Telesat Sees Slight Increase in Quarterly Sales and Profit

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PARIS — Satellite fleet operator Telesat of Canada, whose owners for several months have been preparing for either a stock-market introduction or a multibillion-dollar sale of the company, on May 5 reported a modest revenue increase and improved profitability for the three months ending March 31.

Ottawa-based Telesat, the world’s fourth-largest commercial satellite operator when ranked by revenue, declined in a conference call with investors to discuss the effort by its owners — Canadian pension fund PSP Investments and Loral Space and Communications of New York — to sell Telesat or prepare an initial stock offering.

Telesat Chief Executive Daniel S. Goldberg said only that the company is aware that the market for buyers — in a stock offering or an outright sale — appears strong now but will not necessarily remain that way and that “we’re not going to let this drag on forever.”

Telesat reported revenue of 202.8 million Canadian dollars ($208.5 million) for the three months ending March 31, up just 2 percent from the same period a year earlier but 4 percent after stripping out foreign-exchange effects. In the year between the two results, the U.S. dollar dropped by about 6 percent relative to the Canadian dollar. Telesat reports its results in Canadian dollars, but most of its revenue and its capital costs are in U.S. dollars.

EBITDA, or earnings before interest, taxes, depreciation and amortization, was 77 percent of revenue for the three-month period, up from 74 percent a year earlier.

Goldberg said the increase in revenue was mainly due to increased sales on the Telstar 11N satellite, which was launched in 2009 and is operated at 37.5 degrees west longitude. Carrying 39 Ku-band transponders, Telesat’s newest satellite is now a bit more than 60 percent full and Goldberg said its fill rate should slowly climb toward 80 percent in the next year or two.

Telesat reported that its North American fleet as a whole was 89 percent full as of March 31, while its international fleet was 77 percent full. The company operates 12 satellites and has three more on order and scheduled for launch in the next 18 months. The North American business accounts for about 80 percent of Telesat’s revenue.

In addition to its three fully owned satellites, Telesat has purchased from Loral the Canadian coverage of the ViaSat-1 Ka-band broadband satellite owned by ViaSat Corp. of Carlsbad, Calif., and scheduled for launch late this summer. Telesat is paying about $61 million for ViaSat-1’s Canadian beams and is assuming a 15-year contract Loral had signed with Canadian rural broadband provider Barrett Xplore, which has purchased about 12 gigabits per second of ViaSat-1 capacity for 262 million Canadian dollars.

Goldberg said pricing in the markets where Telesat is active in selling satellite bandwidth — mainly North and South America, the Middle East, Africa and Asia — has remained stable in recent months, although there has been some weakness in Africa with the arrival of high-throughput fiber lines on the coasts and new satellite capacity in the region.

Latin America, particularly Brazil, remains strong, which is one reason why Telesat wants its Telstar 14R satellite to be launched as soon as possible. Telstar 14R is scheduled for launch May 20 aboard an International Launch Services Proton rocket from Russia’s Baikonur Cosmodrome in Kazakhstan. The satellite carries the equivalent of 58 Ku-band transponders and will replace and expand the Telesat capacity over Latin America now provided by Telstar 14, which has 41 transponders and is operated at 63 degrees west.

“We are pretty much tapped out on a lot of the capacity serving that market right now,” Goldberg said of Telesat’s Latin American service from Telstar 14.

In a May 5 filing with the U.S. Securities and Exchange Commission, Telesat said it had reached a settlement with three insurance underwriters over claims related to Telesat’s Anik F1 satellite, which has a defective solar array. The dispute, which has dragged on for a decade, is centered on differing interpretations between Telesat and some of its underwriters over the level of degradation measured on the solar panels.

Earlier settlements had reduced Telesat’s claim to 18 million Canadian dollars. In January, the company said, three insurers concluded a negotiated settlement. Telesat said arbitration is scheduled to start in September on the remaining 11 million Canadian dollars in dispute with other underwriters.

 

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