TSAT — Telesat Corporation

Telesat Corporation Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• 2025 Revenue: $418 million, in line with expectations.
• Adjusted EBITDA: $213 million, exceeding guidance of $170 million to $190 million, attributed to higher capitalized labor for the Lightspeed project and lower operational expenses in the GEO segment.
• Net Loss: $530 million, compared to $302 million in 2024, primarily due to reduced revenue, impairment of goodwill in the GEO business, and increased derivative liabilities.
• Cash Position: Ended 2025 with $510 million in cash, including $206 million in the GEO segment and $337 million in the LEO segment.

2. Strategic Updates and Business Highlights

• GEO Business Challenges: The GEO segment continues to face structural challenges, with a projected revenue decline of $90 million to $110 million in 2026, driven by expiring contracts and reduced usage.
• LEO Progress: Significant advancements in the Lightspeed project, with the first satellite launch scheduled for late 2026 and a heavy launch cadence planned for 2027. Full global commercial service is now expected in Q1 2028, delayed by three months due to chip development issues.
• Defense Market Focus: Telesat is positioning Lightspeed to meet government and defense needs, including a new military Ka-band capability, which is expected to enhance service offerings for allied nations.
• Partnerships and Contracts: Recent agreements include a substantial deal with Viasat for airline broadband services and an MOU with Hanwha Systems for defense applications.

3. Forward Guidance and Outlook

• 2026 GEO Revenue Guidance: Expected between $300 million and $320 million, with adjusted EBITDA projected at $210 million to $220 million.
• LEO Investment Guidance: Anticipated spending of $1.0 billion to $1.2 billion on Lightspeed, including operating costs and capital expenditures.
• Backlog Growth: Management is optimistic about significantly increasing the Lightspeed backlog in 2026, particularly in defense applications, despite the lengthy government procurement processes.

4. Bad News, Challenges, or Points of Concern

• GEO Revenue Decline: The GEO segment is expected to see a substantial revenue drop due to expiring contracts and reduced demand, which could impact overall profitability.
• Net Loss Increase: The significant increase in net loss raises concerns about the financial health of the company, particularly in relation to its legacy business.
• Debt Refinancing: Telesat is working on refinancing $1.7 billion of debt maturing in December 2026, which poses a liquidity risk if not managed effectively.

5. Notable Q&A Insights

• Military Contracts: There is anticipation for a contract with the Canadian Armed Forces related to the ESCaPE project, though negotiations are ongoing.
• Market Dynamics: The geopolitical environment is driving demand for LEO services, with increased interest from defense sectors due to recent global events.
• Launch Schedule: The first two satellites are still on track for launch by the end of 2026, with expectations to have 96 satellites in orbit by the end of 2027.
• Competitive Landscape: Telesat is seeing increased engagement from customers, particularly in defense, partly due to its progress and the current demand for advanced satellite capabilities.

Overall, Telesat Corporation is navigating significant challenges in its GEO business while making substantial progress in its LEO initiatives, particularly with the Lightspeed project. The company remains optimistic about future growth, especially in defense-related applications, despite the financial headwinds it faces.