Telesat's Q4 2024 Earnings: Contradictions in Debt Restructuring, Backlog Growth, and GEO Revenue Outlook

These are the key contradictions discussed in Telesat's latest 2024Q4 earnings call, specifically including: Debt Restructuring Expectations, Lightspeed Backlog Growth, LEO Backlog Growth Expectations, and GEO Revenue Outlook:



Financial Performance and Guidance:
- Telesat reported revenue of $571 million for 2024, exceeding their guidance, with adjusted EBITDA at $384 million.
- For 2025, the company expected revenue to be between $405 million - $425 million and adjusted EBITDA between $170 million - $190 million.
- The decline was attributed to pressure in the GEO business, particularly in the video and enterprise sectors, and increased expenses related to Telesat Lightspeed.

Telesat Lightspeed Development and Market Opportunities:
- Lightspeed's OpEx is expected to increase by approximately $40 million at the midpoint of guidance.
- The company is optimistic about securing more significant Lightspeed contractual backlog, potentially eclipsing the current GEO backlog by year-end.
- Expectations are driven by strong commercial interest, enhanced geopolitical focus on sovereign national security requirements, and market acceleration towards LEO services.

Transitioning from GEO to LEO:
- GEO revenue is anticipated to decline due to lower rates associated with contract renewals and competition from Starlink.
- The company is focusing on disciplined execution in the GEO business while prioritizing the development and commercialization of Lightspeed.
- The transition is necessitated by market dynamics favoring LEO solutions and the need to align with evolving customer demands.

Debt Restructuring and Financial Strategy:
- The company's priority is to refinance its restricted group debt, which is maturing at the end of 2026.
- Telesat has already repurchased $849 million in debt, resulting in approximately $54 million in annual interest savings.
- The refinancing efforts are aimed at strengthening the company's financial position and improving long-term sustainability.