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Telesat Corporation (NASDAQ:TSAT) shares are trading higher after the company reported second-quarter results and tapped MDA Ltd (OTC:MDALF) as the prime satellite manufacturer of the advanced Lightspeed Low Earth Orbit constellation.
Telesat Lightspeed is now fully funded through global service delivery, considering the company's equity contribution, certain vendor financing, and aggregate funding commitments from its Canadian federal and provincial government partners.
Q2 Results In A Glimpse
Telesat reported consolidated revenue of C$180 million, a decrease of 4% Y/Y. The decline was mainly due to a termination of service by a South American customer and the reduction of revenue from one of its North American DTH customers.
Telesat's net income was C$520 million compared to a net loss of C$(4) million for the same period in the prior year.
Adjusted EBITDA for the quarter decreased 5% Y/Y, with the margin at 77.1%, compared to 78.4% in the same period in 2022.
Operating expenses fell in the quarter due to lower non-cash share-based compensation. However, it was partially offset by higher costs associated with procuring third-party satellite capacity required to support certain customer networks that could no longer be supported on Anik F2 once it commenced inclined operations.
As of the end of the quarter, TSAT's fleet utilization was 87%.
Outlook: Telesat reiterated its FY23 forecast for revenues of C$690 million-C$710 million and Adjusted EBITDA of C$500 million-C$515 million.
Contract Details With MDA
The company has selected MDA to build 198 advanced satellites for the Telesat Lightspeed Low Earth Orbit (LEO) program in a C$2.1 billion deal. The contract provided options for Telesat to purchase up to 100 additional satellites.
Telesat now has aggregate funding commitments from its Canadian federal and provincial government partners in the combined amount of up to approximately $2 billion.
This funding, combined with Telesat's own approximately $1.6 billion equity contribution and certain vendor financing, would provide the Telesat Lightspeed program with sufficient funds to launch global service, which will occur once the first 156 satellites are in orbit.
"I'm incredibly proud of the Telesat team for their innovative work to further optimize our Telesat Lightspeed design – which was already a highly advanced and high performing LEO network – resulting in dramatically reduced costs with unmatched enterprise-class service offerings," stated Dan Goldberg, President and CEO of Telesat.
Price Action: TSAT shares are trading higher by 41.5% to $11.96 premarket on the last checked Friday.
