Telesat’s Contradictory MDA Ownership Claims, ESCAP-P Contract Delays, and Debt Refinancing Uncertainty in 2026 Q2 Earnings Call

Date of Call: Aug 13, 2026

Financials Results

• Revenue: CAD 79 million, down 26% YOY in GEO segment; consolidated revenue not specified but includes GEO and LEO

Guidance:

• Reiterated GEO segment revenue guidance for full-year 2026 of CAD 300 million to CAD 320 million and adjusted EBITDA of CAD 210 million to CAD 230 million, excluding debt refinancing costs.
• Increased 2026 total investment guidance for Telesat Lightspeed to CAD 1.3 billion to CAD 1.5 billion, up from prior range of CAD 1 billion to CAD 1.2 billion.
• Global commercial availability of Lightspeed expected in Q1 2028.

Business Commentary:

Lightspeed Constellation Expansion:

• Telesat announced the signing of the first contract in the ESCP-P program and expanded the Lightspeed constellation to 225 satellites, funded by a contract with MDA for 69 additional satellites.
• The expansion is driven by strategic opportunities to provide critical capabilities to the Canadian Armed Forces and the growing demand for defense and government applications.

Financial Performance and Guidance:

• Telesat reported consolidated revenue of CAD 79 million and adjusted EBITDA of CAD 22 million for Q2 2026, with a net loss of CAD 559 million.
• The net loss was impacted by an increase in the fair value of Telesat Lightspeed warrants and the weakening Canadian dollar, while the strong confidence in future prospects led to an increased revenue and EBITDA forecast for Lightspeed.

GEO Segment Challenges and Opportunities:

• The GEO segment's revenue was CAD 78 million, down 26% compared to the same period last year, with most declines coming from non-renewals and lower broadcast revenue.
• Despite challenges, the segment saw an increase in backlog due to a meaningful term extension of a broadcast video contract, highlighting efforts to maximize existing satellite value and secure long-term commitments.

C-Band Spectrum Repurposing:

• The FCC's report ordered the repurposing of 160 MHz of C-band satellite spectrum, with Telesat due to receive $189 million in incentive payments.
• This development is expected to provide financial resources and improve cash flow visibility, as Telesat successfully cleared spectrum in previous FCC proceedings.

Increased Investment in Lightspeed:

• Investment in the Telesat Lightspeed program during Q2 2026 was CAD 165 million, with the full-year investment guidance increased to CAD 1.3 billion to CAD 1.5 billion.
• The increased investment is due to the accelerated expansion of the constellation and is funded by pre-service milestone payments from the Government of Canada.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed strong confidence in future prospects, citing 'very good about how the business is performing,' 'more bullish than ever about our prospects,' and 'optimistic and bullish about where the business is going.' Key wins included signing the largest contract in company history (ESCP-P) and raising revenue and EBITDA forecasts for Lightspeed.

Q&A:

• Question from Caleb Henry (Quilty Space): First question is actually on the future expansion of the Lightspeed contract... Can you talk about the role that Telesat is playing as a partner there?
  Response: Telesat will act as a subcontractor to MDA for the MEO constellation providing network integration and ground segment expertise; expects long-term role and material revenue from follow-on contracts.

• Question from Caleb Henry (Quilty Space): Then my one follow-up... 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 that...
  Response: Space relay leverages Lightspeed to communicate with other satellites (e.g., Earth observation) for real-time data delivery; revenue forecast ramps gradually with promise for defense and civil applications, including potential data centers in space.

• Question from Edison Yu (Deutsche Bank): First, want to ask you about your latest thoughts regarding D2D... Is that something that you would take part in?
  Response: Focus remains on executing Lightspeed; D2D is not a principal focus but opportunistically Telesat would consider a role if it adds value without distraction.

• Question from Edison Yu (Deutsche Bank): Wanted to also ask you, just going back to Lightspeed... did you have a lot of movement in terms of the pricing assumptions...
  Response: Underlying assumptions updated with changed mix (more defense), pricing expectations sharpened but competitive downward pressure modeled; no wholesale changes.

• Question from Dave McFadzean (ATB): I see that you increased the warrant valuation quite a bit. I was wondering if you could tell us what you are actually valuing the O at...
  Response: Declined to extrapolate Lightspeed value from warrants but noted increase is due to ESCP-P contract and backlog growth, signaling positive business outlook.

• Question from Dave McFadzean (ATB): When do you think you would be able to announce some more defense customers...
  Response: Expects backlog to be meaningfully higher by end of next year due to confidence in converting pipeline opportunities into firm contracts, with some possible by year-end.

• Question from Maher Yaghi (Scotiabank): I have a few. Maybe I will start with the ESCP-P contract... are they in any way different technologically speaking...
  Response: New satellites are identical to initial 156; expansion allows restoring commercial capacity, accelerating growth, and improving network resiliency.

• Question from Walt Piecyk (LightShed): Just want to go to the expansion and specifically Falcon 9. Are these contracted?
  Response: 15 rockets needed for 225 satellites; 14 under contract with SpaceX, one more Falcon 9 secured; all launches expected by end of 2028.

• Question from James Ratzer (New Street Research): The first one was just coming back, if we can, to the refinancing coming up... Is that something you are seriously thinking about...
  Response: Clarified no consideration of bankruptcy filing; focus is on achieving consensual refinancing outcome prior to maturities.

• Question from Chris Quilty (Quilty Space): Just a follow-up on the ESCP-P program. Is that going to require an incremental ground segment...
  Response: Good progress on ground segment rollout with multiple landing stations under development; open to third-party partnerships to accelerate and share costs where financially accretive.

Contradiction Point 1

Commercial Role and Ownership in MDA's MEO Constellation

Contradiction on whether Telesat will own and sell capacity from the MDA-led MEO constellation.

Caleb Henry (Quilty Space) - Caleb Henry (Quilty Space)

2026Q2: Telesat does not expect to own the MEO constellation but may have opportunities to resell excess capacity. - Dan Goldberg(CFO)

What is Telesat's role with MDA on the X and UHF bands in the Lightspeed constellation, and is that capacity for sale or is Telesat managing it for the Canadian government? - David McFadgen (ATB Cormark)

2026Q1: The Government of Canada will choose the solution that offers the best value. Telesat LightSpeed, which now incorporates Mil-Ka, could be a good fit. - Dan Goldberg(CFO)

Contradiction Point 2

Disclosure and Timing of Financial Projection Updates

Contradiction on the timing and nature of updates to LightSpeed's financial projections.

Edison Yu (Deutsche Bank) - Edison Yu (Deutsche Bank)

2026Q2: The mix shift to defense/sovereign applications is a major factor... but there were no wholesale changes to the expectation of competitive price pressure over time. - Dan Goldberg(CFO)

What are the underlying assumptions behind Lightspeed's positive revenue forecast, excluding the mix shift to government/military? - Edison Yu (Deutsche Bank)

2026Q1: The update will have two aspects: 1) It will update guidance for the year if the ESCAPE contract significantly impacts 2026 numbers. 2) It will update the previously published LightSpeed financial projections if the ESCAPE project incorporates LightSpeed capability. - Dan Goldberg(CFO)

Contradiction Point 3

Status and Timeline of Canadian Government Contract (ESCP-P)

Contradiction on whether the contract is under negotiation or already signed.

"What were Quilty Space's earnings highlights during Caleb Henry's leadership?" - Caleb Henry (Quilty Space)

2026Q2: The work with the Canadian government is ongoing, and more contracts are expected. - Dan Goldberg(CEO)

What role is Telesat playing with MDA on the X and UHF bands in the Lightspeed constellation expansion, and is that capacity for sale or is Telesat managing it for the Canadian government? - David McFadgen (ATB Cormark Capital Markets Inc.)

2025Q4: The Canadian Armed Forces deal (ESCaPE) was announced with the government of Canada and MDA in December. It is still not under contract; negotiations are ongoing, and the goal is to finalize it before the end of this year. - Daniel Goldberg(CEO)

Contradiction Point 4

Status and Timeline for Ground Segment Build-Out

Contradiction on progress and specificity of ground segment deployment plans.

Chris Quilty (Quilty Space) - Chris Quilty (Quilty Space)

2026Q2: Development is ongoing with multiple landing stations... The company expects to share more information about its plans in the future. - Dan Goldberg(CEO)

Will the ESCP-P program require incremental ground segment or can existing infrastructure be leased, and what is your stance on third-party financing for the ground segment? - Christopher Quilty (Quilty Space Inc.)

2025Q3: Good progress is being made. Key deals are announced (Orange for Europe, Vocus for Australia). Telesat is building four Canadian teleports. An RFP is underway for landing stations globally. - Dan Goldberg(CEO)

Contradiction Point 5

Status of Debt Refinancing Negotiations

Contradiction on the stage and certainty of refinancing discussions with legacy lenders.

Edison Yu (Deutsche Bank) - Edison Yu (Deutsche Bank)

2026Q2: It remains a key priority to reach a consensual, fair, and balanced refinancing outcome with legacy lenders prior to the maturities. - Dan Goldberg(CEO)

Are there any updates on upcoming debt maturity negotiations? - David McFadgen (Cormark Securities Inc.)

2025Q3: It is too early to say. Engagement has just started, and the company will have to take it from there. - Dan Goldberg(CEO)