Telesat (TSAT) Q2 2026 Earnings Call Transcript

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DATE

Thursday, Aug. 13, 2026 at 10:30 a.m. ET

CALL PARTICIPANTS

• Vice President, Investor Relations - James Maxwell Ratcliffe
• President and Chief Executive Officer - Daniel S. Goldberg
• Chief Financial Officer - Donald Tremblay

TAKEAWAYS

• Consolidated Revenue -- $79 million, representing a 25% decline year over year driven by lower activity in the GEO segment.
• Net Loss -- $559 million, reflecting a non-cash loss of $475 million from the increased fair value of Telesat Lightspeed warrants.
• Adjusted EBITDA -- $22 million, representing a 62% decrease year over year due to lower revenues and $14 million in debt refinancing expenses.
• ESCAPE Program Contract -- $2.7 billion, representing a 15-year agreement with the Canadian government for Military Ka-band connectivity in the Arctic.
• Lightspeed Backlog -- $5.6 billion, following the addition of the ESCAPE contract and a five-year rural broadband deal with Northwestel.
• Constellation Expansion -- 225 satellites, representing a 44% increase from the prior plan to restore commercial capacity after allocating spectrum for military use.
• Lightspeed Investment Guidance -- $1.3 billion to $1.5 billion for 2026, reflecting an increase from the previous range of $1 billion to $1.2 billion.
• GEO Segment Revenue -- $78 million, a 26% decrease year over year primarily resulting from contract expirations on the Anik F4 satellite.
• GEO Adjusted EBITDA -- $43 million, which includes $14 million in costs related to the company's debt refinancing process.
• C-band Incentive Payments -- US$189 million, expected for the repurposing of 160 megahertz of spectrum for terrestrial wireless use in the U.S.
• New GEO Financing -- US$120 million, obtained through a secured term loan at a non-guarantor subsidiary for general corporate purposes.
• Satellite Utilization -- 60%, a decline of 2 percentage points from the first quarter of 2026 after adjusting for the retirement of two satellites.
• Launch Capacity -- 14 Falcon 9 rockets, currently under contract with SpaceX to deploy the 225-satellite constellation by the end of 2028.
• GEO Backlog -- $900 million, which increased during the quarter following a five-year term extension for a broadcast video contract.
• Interest Expense -- $50 million, down from $54 million in the second quarter of 2025 due to lower interest rates on term loans.
• Capitalized Interest -- $18 million, related to the Telesat Lightspeed program compared to $8 million in the prior year period.
• Lightspeed Financing Availability -- $1.6 billion, remaining under the current financing package to fund development through the start of global service.
• Global Commercial Availability -- First quarter of 2028, which management continues to target for the entry of the Lightspeed network into service.
• MDA Satellite Contract -- 69 additional satellites, which were added to the existing order to complete the fully funded 225-satellite constellation.
• GEO Revenue Guidance -- $300 million to $320 million, which management reiterated for the full 2026 fiscal year.
• Project Contingency -- US$500 million, set aside within the Lightspeed financing to cover potential development cost overruns.
• LEO Cash Position -- Over $200 million, available at the end of the second quarter of 2026 to support program development.

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RISKS

• Goldberg stated, "The decommissioning of these satellites will still be a headwind for the balance of this year and into the future," referring to the retirement of Anik F4 and Telstar 14R.
• Tremblay noted that the net loss was partially driven by the "weakening of Canadian dollar during the quarter impacting the value of our U.S. dollar-denominated debt."
• Goldberg noted the company faces "ongoing revenue pressures in the Geo segment" due to non-renewals in broadcast and fixed broadband activities.

SUMMARY

Telesat Corporation (NASDAQ:TSAT) reported a strategic expansion of its Low Earth Orbit initiatives following the finalization of a major government communications contract. Management stated that the agreement provides a foundation for the accelerated deployment of its global satellite network and serves as a key catalyst for future defense and sovereign opportunities. The company remains focused on maximizing the value of its legacy geostationary fleet to support ongoing operations while navigating upcoming debt maturities. Management indicated that technical and operational progress on the ground segment and launch scheduling remains aligned with the projected timeline for global network availability.

• The expansion to 225 satellites was driven by the diversion of 25% of commercial spectrum to Military Ka-band to meet requirements for the ESCAPE program.
• Management reported that the first 156 satellites and the subsequent 69 satellites will be technically identical and produced on the same assembly line to avoid delivery delays.
• Chief Executive Officer Goldberg stated, "Our focus working with our advisers is to reach consensual outcome with the legacy lenders prior to the maturities coming due."
• The company is developing a ground segment with at least eight landing stations currently under construction or commissioned in Canada, Australia, and France.
• Management noted that the optical intersatellite links on Lightspeed satellites meet U.S. government SDA standards, enabling potential data relay opportunities with other constellations.
• The US$189 million in C-band incentive payments is contingent on clearing spectrum by transition deadlines in 2030 and 2031.

INDUSTRY GLOSSARY

• DTH: Direct-to-home satellite television broadcasting directly to residential customers.
• Ka-band: A portion of the electromagnetic spectrum used for satellite communications, offering high-speed data transmission.
• LEO: Low Earth Orbit, referring to satellites operating at altitudes between 500 to 2,000 kilometers.
• GEO: Geostationary Orbit, referring to satellites that remain in a fixed position relative to a point on Earth.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization, used to measure financial performance.
• ESCAPE: Enhanced Satellite Communications Project - Polar, a Canadian government program for secure Arctic connectivity.
• MDA: A Canadian space technology company manufacturing the Telesat Lightspeed satellites.
• SDA: Space Development Agency, a U.S. government organization that sets standards for satellite interoperability and data relay.
• Military Ka-band: A specific set of high-frequency spectrum reserved for secure government and defense communications.

Full Conference Call Transcript

Operator: Thank you for standing by. James is Jordan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Telesat Second Quarter 26 Financial Results Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask questions during this time, simply press star followed by 1 on your telephone keypad. If you would like to withdraw your question, press 1 again. Thank you. I would now like to turn the call over to James Maxwell Ratcliffe. Vice president, investor relations. Please go ahead.

James Maxwell Ratcliffe: Thank you, Jordan. Good morning, everyone, and thank you for joining us today. Earlier this morning, we filed our quarterly report for the period ending 06/30/2026, on Form 6-K with the SEC and on SEDAR plus. Our remarks today may contain forward looking statements. There are risks that Telesat's actual results may differ materially from the results contemplated by the forward looking statements as 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 would now like to turn the call over to Daniel S.

Goldberg Telesat's President and Chief Executive Officer.

Daniel S. Goldberg: Okay. Thanks, James, and good morning, everyone. Thanks for joining us. I will start with a few words about the business, and then I will hand the call over to Donald to speak to the numbers in more detail, and we will then open the call up to questions. Just last week, we announced we signed the first contract in the escape program We are very pleased to have secured that key strategic opportunity to provide such a critical capability to the Canadian Armed Forces. To support the range of important missions and interests that they have and that Canada has in the Arctic.

With that contract announced, and an expanded Lightspeed constellation fully funded for an accelerated rollout, we are very well positioned to execute on the wide range of additional opportunities for Lightspeed that we are now engaged on. Including in the defense and government segments. Allowing us to build on our already substantial $5.6 billion Telesat Lightspeed contractual backlog. Our strong confidence in our future prospects caused us to raise our publicly available revenue and EBITDA forecast for Lightspeed, which I hope you all saw last week. In addition to the strong commercial traction we are getting, we have also been making excellent progress on the technical and operations fronts for LightSpeed.

On the constellation development side of things, we signed a firm contract with MDA for 69 additional satellites bringing the fully funded and committed constellation size to 225 satellites. We have secured almost all the launch capacity we need and expect to sign an agreement for the final Falcon 9 rocket required to complete the deployment of the 225 satellite constellation in the near future. And we continue to expect global commercial availability in the first quarter of 28. In light of the expansion of the constellation, you may have noticed in today's earnings release that we updated our 2026 Lightspeed total investment guidance for 2026. Which includes both OpEx and CapEx associated with delivering the global network.

Our prior guidance was CAD 1 billion to CAD 1.2 billion of investment this year, which we have now brought up to CAD1.3 billion to CAD1.5 billion a $300 million increase to the bottom and top end of the range. In our GEO segment, first quarter results came in largely as we had expected with most of the year over year decline coming from non renewals and lower revenue renewals in our broadcast activities and to a lesser extent in reductions in services for fixed broadband customers. That was partially offset by new contracts for broadband services or commercial airline broadband connectivity. As you may have noticed, our GEO backlog increased during the quarter.

Due primarily to a meaningful term extension of 1 of our broadcast video contracts. Evidence of our continued efforts to maximize the value of our existing GEO satellites, lock in long term commitments where we can, to improve cash flow visibility in the legacy business, all while retaining careful cost controls to mitigate the impact of ongoing revenue pressures in the Geo segment. During the quarter, 2 of our GEO satellites, Anik F4 and Telstar 14R, reached the end of their useful lives. And were retired from service.

While we have been able to transfer nearly half the traffic from these satellites on the certain of our remaining GEO satellites, The decommissioning of these satellites will still be a headwind for the balance of this year and into the future. We had anticipated this impact. We knew that these satellites were going to be retired this year. When we provided our Geo segment guidance for 2026, and we are reiterating that revenue and EBITDA guidance today. Staying with our Geo segment, we were pleased to see late last month, the FCC's report and order to repurpose a 160-megahertz of C-band satellite spectrum for terrestrial wireless use.

Under the terms of the report and order, Telesat is due to receive US$189 million in incentive payments for our role in freeing up that valuable spectrum We are actively working to develop a plan to ensure that spectrum is cleared prior to the transition deadlines in 2030 and 2031. We successfully cleared C band spectrum in the prior FCC C band reallocation proceeding and we are confident we will be successful this time as well. Lastly, for Telesat Geo, we have entered into a new term loan agreement with a third party lender for US$120 million to be used for general corporate purposes. These new funds will provide Telesat with greater financial resources to support our legacy business.

We remain heavily focused on the upcoming Telesat GEO debt maturities and achieving a fair and balanced consensual outcome for all of our stakeholders. So with that, I will hand over to Donald, who will speak to the numbers in more detail. And then we will open the call up to questions.

Donald Tremblay: Thank you, Dan, and good morning, everyone. My prepared remarks today will focus on highlights from this morning's press release and filing. In the second quarter of 26, we reported consolidated revenue of $79 million adjusted EBITDA of $22 million and net loss of $559 million Consolidated net loss for the quarter was impacted by an increase of $475 million in the fair value of Telesat Lightspeed warrants, and the weakening of Canadian dollar during the quarter impacting the value of our U.S. dollar-denominated debt. The warrants are now valued at more than $1.3 billion reflecting the expansion of the constellation to 225 satellites and our ability to accelerate the execution of our plan.

Interest expense for the quarter totaled $50 million down from $54 million in the second quarter of 25, due to lower interest rate on our term loan. Interest relating to the Telesat Lightspeed totaling $18 million during the second quarter of 26. Was capitalized to the project compared to $8 million for the same period last year, as the amount outstanding on the Telesat Lightspeed financing has increased to $974 million at the end of the quarter, including capitalized interest of $54 million Our GEO segment results were in line with our expectations during Q2. We generated $78 million in revenue, down 26% or $28 million compared to the same period last year.

For the year, revenue of our GEO business segment was $184 million, also down 26% from last year. The majority of the revenue decline during the quarter and for the year was in our broadcast segment, driven by the expiration of contract for service on our Anik F4 satellite in 2025, and lower capacity and rate as part of the renewal of a contract on Anik F5. In our enterprise segment, the decline was primarily driven by lower revenue from our Xplore contract renewed in October 2025. These decline were partially offset by new contract added in 2025 in our aviation vertical by our global commercial team.

The utilization of our satellites was 60% at the end of Q2, I will note that this utilization figure benefit from the retirement of our Telstar 14R and Anik F4 satellite during the quarter. If we adjust for these retirements, Utilization declined about 2 percentage points from the end of Q1. The backlog of our GEO segment rose to $900 million at the end of June, due in large part to the extension of 1 of our broadcast service contract for 5 years during the quarter. Adjusted EBITDA for our GEO segment was $43 million for the second quarter, down $37 million compared to last year. Driven by lower revenue and higher expense related to our debt refinancing process.

Our second quarter 26 results include approximately $14 million in costs related to our debt refinancing up approximately $7 million compared to the same period last year. Adjusting for these expense, our GEO adjusted EBITDA would have been $57 million during the period, down 30% from last year. For the year, adjusted EBITDA totaled $119 million after excluding expense relating to our refinancing process. As a result of this performance, for the first half of 26, we are reiterating our GEO business segment guidance for the year of revenue of $300 million to $320 million and adjusted EBITDA of $210 million to $230 million excluding debt refinancing and related litigation expenditure.

Turning to the cash and liquidity position of our GEO business segment. Cash at the end of Q2 was approximately $160 million and we announced today we borrowed US$120 million under a new term loan providing meaningful additional cash for Telesat GEO. We invested $165 million in the Telesat Lightspeed program during the second quarter of 26, including $145 million in capital expenditure and $20 million in non capitalized labor and other operating costs. For a total investment of $336 million this year.

Given the accelerated expansion of the constellation deployment from 156 to 225 satellites we announced last week, we now expect full year investment in the program to be between $1.3 billion to $1.5 billion up from $1 billion to $1.2 billion guidance we provided earlier this year. With the incremental investment funded by pre-service payment to be received from the government of Canada. In the LEO segment, we ended the quarter with over $200 million in cash on hand.

This cash, combined with $1.6 billion in availability under our Telesat Lightspeed financing, US$325 million from our vendor financing, and US$1.5 billion in milestone payment related to the ESCAPE contract is expected to fully fund the Telesat Lightspeed project including US$500 million of contingencies. Until it achieved global commercial service around the end of Q1 of 28. Our backlog for Lightspeed increased significantly to approximate $5.6 billion with the increase coming largely from the 15-year ESCAPE contract we announced last week. We also signed a 5-year contract with Northwestel in early Q2 for rural broadband connectivity in Canada.

Before I conclude my prepared remark, I would like to confirm that we are in compliance with all government in our credit agreements and indenture. I will now turn the call back to the operator for the Q&A.

Operator: Thank you. As a reminder, if you would like to ask a question in today's call, simply press star. and 1 follow-up question. We will take a brief moment to compile the Q and A roster. Your first question comes from the line of Caleb Henry from Quilty Space. Your line is now live.

Caleb Henry: Hi, guys. Okay. First question is actually on the future expansion of the Lightspeed contract or excuse me, Lightspeed Constellation. On the previous call, it was mentioned that there is going to be X in UHF band, which you are partnered with MDA on. Can you talk about the role that Telesat is playing as a partner there? Is that capacity that you also anticipate being able to sell? Or is Telesat mainly managing the constellation on behalf of the Canadian government?

Daniel S. Goldberg: Hey, Caleb. Good morning, and thanks for the question. So maybe just a quick step back on Escape and we have talked a little bit about this before. it is all about Arctic satellite communications capability. there is a military Ka-band component of that. And as we have, you know, announced before, that is going to be provided using Lightspeed, and we have expanded the constellation to meet those requirements. So that is Number 1.

Number 2, is there will be also a UHF and expand capability that is expected to be in MEO That is a constellation that will be primed by MDA and Telesat will be a subcontractor to MDA And so there is still more work that needs to be done on that. More work with the government of Canada, DND, you know, the Canadian Air Force to define exactly what that capability is going to look like. And contracts need to be in place. We have got a teaming agreement with MDA on that.

Telesat and MDA have been you know, already, we announced this a while ago, named as kind of strategic partners for that capability. it is not my expectation that we are gonna end up owning that MEO constellation. Would we have some ability to resell excess capacity on it? I do not know. that is not something that we have explored at this point in time. And it is gonna take it is gonna take a little while from here. We have gotta do definition work and whatnot.

I think at a minimum, what Telesat will be doing in connection with the MEO constellation again, as a subcontractor to MDA is providing you know, network integration expertise, ground segment expertise, overall Escape integration. You got the Mil-Ka. You have got the UHF. You have got the X band. that is all got to operate as an integrated network. So in any event, I do think it is a meaningful opportunity for Telesat. When we talked about the Escape contract that we announced just last week, we are pretty clear that is an initial contract. We expect follow on contracts probably next year for even still the military Ka-band.

That it will be more about network integration user terminals, and other ground segment. And that, you know, we expect to be a meaningful set of contracts for us. And then on MEO, that work's going to take, probably a couple of years to get in place. But here again, you know, our expectation is we will have a long term role in supporting that constellation. And that represents a very material revenue opportunity for the company. So I hope that is helpful.

Caleb Henry: That is. And then my 1 follow-up, also, harking back to last week's call. The presentation had a couple of mentions of, Relay as an emerging service area. I was wondering if you could talk a little bit about the forecast for Relay revenue and sort of when you see that turning on in some of the drivers?

Daniel S. Goldberg: Yeah. We so, you know, when we talk about Space Relay, that is really about leveraging the Lightspeed constellation to communicate with other satellites. Those could be satellites, you know, Earth observation, for instance, and we have the ability to connect those satellites into our global backbone. So many of those satellites today they are taking images. They are collecting data. But the user, the end user has to wait for the satellite to pass over a gateway that data gets downloaded, and only then is it available to the end user we can get that data back to the users in real time. If that satellite is connected to the Lightspeed constellation, it can collect the data.

It can instantly relay that data to Lightspeed, and we can terminate that traffic anywhere on the face of the earth in milliseconds. And so we think that is very powerful. We are already doing work with NASA to demonstrate this capability. And we have we have disclosed that NASA contract before, and we have been engaged with quite a few potential customers for this, earth observation companies, other governments, You know, governments have a lot of those satellites in orbit. Collecting valuable data with you know? And they want access to that information as fast as possible. So when you know? Oh, and I should also say that our optical intersatellite links meet the US government's SDA standard.

And so and so that opens up, you know, we think a big opportunity because other operators will have their optical links also meeting those standards, which means we can pass traffic to 1 another. So, you know, when you have seen our forecast that revenue you know, ramps I do not have it in front of me. It sort of ramps gradually but we are bullish on that opportunity for defense applications, for civil applications, We think We think there is great promise there.

Certainly, when you hear others talk about data centers in space, you know, that is that is that is another opportunity If there are data centers in space, you gotta get you know, that it needs to be connected back to the Earth. And so when we think about space relay, it covers a pretty wide range of applications that we are quite bullish on.

Operator: Your next question comes from the line of Edison Yu from Deutsche Bank. Your line is now live.

Analyst: Hey, good morning. Thanks for taking our questions. First, I want to ask you about your latest thoughts regarding D2D. You probably saw, you know, MDA addressed the, you know, the space ran proposal. Is that something that you would take part in? Have you had discussions around a potential role in operating such a constellation?

Daniel S. Goldberg: So I would say this on D2D. And maybe the first thing I would say is you know, we are very, very focused right now on executing on Lightspeed. it is the biggest project in Telesat's history. it is the biggest project space project in Canada's history, and is we see a huge opportunity there and but we need to stay focused on executing that And we are But that said, we are, you know, pretty well acquainted with what know, the various operators around the world and here in Canada are doing around D2D. We have had conversations with a number of parties about what role Telesat could potentially play in a D2D constellation.

And so, anyway, I will not offer any more specifics than that. Other than to say it is not in any sense our principal area of focus. But opportunistically, if we can you know, play a role in a D2D network where we can add value that can be accretive to Telesat. Does not distract us from, you know, our top priorities. Yeah, you know, that is something that we would think about. Understood. I wanted to also ask you just going back to LightSpeed. Obviously, you put out those numbers, which I am sure were very positive. Can you maybe talk about the underlying assumptions a bit more? Outside of the big change in mix to government and military.

Did you have a lot of movement in terms of, like, the pricing assumptions, the price per bit, kind of-- yeah. Just can you maybe kind of double-click on just the some of the underlying assumptions that went into those forecast that may have changed versus 3 years ago? Yeah. I would say fundamentally, there is certainly been, as you noted, meaningful change in mix When we first started down the path of Lightspeed, the world, you know, was pretty different place than it is today in these geopolitical shifts.

And some of these conflicts that are ongoing around the world have opened up this you know, very significant opportunity for, defense and kind of sovereign requirements to respond to that and to respond to what the government of Canada was needing for their ESCAPE program, we changed our frequency plan to add the military Ka band. And so in any event, so that in and of itself has a big impact on you know, our expectations around revenue mix because obviously, the Mil-Ka is going to be used for those government defense and sovereignty applications.

Beyond that, though, yeah, we updated all the assumptions, obviously, underpinning the plan with respect to pricing, with respect to take up, with respect to you know, geographic distribution and whatnot. But there were there were not I would say, wholesale changes in terms of our expectations around the pricing environment. We know that the market for satellite delivered broadband connectivity is going to be a competitive market. We always knew that. We have we have modeled you know, downward price pressure over time throughout the plan. We did that previously. You know, we can that is still embedded in our in our current plan. We sort of sharpened our pricing assumptions in some instances down, in some instances up.

Based on you know, kind of the more current information that we have. So, anyway, it is in that is that is how we went about doing it. I hope that was helpful. Yeah. That was. Thank you. If I could just sneak in just 1 financial 1. Just in terms of the you know, obviously, you got the extra the debt. Any update on when we can expect any sort of update on the near-term maturity? Just in terms of the negotiations and how we should think about that? Yeah. You know, here's what I would say about that.

And, obviously, and everyone on this call knows it, we are limited in terms of what we are able to say about the upcoming maturities But what I can say is it remains a key priority. It always has been throughout the year. Our focus working with our advisers is to reach consensual outcome with the legacy lenders prior to the maturities coming due. that is something that we are very focused on and doing it in a way that is yeah, fair and balanced for all the stakeholders of the business. Including, obviously, the lenders. So that is what our focus has been. Our focus remains that.

We, you know, just given the nature of these kinds of processes, there is only so much that we can say about it. But obviously, as soon as we have a material update that we can share we will. But that is you know, that is kind of the status at this point.

Operator: Your next question comes from the line of David McFadgen from ATB. Your line is live.

David McFadgen: Hi, guys. Yeah. A couple of questions, if I may. So I see that you increased the warrant valuation quite a bit. I was if you could tell us what you are actually valuing LEO at to get to that warrant evaluation. And then secondly, when do you think you would be able to announce some more defense customers like some other NATO countries buying some capacity on Lightspeed? Thank you.

Daniel S. Goldberg: Thanks for the questions, David. So on, trying to extrapolate the value of Lightspeed from the warrant value, We are we are not gonna do that for folks. But you are absolutely right, though. You know, the value of the warrants has gone up you know, by more than 50%, and that is totally a function of the fact that we got the Escape contract done. We have got this you know, very significant backlog now. On Lightspeed. We have been able to accelerate you know, our expectations around revenue and EBITDA. Take up commensurate with us accelerating the expansion of the constellation.

And so anyway, I mean, that is obviously a positive sign for the business. it is good news if you are a Canadian taxpayer because of the Government of Canada and the Government of Quebec have warrants in the Lightspeed projects. So anyway, and I am no sophisticated financial analyst. You are. You can probably you know, working backwards, you know, make your own calculations about what that might imply for the value of Lightspeed, but we are not gonna do it for you. So that was 1. And then on your question about further defense opportunities and when we would be in a position to announce them, it is always tricky You know?

I mean, escape itself, you know, we laugh about this a little bit. You know, we bid on that originally in 2008. We always knew it was a question of when and not a question of if. If someone had told me in 2008, it would take 18 years I would have been surprised. But I do not expect the opportunities that we have in the pipeline for Lightspeed to take 18 years because given the nature of the world right now, the customers that we are talking to, they want this capability as soon as possible.

And so we are having real meaningful concrete opportunities with I would say, you know, sovereign customers about using Lightspeed. it is always hard to handicap just how long those things will take. My expectation is by the end of next year, our backlog will be meaningfully higher because of my confidence, our confidence about converting things that we have in the pipeline today into firm, you know, take or pay contracts like Escape, you know, is it possible to get something more done by the end of this year? Recognizing that, you know, we are already halfway through August. I do not know. Maybe.

I would not I would not foreclose it, but I sure would not you know, telegraph that we have got high conviction about doing that. But we do have higher conviction about getting that done between now, again, and the end of next year before you know, Lightspeed even goes into full commercial service. So that is our expectation. But I gotta say, you know, we never gave backlog guidance for this year. I think at most, I would have said we expect, you know, backlog to be some multiples higher at the end of this year than it was, you know, at the beginning of this year.

And there, you know, we are very pleased sitting here today having gotten Escape. We signed the Northwestel contract. We have very positive, significant opportunities still in the pipeline above and beyond the incremental meaningful opportunities with Escape. So we are very bullish about our ability to meaningfully grow backlog from here even before we enter commercial service.

David McFadgen: Would it be possible to squeeze 1 more in?

Daniel S. Goldberg: Sure. So I saw you got that additional loan and the GEO sub. what is the collateral for that additional loan? So I would say this. Like, we are we are not gonna get into the weeds of it on this call. But I will say at the highest level, under our covenant package in the and I am just talking about in the legacy borrowing. So the term loan and the notes that we have out there. We obviously had scope to raise this incremental funding. And so we were we were pleased to get it done.

It just gives us more financial resources to support the legacy business, which here again, I think is a good thing for the business. And so and I will say this also. We have we have provided some disclosure about this loan in the release and in the financial statements. And in the fullness of time, we will we will, you know, file the loan agreement as well. And so you know, that will be out there.

Operator: Your next question comes from the line of Mayor Yaghi from Scotiabank. Your line is live.

Analyst: Great. Thank you for taking my question. I have a few. Maybe I will start with you know, the escape contract that you signed. Maybe if we can go back. It was great to see the contract being finalized. I wanted to ask you specifically the new satellites that you are, going to deploy, following that contract being signed, are they in any way different technologically speaking in terms of frequencies that they operate under versus the initial 56.

Daniel S. Goldberg: You know, thanks for the question. No. They are identical. To the first 156 And so what is good about that is they are gonna, you know, just follow immediately, down the, assembly line from the 156. So it means that nothing about adding those 69 additional satellites is going to slow down in any way the delivery of those first 156, which is why you know, we are standing behind our target entry date in terms of when we go into global service. And then those next 69 just follow right on from the initial 156. So yeah, all 225 will be identical. Okay. Okay.

So given this, I was trying to figure out, you know, when I look at the revenue run rate, of the program beyond the initial spike in cash payments upfront I was wondering why do you need the new satellites? Because I was trying to figure out the capacity that the new contract is gonna consume out of your existing 156 satellites. On the mil-Ka band, which is 25% of your spectrum, allocation, does not seem to me like it is gonna use up much of that 25% anyway. So why did we move in the direction of putting up more satellites, right away instead of waiting as you know, after commercial launch and then putting up more satellites. Yeah.

No. it is a great question. And there are a couple of reasons. So 1, when we converted the frequency plan for the first 156, absolutely the right thing to do given all the opportunities we see with defense users. And how much demand we expect there will be for this you know, very advanced military Ka-band capability. So we are, you know, excited about that. But at the same time, we took 25% of the frequencies that were going to be available for our commercial customers sort of off the market.

And so and we see huge opportunities there, and we did not want to reduce our capacity that could support those commercial verticals like broadband connectivity for the airline industry, broadband connectivity for the maritime sector, broadband connectivity for rural broadband, enterprise users around the world, and the like. And so what was great about accelerating the, you know, expansion of the satellites because we our plans were always to have more satellites than 156. We were just going to fund the expansion satellites with the cash flow from the first 156. So it was not a view that we will not see demand for that capacity.

We just did not have enough money to, grow the constellation as much as we wanted to. And so with this deal with Escape, we are able to restore the 25% of commercial capacity that we had diverted for the defense market, number 1. 2, accelerate the satellites that we always need that we always knew the market would need. And then I would say, lastly, just having more satellites in the constellation means more resiliency, more redundancy, better performance of the network. So it was just a big win.

Operator: Your next question comes from the line of Walter Piecyk. From LightShed. Your line is live.

Analyst: Thanks. Hey, Daniel. Just wanna go to the expansion. And specifically Falcon 9. Are these contracted? Because I know SpaceX has talked about stop taking third-party bookings beyond 2028, and I assume that extension will go beyond 2028, so I am just curious if these things are contracted and whether they have to be on Falcon 9 or you are going to look for other launch opportunities.

Daniel S. Goldberg: So to launch the 225 satellites, we need 15 rockets. We already have 14 under contract with SpaceX We had, you know, sort of 3 for lack of a better term, surplus rockets that we did not need for the 156. But when we added the 69, we needed those 3. So those got kind of brought forward. And then we needed 1 more. And so that and 1 more Falcon 9. And we like using Falcon 9. Super reliable. They obviously, SpaceX launches at a very rapid cadence. We are very focused on getting the constellation deployed as quickly as possible. So that is the right launch vehicle for light speed. And so we needed 1 more rocket.

So we have been in touch with our friends at SpaceX. They have agreed to make that rocket available to us. We are you know, getting the launch services agreement in place to do that. But I would also note, it is our expectation that all of our launches, for all 225 satellites will get done by the end of 28. So that is the plan. that is good to know you are locked and loaded. I know I have asked this question many times over the last couple years, so I suspect I know the answer.

I am just gonna ask again because there is just a lot of talk in the market about SpaceX out looking for additional spectrum. there is companies out there that own spectrum. Their stocks are really moving. Any kind of let's call it, request from potential customers for you to layer in additional spectrum to the satellite that you have developed before you actually get these launches going. So these first 225, we are done. And by done, I mean, the design's done. The hardware's been, you know, ordered, and satellites are already, at MDA's new factory. Like, we are we are we are going hard down the path. We have got and these are great satellites.

I mean, it is and with the right frequency plan with the military Ka-band, we feel really good about that. So we do not have any scope at this point in time without taking some massive delay, which we will not do, to make modifications to these 225. So the ship has sailed on those for future satellites, and our expectation is absolutely the Lightspeed Constellation is going to grow over time. That will be a response to demand that we are seeing out there in the market, but we are very bullish on that. We are already, doing a fair amount of work around here. As to what our next generation of Lightspeed satellites will look like.

Could those accommodate other frequency bands, hosted payloads, absolutely. But not these first 225.

Operator: Your next question comes from the line of James Ratzer from New Street Research. Your line is now live.

James Ratzer: Yes. Great. Yeah. Daniel, thanks very much for taking the questions. So I have a couple, please. Just the first 1 was just coming back, if we can, to the refinancing coming up. I think you mentioned you wanted to be kind of fair, balanced, and consensual. Was reading, though, the kind of court document from July 27, and that seemed to suggest that you might also be considering a Chapter 11 process as well. So I was wondering if you could just kind of respond to that if that is something you are seriously thinking about at this stage as 1 outcome?

And secondly, just coming on to the $120 million of new financing you have just received, Can you just let us know where in the stack that ranks? Is it kind of pari passu with the senior debt or the unsecured? So just be interested to know where that sits in the stack. Many thanks.

Daniel S. Goldberg: Okay. Thanks, James. The filing, I am not sure what you are referencing to what you are referencing in terms of you know, drawing a conclusion that we are entertaining, you know, a bankruptcy filing. that is not the case at all. Our focus is strongly no. Just to say, our focus is strongly on refinancing the debt prior to the maturities achieving a consensual outcome. that is the focus. We are spending a lot of time and a lot of energy to achieve that outcome, number 1. And then on the $120 million where it fits in, here again, like, the on this call this morning, the plan is not to go into the weeds on that.

As I said, we will share more information about that. You know, we have said that the borrowings were made you know, within a nonguarantor subsidiary of Telesat Geo. So, you know, we are over there in the legacy, you know, debt silo. And as I said also, the loan agreement will get filed and made available. And so for now, we will leave it at that.

James Ratzer: Got it. You cannot say, Daniel, whether it was linked to the new C-band proceeds that you are know you are going to be receiving? Or is that something that is separate from the new debt you just raised?

Daniel S. Goldberg: Yeah. So there we you are right. I will not say But I will note that, obviously, having that FCC order come out and tell us that being eligible for those proceeds subject to our meeting, our obligations to clear that spectrum on time. that is obviously a very accretive development for the business. Got it. No. that is clear. Thank you very much.

Operator: Thank you. Your next question comes from the line of Christopher Quilty. From Quilty Space. Your line is live.

Chris Quilty: Thanks. Just a follow-up on the Escape program. Is that going to require an incremental ground segment? Or is that something that you know, the existing Lightspeed ground segment you can sort of lease back to the to the customer. And just more broadly, where do you sit in terms of the ground segment build out? And I think you had some past deliberations around bringing in outside financing or not for the ground segment. Where do you stand on that?

Daniel S. Goldberg: Yes, Christopher, thanks. We are making really good progress on rolling out the ground segment. So we are talking about landing stations here. So you know, we have I am looking at my technical colleague, at least 3 or 4 landing stations already under development here in Canada. And we have been you know, installing, you know, the big gateway antennas, doing tests that is going well. We have announced that we have got some ground stations being built for us in Australia. We did the deal with Orange in France at their first night teleport. So that is being it is the word I am looking for. Commission. Thank you, Michel. Commission right now. Sure.

We are making really good progress there. We have been doing testing on the antennas, and we gave Intellian a big contract to build the landing station antennas. And so we have been commissioning those and doing the testing. So that is all going very positively. As to working with third parties, to support the landing stations, I would say absolutely that is something we are receptive to and it is something that we have always done. You know, even our geostationary the ground stations around the world that support our GEO satellites. Some of those we own, including some in Canada, 1 in The US.

But many of them, we are relying on third party teleports to provide the service with light speed. And by the way, this is not unique to Telesat. it is what everyone does, including Amazon, Starlink, OneWeb, I believe. Certainly, you know, SCS, we all make use of third party teleports. We might own some of the equipment that sits at those third party teleports. They kind of host that equipment for us. And provide us a service. And we are not thinking about it any differently with respect to Lightspeed, and there is some real benefits if we work with third party providers. We do not need to own teleports all over the world.

That would not be a good use, I think, of our capital or time. And so we have already are working with some third parties in, I will say, Australia, Europe, I mentioned. We are having some conversations with folks in Asia. Because we need landing stations there too, and we are receptive to doing something I would say, kind of broader, more comprehensive with 1 or more third parties if that is something that would accelerate our rollout, if that were financially accretive, Always, of course, provided that they can provide the mission critical services we need and do it in a secure environment given the nature of the traffic that we will be supporting on Lightspeed.

Chris Quilty: And is that something that would likely happen this year or slipping out into next year?

Daniel S. Goldberg: Well, we are I mean, we are rolling out landing stations. We have to support our upcoming launches. And so, you know, we are we are we have got at least, you know, 8-plus teleports, landing stations, under development, various stages right now. Some of them are already done. Some of them are in flight. We will be doing more. Even over the course of this year. And so, yeah, you know, we expect to be able to share more information about our plans for that. Great. Thank you.

Operator: Thank you. That concludes our question-and-answer session. I would like to turn the call over to Daniel S. Goldberg for closing remarks.

Daniel S. Goldberg: Okay. Well, operator, thank you very much. Maybe I would just say in some, I mean, we are about 2-thirds of the way through the year. And we feel very good about how the business is performing, how we are executing. Where we reiterated our guidance for GEO, Last week, we announced the largest contract in Telesat's history with the Escape contract, the pipeline for Lightspeed is very, very significant. We have, you know, $5.6 billion of backlog at this point in time with Lightspeed. And between the further opportunities with Escape, the other sovereign opportunities that we have and commercial opportunities that we have in the pipeline. We are actually more bullish than ever about our prospects.

The constellation has expanded. it is accelerated. it is fully funded. We have US$500 million in contingency to support Lightspeed, which we are very focused on not needing to dip into. The GEO business actually is performing pretty well year to date. We actually grew our backlog in GEO this past quarter, which we have not done for a while.

I think that shows some of the resiliency around that business and improved cash flow visibility when we are able to grow it, certainly the announcement by the FCC recently on the C band process and Telesat being eligible for US$189 million of proceeds on the back of the $344 million in proceeds that we received from the earlier proceeding, which gives us confidence that we will secure this $189 million I think we end Q2 and head into the rest of the year really optimistic and bullish about where the business is going and our prospects. So in any event, thank you all for joining us.

This morning, and we look forward to chatting with you when we issue our third quarter numbers. So thank you, operator.

Operator: This concludes today's meeting. You may now disconnect.

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