Satellite Telecom | Telesat Revenue Grows as It Awaits New Ownership

by

PARIS — Satellite fleet operator Telesat of Canada on May 1 said its most likely near-term ownership scenario is for majority shareholder Loral Space and Communications to sell itself to a new owner, which then would negotiate a shareholder agreement with existing minority owner PSP Investments of Canada.

New York-based Loral has been evaluating prospective bids since early March.

While it waits to learn who its new owner will be, Ottawa-based Telesat continues to reduce its debt and manage its business as the world’s fourth-largest satellite fleet operator by revenue.

The company reported an 11 percent increase in revenue for the three months ending March 31 compared to the same period a year ago, to 242 million Canadian dollars ($219 million). The increase drops to 7 percent after removing foreign-exchange rate fluctuations from the comparison.

The U.S. dollar’s value against the Canadian dollar rose 9 percent between March 2013 and March 2014.

In a conference call with investors, Telesat Chief Executive Daniel S. Goldberg said the revenue increase was mainly a result of the entry into service of the Anik G1 satellite in May 2013. Also playing a role was a short-term lease of an aging Telesat Nimiq satellite to an unidentified satellite fleet operator during the first three months of 2014.

Goldberg said the revenue from that short-term lease, which has ended, is equivalent to 1-2 percent of the company’s total 2013 revenue, or around 13 million Canadian dollars. Moving a satellite from one slot to another for a short period can be done at almost no cost to Telesat, meaning almost all the revenue generated falls to the bottom line.

Telesat in the past has loaned satellites to Arabsat of Saudi Arabia and HellasSat of Greece, which is now owned by Arabsat. Telesat said revenue from Europe, the Middle East and Africa during the first three months of 2014 doubled to 33.5 million Canadian dollars as  a result of the short-term lease.

Telesat said its adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, increased by 16 percent from a year ago and was equivalent to 82 percent of first quarter revenue, compared to 78 percent a year ago.

Telesat said its North American fleet was 90 percent full as of March 31, and its international fleet was 83 percent full. Backlog stood at 4.9 billion Canadian dollars.

Goldberg said Telesat plans to enter into a contract late this year for a satellite to replace its Telstar 18 at 138 degrees east longitude over the Pacific. The replacement, like the current Telstar 18, will be jointly owned by Telesat and APT Satellite Holdings of Hong Kong, with the two companies sharing the cost of construction and launch.