we'd love to build a new GEO satellite provided that we feel good about the business case. For the last 10 years, we haven't been able to close a business case on either a new GEO satellite or even a replacement GEO satellite, just given everything that's been going on in the market. We still see some opportunities out there potentially, and we continue to work hard to develop a sound GEO business case. That, I think, is what the outlook looks like. Yeah, absolutely. Dan, yeah, I agree. It's accretive to our cash position, and that would, I think, only change in the next couple of years if we had a new opportunity to invest in GEO. it's accretive to our cash position and that would i think only change in the next couple of years if we had a new opportunity to invest in geo Then we're building a new GEO satellite, so there's cash flows out that would offset the cash flows in. then we're building a new geo satellite so there's cash flows out that would offset the cash flows in That's what it looks like right now, and we'd love to build a new GEO satellite provided that we feel good about the business case. that's what it looks like right now and we'd love to build a new geo satellite provided that we feel good about the business case For the last 10 years, we haven't been able to close a business case on either a new GEO satellite or even a replacement GEO satellite, just given everything that's been going on in the market. for the last 10 years we haven't been able to close a business case on either a new geo satellite or even a replacement geo satellite just given everything that's been going on in the market We still see some opportunities out there potentially, and we continue to work hard to develop a sound GEO business case. we still see some opportunities out there potentially and we continue to work hard to develop a sound geo business case That, I think, is what the outlook looks like. that i think is what the outlook looks like Yeah, absolutely. yeah absolutely Dan, yeah, I agree. dan yeah i agree

Speaker 6: Thank you very much. Thank you very much. thank you very much

Speaker 8: Again, if you would like to ask a question, press on your telephone keypad. Our next question comes from the line of Walt Piecyk with LightShed Partners. Your line is open. Again, if you would like to ask a question, press on your telephone keypad. again if you would like to ask a question press on your telephone keypad Our next question comes from the line of Walt Piecyk with LightShed Partners. our next question comes from the line of walt piecyk with lightshed partners Your line is open. your line is open

Speaker 1: Thanks. Hey Dan, with Kuiper kind of getting a little momentum, at least in launches, just curious if you can update us on, and they seemingly are going after a similar market, just kind of your competitive analysis there and whether they're under consideration for any of the business that you've been attempting to win ahead of your LEO launch. Thanks. thanks Hey Dan, with Kuiper kind of getting a little momentum, at least in launches, just curious if you can update us on, and they seemingly are going after a similar market, just kind of your competitive analysis there and whether they're under consideration for any of the business that you've been attempting to win ahead of your LEO launch. hey dan with kuiper kind of getting a little momentum at least in launches just curious if you can update us on and they seemingly are going after a similar market just kind of your competitive analysis there and whether they're under consideration for any of the business that you've been attempting to win ahead of your leo launch

Speaker 7: Hey Walt. Yeah, so look, we always knew Kuiper was coming. Every once in a while, somebody would question how committed Amazon was to Kuiper. I was always convinced that this was something that they were very, very serious about, and I continue to believe that. I think it will be, like Starlink, a very capable constellation. You're right, they're like Starlink, you know, focused on the same verticals that we're focused on, plus consumer broadband. Again, like Starlink, we're not, as you know, focused on the B2C direct-to-consumer market. Yeah, we see Kuiper out there in the market pitching, you know, themselves in all these different verticals that we're focused on, which is all to say, as far as I'm concerned, nothing's changed. We knew they were coming. Hey Walt. hey walt Yeah, so look, we always knew Kuiper was coming. yeah so look we always knew kuiper was coming Every once in a while, somebody would question how committed Amazon was to Kuiper. every once in a while somebody would question how committed amazon was to kuiper I was always convinced that this was something that they were very, very serious about, and I continue to believe that. i was always convinced that this was something that they were very very serious about and i continue to believe that I think it will be, like Starlink, a very capable constellation. i think it will be like starlink a very capable constellation You're right, they're like Starlink, you know, focused on the same verticals that we're focused on, plus consumer broadband. you're right they're like starlink you know focused on the same verticals that we're focused on plus consumer broadband Again, like Starlink, we're not, as you know, focused on the B2C direct-to-consumer market. again like starlink we're not as you know focused on the b2c direct-to-consumer market Yeah, we see Kuiper out there in the market pitching, you know, themselves in all these different verticals that we're focused on, which is all to say, as far as I'm concerned, nothing's changed. yeah we see kuiper out there in the market pitching you know themselves in all these different verticals that we're focused on which is all to say as far as i'm concerned nothing's changed We knew they were coming. we knew they were coming Maybe on balance, they're coming a little bit later than we had anticipated, but they're, you know, they're starting to launch now. Maybe on balance, they're coming a little bit later than we had anticipated, but they're, you know, they're starting to launch now. maybe on balance they're coming a little bit later than we had anticipated but they're you know they're starting to launch now

Speaker 1: Do you see them in RFP processes, though, or no? Do you see them in RFP processes, though, or no? do you see them in rfp processes though or no

Speaker 7: Yeah, that's a good question. I mean, the folks that kind of do more formal RFPs, it seems like the airlines certainly do that. We tend to support our channel partners in those RFPs. I have a little less visibility there, but I would say I assume they're pitching in the Aero segment. To date, that segment is being successfully won by the incumbent operators, so the Viasat of the world, the Gogo, Panasonic, Hughes has made some inroads there, and, of course, Starlink. I assume that Amazon, I'm sorry, Project Kuiper is out there as well. We see them, there are different government opportunities all around the world. It is as we expected. I think that they'll have a great offering. I think that they'll get a lot of traction in the market. I continue to believe that we will too. It's a big market. Yeah, that's a good question. yeah that's a good question I mean, the folks that kind of do more formal RFPs, it seems like the airlines certainly do that. i mean the folks that kind of do more formal rfps it seems like the airlines certainly do that We tend to support our channel partners in those RFPs. we tend to support our channel partners in those rfps I have a little less visibility there, but I would say I assume they're pitching in the Aero segment. i have a little less visibility there but i would say i assume they're pitching in the aero segment To date, that segment is being successfully won by the incumbent operators, so the Viasat of the world, the Gogo, Panasonic, Hughes has made some inroads there, and, of course, Starlink. to date that segment is being successfully won by the incumbent operators so the viasat of the world the gogo panasonic hughes has made some inroads there and of course starlink I assume that Amazon, I'm sorry, Project Kuiper is out there as well. i assume that amazon i'm sorry project kuiper is out there as well We see them, there are different government opportunities all around the world. we see them there are different government opportunities all around the world It is as we expected. it is as we expected I think that they'll have a great offering. i think that they'll have a great offering I think that they'll get a lot of traction in the market. i think that they'll get a lot of traction in the market I continue to believe that we will too. i continue to believe that we will too It's a big market. it's a big market We've got certain capabilities that are differentiated. So yeah. We've got certain capabilities that are differentiated. we've got certain capabilities that are differentiated So yeah. so yeah

Speaker 1: Is their value proposition enhanced because of their ability to tie it into AWS? Is their value proposition enhanced because of their ability to tie it into AWS? is their value proposition enhanced because of their ability to tie it into aws

Speaker 7: I think, I mean, look, they leverage a large ecosystem, and they will benefit from that. They leverage a large ecosystem in terms of AWS. They have deep capabilities in terms of obviously software development, development of devices. I mean, Amazon's obviously one of the largest companies in the world. They've got Amazon Prime. They'll leverage all of those things, I think, in a pretty effective way. I think, I mean, look, they leverage a large ecosystem, and they will benefit from that. i think i mean look they leverage a large ecosystem and they will benefit from that They leverage a large ecosystem in terms of AWS. they leverage a large ecosystem in terms of aws They have deep capabilities in terms of obviously software development, development of devices. they have deep capabilities in terms of obviously software development development of devices I mean, Amazon's obviously one of the largest companies in the world. i mean amazon's obviously one of the largest companies in the world They've got Amazon Prime. they've got amazon prime They'll leverage all of those things, I think, in a pretty effective way. they'll leverage all of those things i think in a pretty effective way

Speaker 1: Okay. On the technical side, you have this company, AST, that is in the process of sourcing some spectrum from Ligado, something I've asked you about historically on past calls, as you know. I think there's some other S-Band that they identified today. Also, Starlink, I think, has been attempting to acquire additional spectrum from what's now EchoStar through an FCC process. We'll see how that goes, but it seems like there's some momentum there. I'm just curious, and again, I know this is a question I've asked you many times over the years, but I just want to refresh not just because if your peer's doing it, it doesn't necessarily mean you have to do it. Okay. okay On the technical side, you have this company, AST, that is in the process of sourcing some spectrum from Ligado, something I've asked you about historically on past calls, as you know. on the technical side you have this company ast that is in the process of sourcing some spectrum from ligado something i've asked you about historically on past calls as you know I think there's some other S-Band that they identified today. i think there's some other s-band that they identified today Also, Starlink, I think, has been attempting to acquire additional spectrum from what's now EchoStar through an FCC process. also starlink i think has been attempting to acquire additional spectrum from what's now echostar through an fcc process We'll see how that goes, but it seems like there's some momentum there. we'll see how that goes but it seems like there's some momentum there I'm just curious, and again, I know this is a question I've asked you many times over the years, but I just want to refresh not just because if your peer's doing it, it doesn't necessarily mean you have to do it. i'm just curious and again i know this is a question i've asked you many times over the years but i just want to refresh not just because if your peer's doing it it doesn't necessarily mean you have to do it Is there any interest or discussion or kind of where are you in the development process of your birds that you could integrate additional spectrum and why or why is that not important for the future of connectivity when you're seeing some of your peers? Let's put AST aside for a second, but even Starlink, right, looking to add additional spectrum to their constellation. Is there any interest or discussion or kind of where are you in the development process of your birds that you could integrate additional spectrum and why or why is that not important for the future of connectivity when you're seeing some of your peers? is there any interest or discussion or kind of where are you in the development process of your birds that you could integrate additional spectrum and why or why is that not important for the future of connectivity when you're seeing some of your peers Let's put AST aside for a second, but even Starlink, right, looking to add additional spectrum to their constellation. let's put ast aside for a second but even starlink right looking to add additional spectrum to their constellation

Speaker 7: We're still sticking to our knitting in terms of enterprise broadband connectivity. We're well aware of what others are doing in the direct-to-device market, and we wish them well. We don't really have the spectrum for that. Our satellites that we're building today are absolutely optimized. Every amp, every kilo of mass is absolutely devoted to our core mission. We do not have the capability to modify them in a way to add antennas or payloads to do direct-to-device. The satellites would look massively different than they do. We'd lose schedules. That's not something that we're being distracted by. To come back to it, Lightspeed is a significant undertaking from an engineering perspective, a commercial perspective, a regulatory perspective, a CapEx perspective. We've got to stay focused on that, and we are 1,000% focused on that. I think making really good progress. We're still sticking to our knitting in terms of enterprise broadband connectivity. we're still sticking to our knitting in terms of enterprise broadband connectivity We're well aware of what others are doing in the direct-to-device market, and we wish them well. we're well aware of what others are doing in the direct-to-device market and we wish them well We don't really have the spectrum for that. we don't really have the spectrum for that Our satellites that we're building today are absolutely optimized. our satellites that we're building today are absolutely optimized Every amp, every kilo of mass is absolutely devoted to our core mission. every amp every kilo of mass is absolutely devoted to our core mission We do not have the capability to modify them in a way to add antennas or payloads to do direct-to-device. we do not have the capability to modify them in a way to add antennas or payloads to do direct-to-device The satellites would look massively different than they do. the satellites would look massively different than they do We'd lose schedules. we'd lose schedules That's not something that we're being distracted by. that's not something that we're being distracted by To come back to it, Lightspeed is a significant undertaking from an engineering perspective, a commercial perspective, a regulatory perspective, a CapEx perspective. to come back to it lightspeed is a significant undertaking from an engineering perspective a commercial perspective a regulatory perspective a capex perspective We've got to stay focused on that, and we are 1,000% focused on that. we've got to stay focused on that and we are 1,000% focused on that I think making really good progress. i think making really good progress I think the value creation opportunity for Telesat, if we execute well on our Lightspeed plan, is massive. We have to stay focused to capture that. On the spectrum front, the FCC, it sounds like, is going to take another look at the portion of the C-band that they did not claw back and auction for 5G services. We continue to operate on C-band in North America. Maybe there's an opportunity there, but I don't think that's Telesat building a direct-to-device constellation. That's not on our radar. I think the value creation opportunity for Telesat, if we execute well on our Lightspeed plan, is massive. i think the value creation opportunity for telesat if we execute well on our lightspeed plan is massive We have to stay focused to capture that. we have to stay focused to capture that On the spectrum front, the FCC, it sounds like, is going to take another look at the portion of the C-band that they did not claw back and auction for 5G services. on the spectrum front the fcc it sounds like is going to take another look at the portion of the c-band that they did not claw back and auction for 5g services We continue to operate on C-band in North America. we continue to operate on c-band in north america Maybe there's an opportunity there, but I don't think that's Telesat building a direct-to-device constellation. maybe there's an opportunity there but i don't think that's telesat building a direct-to-device constellation That's not on our radar. that's not on our radar

Speaker 4: Got it. Thank you. Got it. got it Thank you. thank you

Speaker 7: Thank you. Thank you. thank you

Speaker 8: Seeing no further questions, that concludes our Q&A session. I'd like to turn the call back over to Dan Goldberg for closing remarks. Seeing no further questions, that concludes our Q&A session. seeing no further questions that concludes our q&a session I'd like to turn the call back over to Dan Goldberg for closing remarks. i'd like to turn the call back over to dan goldberg for closing remarks

Speaker 7: Okay. Operator, thank you, and thank you all for joining us this morning. We look forward to chatting with you again when we release our third quarter numbers. Thank you. Okay. okay Operator, thank you, and thank you all for joining us this morning. operator thank you and thank you all for joining us this morning We look forward to chatting with you again when we release our third quarter numbers. we look forward to chatting with you again when we release our third quarter numbers Thank you. thank you

Speaker 4: Thank you very much. Thank you very much. thank you very much

Speaker 8: Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect. Ladies and gentlemen, that concludes today's call. ladies and gentlemen that concludes today's call Thank you all for joining, and you may now disconnect. thank you all for joining and you may now disconnect