Telesat Canada today announced its consolidated financial results for the three month and one year periods ended December 31, 2017. All amounts are in Canadian dollars and are reported under International Financial Reporting Standards (IFRS) unless otherwise noted.
For the quarter ended December 31, 2017, Telesat reported revenues of $252 million, an increase of approximately 5% ($12 million) compared to the same period in 2016. The U.S. dollar was approximately 4% weaker on average against the Canadian dollar than it was during the fourth quarter of 2016. After adjusting for the impact of changes in foreign exchange rates, revenue increased by 7% ($18 million) compared to the same period in 2016. The growth in revenue was primarily driven by short-term services provided to other satellite operators.
Operating expenses of $47 million for the quarter were slightly ($1 million) higher than the same period in 2016. After adjusting for the impact of changes in foreign exchange rates, expenses were $2 million higher.
Adjusted EBITDA1 for the quarter was $207 million, an increase of 7% ($13 million) compared to the same period in 2016. After adjusting for the impact of changes in foreign exchange rates, Adjusted EBITDA1 was 9% ($18 million) higher. The Adjusted EBITDA margin1 was 82.0% in the fourth quarter of 2017, an increase from 81.0% during the same period in 2016.
Telesat’s net income for the quarter was $72 million compared to a loss of $21 million for the quarter ended December 31, 2016. The variation was primarily due to lower foreign exchange losses in 2017 compared to 2016, and a loss on refinancing in 2016.
For the year ended December 31, 2017, revenue was $927 million or $3 million lower compared to the same period in 2016. During 2017, the U.S. dollar was approximately 2% weaker on average than it was during 2016. After adjusting for the impact of changes in foreign exchange rates, revenues increased by $2 million compared to 2016.
Operating expenses were $188 million, 7% ($13 million) higher than the prior year or 8% ($14 million) higher after adjusting for the impact of changes in foreign exchange rates. The increase in operating expenses was primarily due to an increase in compensation and employee benefits expense arising from special payments made to stock option holders in connection with a return of capital of US$387 million to Telesat’s shareholders in the first quarter of 2017.
Adjusted EBITDA1 for the year ended December 31, 2017 was $757 million, or 1% ($5 million) lower compared to 2016 and slightly ($1 million) lower after adjusting for the impact of changes in foreign exchange rates. The Adjusted EBITDA margin1 for the year ended December 31, 2017, was 81.6% compared to 81.9% in 2016.
For the year ended December 31, 2017, net income was $505 million, compared to net income of $293 million in 2016. The variation was principally the result of a larger gain on foreign exchange, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars, a larger gain on the fair value of financial instruments in 2017 and a loss on refinancing in 2016.
“I am pleased with our performance last quarter and over the past year, particularly given the challenging conditions that continue to prevail in many of the markets we serve,” commented Dan Goldberg, Telesat’s President and CEO. “Our solid results highlight the strength of our business, which is underpinned by our industry leading contractual backlog to revenue ratio, as well our strong operating discipline, which is reflected in part in our favorable Adjusted EBITDA margin1 and improving capacity utilization. We also took significant steps in 2017 to best position Telesat for the years ahead, including progressing the construction of our planned Telstar 18 VANTAGE and Telstar 19 VANTAGE satellites, which we anticipate will launch mid-2018. In addition, earlier this year we successfully launched our first Low Earth Orbit (LEO) satellite to support the development of our state-of-the-art, high capacity LEO constellation that will deliver transformative, low latency, fiber-like broadband to commercial and government users worldwide. Looking ahead, we remain focused on increasing the utilization of our in-orbit satellites and executing on our key growth initiatives.”
At December 31, 2017:
In April 2017, Telesat announced that Erwin Hudson, one of the industry’s most accomplished executives in the field of satellite-enabled broadband networks, joined the company as Vice President, Telesat LEO.
In September 2017, Telesat announced that Bell Canada signed a 15-year contract for substantially all of the HTS spot beam capacity over northern Canada on Telesat’s new Telstar 19 VANTAGE satellite. Bell Canada subsidiary Northwestel will use the capacity to dramatically enhance broadband connectivity for communities in Nunavut, Canada’s northernmost territory.
In November 2017, the U.S. Federal Communications Commission (FCC) granted Telesat’s petition to access the U.S. market using Telesat’s planned global LEO satellite constellation.
In January 2018, Telesat announced the successful launch of its first LEO satellite, an important milestone in the company’s plans to deploy a global LEO constellation that will revolutionize broadband communications services around the world. Telesat’s LEO constellation will deliver high-performing, cost-effective, fiber-like broadband anywhere in the world for business, government and individual users.