Telesat has announced its financial results for the three month period ended March 31, 2020. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (IFRS) unless otherwise noted.
For the quarter ended March 31, 2020, Telesat reported consolidated revenue of $209 million, a decrease of 6% ($14 million) compared to the same period in 2019. When adjusted for changes in foreign exchange rates, revenue declined 5% ($12 million) compared to 2019. Revenue decreases were primarily due to a reduction of service for one of Telesat’s North American DTH customers and lower revenue due to the completion of the term for prepaid services in a customer agreement that was accounted for as having a significant financing component. These decreases were partially offset by higher equipment sales and new revenue from services provided to users impacted by a failure of a competitor’s satellite in 2019.
Operating expenses for the quarter were $45 million, an increase of $6 million from 2019. Changes in foreign exchange rates had no impact on operating expenses during the quarter. Operating expenses, which consist of compensation and employee benefits, other operating expenses, such as marketing, general and administration expenses, and cost of sales, increased because of a higher provision for bad debt, higher in-orbit insurance expenses, higher professional fees, and higher compensation expense. Adjusted EBITDA1 was $166 million, a decrease of 11% ($21 million) or, when adjusted for foreign exchange rates, a decrease of 10% ($19 million). The Adjusted EBITDA margin1 for the first quarter of 2020 was 79.6%, compared to 84.2% in 2019.
For the quarter ended March 31, 2020, the net loss was $278 million, compared to net income of $172 million for 2019. The negative variation for the quarter was principally the result of non-cash foreign exchange losses in 2020, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars compared to foreign exchange gains in 2019, and non-cash losses on financial instruments in 2020 compared to gains in 2019.
“Our first quarter results were consistent with our expectations at the outset of the year, notwithstanding the COVID-19 pandemic,” commented Dan Goldberg, Telesat’s President and CEO. “Although we expect to face some headwinds from the pandemic throughout the balance of this year and potentially beyond, we believe that it will be principally from customers serving the aeronautical and maritime markets, which we estimate (in the aggregate) represented roughly just 10% of our total 2019 revenue. Our focus at this time is to support our employees and customers through the pandemic, ensuring that our staff is healthy and that we continue to reliably and securely deliver the mission critical services we provide. I am pleased with and grateful for the tremendous work the Telesat team is doing in this regard and, moreover, in the progress we continue to make on our signature growth initiative, the development of our planned revolutionary Low Earth Orbit (LEO) satellite constellation.”