Q4 2021 Telesat Earnings Call

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All participants thank you for standing by to conferences worthy to begin this morning, ladies and gentlemen, welcome to the conference call to report.

Speaker Change: Good morning ladies and gentlemen, welcome to the conference call.

Speaker Change: fourth quarter 2021 financial results for Telefax. Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telefax.

For the fourth quarter 2021 financial results for telecom.

Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat.

And Angela Brown, our Chief financial Officer of Telus.

I would now like to turn the meeting over to Mr. Michael, but I, though director of Treasury and risk management. Please go ahead, Mr. Bill Lytle.

Speaker Change: over to Mr. Michael Bolaito, Director of Treasury and Risk Management. Please go ahead Mr. Bolaito. Thank you and good morning.

Thank you and good morning. This morning, we filed an annual report.

Yes.

Our remarks today may contain forward looking statements there are risks and tell us that.

Michael Bolaito: risk to tell us that actual results may differ materially from the results contemplated by your forward-looking statements as a result of known and unknown risk factors and unknown

Results may differ materially from.

Paul.

Forward looking statements as a result of them.

Unknown risks risk factors and uncertainties, which are discussed in telesat.

Filed with the SEC on form 20-F.

Telesat.

A sponsor.

David.

Yes.

I'll turn the call over to Dan.

President.

Speaker Change: Good. Thanks, Michael. Good morning, everyone. This morning I'll discuss our fourth quarter and full year financial results and give an update on the business. I'll then hand over to Andrew who will speak to the numbers in more detail and then we'll open the call up to questions.

Good Thanks, Michael and good.

Good morning, everyone. This morning, I'll discuss our fourth quarter and full year financial results and give an update on the business. I'll, then hand over to Andrew who will speak to the numbers in more detail and then we'll open the call up to questions.

Andrew: Looking first at the full-year numbers and adjusting for foreign exchange rate changes, revenue and adjusted EBITDA were both down 4% relative to the prior year, and our adjusted EBITDA margin remained stable at 79.6%.

Looking first at the full year numbers and adjusting for foreign exchange rate changes revenue and adjusted EBITDA were both down 4% relative to the prior year and our adjusted EBITDA margin remained stable at 79, 6%.

The revenue and adjusted EBITDA decrease was primarily due to a reduction of service for one of our North American direct to home customers the reduction or non renewal of some services in the enterprise segment, including as a result of the full year impact.

Andrew: The revenue and adjusted EBITDA decrease was primarily due to a reduction of service for one of our North American direct-to-home customers, the reduction or non-renewal of some services in the enterprise segment, including as a result of the four-year impact of contract restructurings in 2020 for a mobility customer as a result of COVID-19, and lower consulting revenue as well.

Contract restructurings in 'twenty 'twenty, four our mobility customer as a result of COVID-19.

And lower consulting revenue as well the revenue decline was partially offset by an increase in revenue from short term services provided to another satellite operator through 2020 , one which didn't occur in 'twenty 'twenty as well as increased services provided to customers in the mobility market as it began to recover.

Andrew: The revenue decline was partially offset by an increase in revenue from short-term services provided to another satellite operator in 2021, which didn't occur in 2020, as well as increased services provided to customers in the mobility market as it began to recover from the impact of COVID-19.

From the impact of COVID-19.

Andrew: Looking at our fourth quarter numbers and adjusting for FX, revenue was down 5% relative to Q4 2020, adjusted EBITDA was down 7% and our adjusted EBITDA margin was 77.5% versus the 79.5% in Q4 2020.

Looking at our fourth quarter numbers and adjusting for FX revenue was down 5% relative to Q4 2020, adjusted EBITDA was down 7% and our adjusted EBITDA margin was 77, 5% versus the 79, 5% in Q4 of 2020, the revenue and adjusted revenue I'm, sorry, the revenue and adjusted EBITDA reduction.

Andrew: The revenue and adjusted revenue, I'm sorry, the revenue and adjusted EBITDA reductions were primarily due to lower equipment sales to certain government customers, the reduction . . .

<unk> were primarily due to lower equipment sales.

To certain government customers the reduction.

Andrew: or non-renewal of certain services in the enterprise segment and a reduction of services for one of Telesat's North American direct-to-home customers.

Our non renewal of certain services in the enterprise segment and a reduction of services for one of Telus, such North American direct to home customers turning to some key metrics backlog at the end of 2021 excluding backlog associated with Telesat Lightspeed was $2 $1 billion in fleet utilization was 80.

Andrew: Turning to some key metrics, backlog at the end of 2021, excluding backlog associated with Telesat light speed was $2.1 billion and fleet utilization was 80%.

Percent.

Andrew: And looking at how our revenues broke down on an application basis in 2021, broadcast was 51% of total revenue, enterprise services 47%, and consulting another 2%.

I'm looking at how our revenues broke down on an application basis in 2021 broadcast was 51% of total revenue.

Surprised services, 47% and consulting another 2%.

Andrew: And on a geographic basis for the year, North America accounted for 83% of revenue, Latin America 7%, EMEA 5%, and Asia 5% as well.

And on a geographic basis for the year North America accounted for 83% of revenue Latin America, 7% EMEA of 5% and Asia, 5% as well.

Andrew: Beyond the numbers, 2021 was an eventful year for Telesat, including becoming publicly traded, clearing the C-band spectrum we've used in the U.S., and receiving payment for the first portion of the 344 million U.S. dollars allocated to Telesat in the FCC's C-band clearing proceeding, and making substantial progress on Telesat Light.

Beyond the numbers 2021 was an eventful year for telesat, including becoming publicly traded clearing the C band spectrum, we've used in the U S and receiving payment for the first portion of the 344 million U S dollars allocated the telesat in the F C. She's.

C band clearing proceeding and making substantial progress on telesat lightspeed with respect to Telesat Lightspeed last year, we announced a 1.44 billion dollar and a separate 400 million door.

Andrew: With respect to Telesat Lightspeed, last year we announced a $1.44 billion and a separate $400 million investment in the program by the Government of Canada and the Government of Quebec, respectively, which brings to over $4 billion the amount of financing we've lined up for Lightspeed to date.

<unk> investment in the program by the government of Canada, and the government of Quebec, respectively, which brings to over $4 billion. The amount of financing we've lined up for lightspeed to date. We also concluded an agreement with the government of Ontario to use Telesat Lightspeed to help bridge the digital divide.

Andrew: We also concluded an agreement with the Government of Ontario to use tall satellite speed to help bridge the digital divide.

Andrew: which along with our Government of Canada agreement previously announced.

Which along with our government of Canada agreement previously announced contributes to the over $750 million in contractual backlog, we had in place for Telesat light speed at the end of last year and again that backlog is incremental to the backlog that I mentioned earlier, where we ended.

Andrew: contributes to the over $750 million in contractual backlog we had in place for Telesat Lightspeed at the end of last year. And again, that backlog is incremental to the backlog that I mentioned earlier, where we ended last.

Last year lastly, we did a huge amount of work with the supply chain for lightspeed advancing the key technologies underpinning the high performing satellites and systems that are key to its operation.

Andrew: Lastly, we did a huge amount of work with the supply chain for Lightspeed, advancing the key technologies underpinning the high-performing satellites and systems that are key to its operation.

Andrew: As we noted last quarter, Thales Alenia Space, who we've been working with on Telesat Lightspeed, informed us late last year that the global supply chain issues out there will delay the construction and in-service date of the Lightspeed constellation. These issues are also putting upward cost pressures on the program.

As we noted last quarter tell us the linear space, who we've been working with on Telesat Lightspeed informed us late last year that the global supply chain issues out there well delay the construction and in service date of the Lightspeed constellation. These issues are also putting upward cost pressures on the program. We're working through this issue.

Andrew: We're working through these issues with TALIS now and we expect to share an updated business plan in the near term with the export credit agencies with whom we've been in discussions to provide financing for the program that will allow us to get those discussions moving again. Although these supply chain issues have been unwelcome, we remain enthusiastic about the prospects for TALIS at Lightspeed and are focused on completing the financing and commencing the full-scale construction of the program in the near term.

Who's with tell US now and we expect to share an updated business plan in the near term with the export credit agencies with whom we've been in discussions to provide financing for the program that will allow us to get those discussions moving again, although the supply chain issues have been on welcome we remain enthusiastic.

About the prospects for Telesat Lightspeed and are focused on completing the financing and commencing the full scale construction of the program in the near term.

Before so I mean up in <unk>.

Andrew: and handing over to Andrew, I wanted to note that I've spoken to a number of our debt investors over the past few months, including addressing a range of questions about Telesat Lights

Hand, it over to Andrew I wanted to note that I've spoken to a number of our debt investors over the past few months, including addressing a range of questions about telesat lightspeed, reflecting on those discussions we thought it was important to reiterate a few points on our call here. This morning sort of in the affirmative.

Andrew: Reflecting on those discussions, we thought it was important to reiterate a few points on our call here this morning, sort of in the affirmative, just so we're all...

So we're all.

Andrew: aligned on how we're thinking about the world. First, it's our plan, in the main, to operate our GEO business and our LEO business, Telesat Lightspeed, as an integrated business, which is to say the same management team, same sales team, technical and operations teams, and the same corporate support functions like finance, legal, human resources, IT, and the like.

Aligned on how we're thinking about the world of first it's our plan in the main to operate our G O business and our Leo business Telesat Lightspeed as an integrated business, which is to say the same management team same sales team technical and operations teams and the same corporate support.

Functions like finance legal human resources and the like the fact that Leo is being financed in a separate credit silo has been solely.

Andrew: The fact that Leo is being financed in a separate credit silo has been solely a function of the borrowing covenants that exist in our current credit facilities, not the fact that we think about it as a separate business.

Function of the borrowing covenants that exist in our current credit facilities not the fact that we think about it as a separate business.

Andrew: Second, Telesat Canada, our restricted entity, owns 100% of the equity of our LEO subsidiary, and we have no plans at this time to move that subsidiary out from under Telesat Canada.

Second Telesat, Canada are restricted entity owns 100% of the equity of our Leo subsidiary and we have no plans at this time to move that subsidiary out from under Telesat, Canada.

Andrew: And third, we expect our geoactivities will continue to generate significant cash, and we intend to use that cash in a way that strengthens the business, which could include paying down current debt and otherwise managing our leverage profile.

Third we expect our G O activities will continue to generate significant cash and we intend to use that cash in a way that strengthens the business, which could include paying down our current debt and otherwise managing our leverage profile.

Andrew: These are all points that we've made in the past, but we thought it would be useful to reiterate those points, given some of the questions we've been hearing.

These are all points that we've made in the past, but we thought it would be useful to reiterate those points given some of the questions. We've been hearing from folks we're going to be presenting at quite a few investor conferences over the course of this year and engaging with the market more broadly I'm, what's happening that tell us that including our expectations on <unk>.

Andrew: We're going to be presenting at quite a few investor conferences over the course of this year and engaging with the market more broadly on what's happening at Telesat, including our expectations on Telesat Lightspeed. So those will all be good opportunities to continue to drive these points home and share our enthusiasm more broadly about our future prospects.

Telesat Lightspeed, so those will all be good opportunities to continue to drive these points home and share our enthusiasm more broadly about our future prospects. So with that I'll hand over to Andrew and then I look forward to addressing questions. Thank you Dan and good morning, everyone. I would now like to focus on highlights from this morning's.

Andrew: So with that, I'll hand over to Andrew, and then I look forward to addressing questions.

Andrew: Thank you, Dan, and good morning, everyone. I would now like to focus on highlights from this morning's press release and filings. In 2021, Telesat reported revenues of $758 million.

Press release and filings.

'twenty, one case out reported revenues of $758 million adjusted EBITDA of $6 3 million and generated cash from operations of $296 million.

Andrew: EBITDA of $603 million and generated cash from operations of $296 million.

Andrew: and with over 1.4 billion of cash on the balance sheet a year in.

With over $1 4 billion of cash on the balance sheet at year end.

Andrew: For the full year of 2021 and compared to the same period in 2020, revenues decreased by $62 million to $758 million. Operating expenses increased by $6.5 million.

For the full year of 2021, when compared to the same periods of 2020 revenues decreased by 62 million to $758 million operating expenses increased by 53 million to $2 $44 million and adjusted EBITDA decreased by $56 3 million.

Andrew: 4 million and adjusted EBITDA decreased by 50 million to 6 or 3 million.

Andrew: The adjusted EBITDA margin was 79.6% unchanged compared to 2014.

The adjusted EBITDA margin was 79, 6% unchanged compared to 2020.

Andrew: Between 2020 and 2021, changes in the U.S. dollar exchange rate had a negative impact of $30 million on revenue.

Between 2020, and 21 changes in the U S. Dollar exchange rate had a negative impact of Turkey on revenues and a positive impact of 6 million in operating expenses and a negative impact of 25 million unadjusted EBITDA.

Andrew: positive impact of $6 million on operating expenses and a negative impact of $25 million.

Andrew: When adjusted for the changes in foreign exchange rates, revenues decreased by 32 million for 2021 compared to 2020, operating expenses increased by 59 million, and adjusted EBITDA

When adjusted for the changes in foreign exchange rates revenues decreased by Turkey to him, but he is for 2020 , one compared to 2020 operating expenses increased by $59 million and adjusted EBITDA decreased by $13 million.

Andrew: Exceeding the impact of foreign exchange, the revenue decrease was primarily due to a reduction of service for one of Telesat's North American direct-to-home customers and reduction of the non-renewable.

Excluding the impact of foreign exchange. The revenue decrease was primarily due to a reduction of service with one of.

North American direct to home customers and reduction or the non renewal of certain services in the enterprise segment.

Andrew: The revenue decline was partially offset by an increase in revenues associated with short-term services.

The revenue decline was partially offset by an increase in revenues associated with short term services provided to the satellite operator in 2021, which is not occurred in 2020 as well as increased services provided to customers in the mobility market as it began to recover from the impact of COVID-19.

Andrew: provided to another satellite operator in 2021, which did not occur in 2020, as well as increased services provided to customers in the mobility market as it began to recover.

Andrew: The increase in operating expenses was principally due to higher non-cash share-based compensation combined with higher wages due to the hiring of additional employees, all primarily to support the Telesat Lightspeed program. This was partially offset by higher capitalized engineering costs.

The increase in operating expenses was principally due to higher noncash share based compensation combined with higher wages due to the hiring of additional employees all primarily to support the Telesat Lightspeed program. This was partially offset by higher capitalized engineering costs compared to the fourth quarter of 2020 , one with the same periods of 2020.

Andrew: Comparing the fourth quarter of 2021 with the same period of 2020, revenues decreased by $14 million to $187 million.

Revenues decreased by $14 million to $187 million operating expenses increased by $40 million and adjusted EBITDA decreased by 15 billion to $1 45 billion.

Andrew: Operating expenses increased by 40 million and adjusted EBITDA decreased by 15 million.

Andrew: In other operating gains, we reported 108 million, primarily as a result of the recognition of phase one accelerated clearing payments for the repurposed.

Those are operating gains we reported 108 million primarily as a result of the recognition of phase one accelerated clearing payments for the Repurposing of U S C band spectrum.

Andrew: The gains and losses on financial instruments reflect changes in the fair values over interest rate swaps and the prepayment option on our senior and senior debt.

The gains and losses on financial instruments reflect changes in the fair values of our interest rate swaps and the prepayment option on our senior and senior secured notes for the full year of 2021, we recognized a loss of $19 million related to financial instruments.

Andrew: full year of 2021, we recognize the loss of 19 million related.

Andrew: We also recorded a gain in foreign exchange of $20 million for the fourth quarter and a gain of $28 million for the fourth quarter.

We also recorded a gain on foreign exchange of 20 billion for the fourth quarter and a gain of $28 million for the full year looking at tax expense for the year was 83 billion higher than 2020, and 2020 <unk> was able to recognize a deferred tax asset and significantly reduce its tax expenses, whereas no similar recognitions occurred in 2021.

Andrew: Looking at Pax, expense for the year was 83 million higher than 2020. In 2020, Telesat was able to recognize a deferred tax asset and significantly reduce its Pax expenses, whereas no similar recognition occurred in 2021. The balance of the increase

The balance of the increase in 2021 was primarily due to an increase in operating income a decrease in interest expense.

Andrew: For 2021, the cash inflows from operating activities were $296 million and the cash outflows used in investing activities.

But 2021 the cash inflow from operating activities were 296 million and the cash outflow was used in investing activities was $2 73 billion virtually all of the capital expenditures related to our low Earth orbit constellation as Kelly said Lightspeed.

Andrew: 3 million, virtually all of the capital expenditures related to a lower orbit constellation, telesat light speed.

Offset by the partial receipt of fever.

Andrew: Turning to guidance, as you will also have noted in our airings release this morning, we are providing preliminary 2022 guidance.

Turning to guidance as you will also have noted in our earnings release. This morning, we are providing preliminary 2022 guidance our guidance reflects a Canadian dollar to U S. Dollar exchange rate of one three for 2022 telesat expects its full year revenues to be between 770 billion on $740 million.

Andrew: Our guidance reflects a Canadian dollar to U.S. dollar exchange rate of 1.3. For 2022, Telesat expects its full-year revenues to be between $720 million and $740 million. As you're aware, the term

You're aware at the terminal or biotic at three contract with dish ends at the end of next month.

Andrew: and at the end of next month and our guidance reflects a range of potential outcomes surrounding

This reflects a range of potential outcomes surrounding that contract.

Andrew: Also in 2022, we expect to recognize a significant hardware sale and a provision of related services to DARPA, the U.S. government agency, under a contract we

Also in 2020 , two we expect to recognize a significant hardware sale under provisions of related services to DARPA. The U S government agency under a contract we announced in 2020 what.

Andrew: While we expect this activity to make a meaningful revenue contribution and the opportunity is considered very valuable in decision-making.

While we expect this activity to make a meaningful revenue contribution and the opportunity is considered very valuable than resisting.

See with government customers and whoever the expense associated with this contract is expected to be more or less equivalent to the revenue contribution.

Andrew: customers and however the expense associated with this contract is expected to be more or less equivalent.

Andrew: Hellisat expects its adjusted EBITDA to be between $525 million to $545 million in 2020.

<unk> expects its adjusted EBITDA to be between 525 billion to $5 45 minutes in 2022 2022 operating expenses are forecast to increase as a result of the additional cost of sales related to the government opportunity as mentioned on the ongoing impact of hiring for kind of your thoughts might be.

Andrew: In 2022, operating expenses are forecast to increase.

Andrew: cost of sales related to the government opportunity, as mentioned, and the ongoing impact of hiring for a telecom company.

Yeah.

Andrew: With respect to capital expenditures, and as Dan noted, we are continuing to work at this time to finalize our financing and contracts with our key suppliers. For now, we expect our 2022 cash flows used in investment.

With respect to capital expenditures expenditures and as Dan noted we are continuing to work at this time to finalize our financing our contracts with our key suppliers for now we expect our 2022 with cash flows used in investing activities to be in the range of 100 million U S dollars.

Andrew: be in the range of 100 million U.S. dollars to 120 million U.S. dollars, including capital expenditures to further advance our Lightspeed program.

And frankly, even in U S dollars, including capital expenditures to further advance our Lightspeed program and.

Andrew: And once we have greater visibility around the construction and financing of a programme, we will provide a further update on our anticipated capital extension.

Once we have greater visibility around the construction and financing of a program. We will provide affordable date other anticipated capital expenditures for the year, which of course could increase substantially.

To meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures, we have approximately $1 5 billion of cash and short term investments at the end of December as well as approximately 200 million in U S dollars of borrowings available under our revolver revolving credit facility.

Andrew: To meet our expected cash requirements for the next 12 months, including interest payments and capital...

Andrew: approximately 1.5 billion of cash in short-term investment.

Andrew: December , as well as approximately 200 million U.S. dollars of borrowings available under a revolving credit.

Andrew: Approximately £979 million in cash was held in their unrestricted...

Approximately 979 million in cash was held in the unrestricted subsidiaries. In addition, we continue to generate a significant amount of cash from ongoing operating activities.

Andrew: In addition, we continue to generate a significant amount of cash.

Andrew: end of the quarter leverage as calculated on the terms of the amended senior secured credit.

At the end of the quarter leverage as calculated under the terms of the tremendous senior secured credit facility was five seven times.

Andrew: was 5.7 times, TeddySat has complied with all the covenants in our credit.

Complied with all the covenants in our credit agreement.

Andrew: A reconciliation between our financial statements and financial covenant calculations is also provided in the report that we have filed.

A reconciliation between our financial statements and financial Covenant calculations is also provided in the report that we had filed this morning.

Andrew: As we have said, Telesat Canada has structured its investment in light speed through one

As we have said Telesat, Canada has structured its investment in lightspeed to unrestricted subsidiaries to date tell us that Canada has invested $1 1 billion in cash into these unrestricted subsidiaries to fund the development of our like the project.

Andrew: Today, Telecef Canada has invested $1.1 billion in cash into these.

Andrew: You will also note that a Form 20-F now provides condensed, consolidated financial information, and in particular, note 37 of the financial statements.

You will also note that our form 20-F now provides cause dense consolidated financial information.

Now 37 of the financial statements. The non guaranty subsidiaries shown is enough or essentially the unrestricted subsidiaries with minor differences.

Speaker Change: So I can say that concludes our prepared remarks for this call. I'm now very happy for us to answer any questions. And we'll like to thank you for your time.

So I can say that concludes our prepared remarks for this call and now very happy for us to answer any questions on that.

I'd like to turn it back to the operator.

Speaker Change: Thank you. We will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please lift your handset before making your selection. If you have a question, please press star 1 on your device's keypad. You may cancel your question at any time by pressing star 2.

Thank you, we'll now take questions from the telephone lines. If you have a question and using a speaker phone. Please lift your handset before making your selection you can have a question. Please press star one on your devices keep that make answering your question at any time by pressing star two.

Please press star one at this time.

A question there won't be a brief pause from other participants register for questions. Thank you for your patience.

Okay.

Yeah.

The first question is from Walter P Chip from light shed. Please go ahead.

Speaker Change: Next question is from Walter Pichik from LightShed. I think we can all appreciate that it's going to be an integrated offering between the GEO and the LEO to come, but obviously it's going to be a few years before we see LEO revenue, so I would just suggest that...

Thanks, Dan.

We can all appreciate that it's going to be an integrated offering between the G O in the in the Leo to come but obviously it's.

It's gonna be a few years before we see Leo revenue so.

I would just suggest that to the extent you can.

Walter Pichik: Breakout expenses that are incremental that otherwise wouldn't be there for Leo same thing on capex I mean even though I realize that capex is gonna have to ramp up to the billions But even on the 1 to 200 million of capex kind of what's incremental? In anticipation of the Leo I think would be would be helpful to kind of understand. What's what's going in the business So just maybe you know kind of thought on that We're going forward and then

Break out expenses that are incremental that otherwise wouldn't be there for Leo same thing on Capex I mean, even though I realize the capex is going to have to ramp up to the 1 billion, but even in the one to 200 million of Capex kind of what's incremental.

In anticipation of a Leo I think would be would be helpful to kind of understand what's what's going in the business. So just maybe you know kind of thoughts on that.

We're going forward and then.

Walter Pichik: In terms of the different outcomes for DISH, you said it's embedded within the guidance, but how should we think about this conceptually?

In terms of the different outcomes for dish.

You said, it's embedded within the guidance, but how should we think about this conceptually like what what.

Walter Pichik: What's the worst-case scenario? Is the worst-case scenario even possible? I mean, the worst-case scenario would require DISH to basically go send people to someone's home, I would think, and change the direction of their DISH, which seems unlikely. So can you kind of walk us through conceptually what are some of the possible outcomes there?

What's the worst case scenario is the worst case scenario, even possible I mean, the worst case scenario would require dish to basically go to send people to someone's home I would thinking.

And change the direction of there.

Of their dish, which seems unlikely. So can you kind of walk us through conceptually what are some of the possible outcomes there.

Yeah, and Walter Thanks in and.

Speaker Change: Yeah, and Walter, thanks, and I just want to comment on your thoughts. So we will give a whole lot more insight on CapEx, what's for LEO, what's for GEO. Same on the expense side, and I know my finance colleagues can speak to this better than I can. But I know in the...

Wanted to comment on your thoughts. So we we will give a whole lot more insight on Capex. What's you know for Leo what's for G O say.

Same on the expense side and I know my finance colleagues can speak to this better than I can but I know in the in the filing we made with the SEC today, we've now broken out.

Speaker Change: the problem we made with the fcg today we've now broken out

Speaker Change: You know, essentially the financials for the restricted group from the financials from the unrestricted group, which is a pretty good proxy for GEO and LEO. So

You know the essentially the financials for the restricted group from the.

<unk> financials from the unrestricted group, which is a pretty good proxy for G O N and M. Leo so.

Speaker Change: Folks have been asking for that for a while, which we always thought was reasonable, so we've done that. But no, we take your point, and that's what we plan to talk about the business-based thing. So was the reason that started, before you get to my second question, was the reason then for those comments, the prepared comments?

Folks have been asking for that for a while which we always thought was reasonable. So we've done that but no we take your point and and and and and that's why we plan to talk about the business base. So it was the reason that started for you to my second question was the reason then for those comments in the prepared comments just send a message to the debtholders that.

Speaker Change: to send a message to the debt holders that effectively as Leo grows, that that debt will not be stranded with the Geo business at a high leverage ratio, is that how you would interpret that? What we're trying to say is like chill. I get the same questions from investors like every other day. Why did you finance Lightspeed in a separate group? We keep

Effectively as Leo grows that the that that will not be stranded with the geo business at a high leverage ratio that is that what we're trying to interpret that.

What we're trying to say is like chill I get the same questions from investors like every other day why did you finance you know lightspeed in the separate group you know where do you go ahead.

We keep we keep we keep telling everyone got no plans to dividend out you know lights.

Speaker Change: Keep telling everyone, we've got no plans to dividend out, you know, Lightspeed. We've got no plans to run it as a separate business.

Lightspeed, we've got no plans to run it as a separate business.

Speaker Change: We've got no plans to, like, violate our covenants and, you know, be, you know, funneling cash out that, you know, that we're not allowed to. We keep saying those things, but, you know, I don't know. I thought myself. I haven't been sufficiently clear. So we thought we'd be, I don't know, kind of affirmatively emphatic. Like, that's what it is.

We've got no plans like violate our covenants and fun.

Bundling cash out that you know that we're not allowed to we keep saying those things, but you know I I don't know I felt myself I havent been sufficiently clear. So so we thought we'd be I don't know kind of affirmatively emphatic like that's what it is.

Speaker Change: And look, we announced I thought a good contract with a longstanding customer, Inuvu, earlier in the quarter. Or maybe Inuvu announced it. I'm looking at John . Yeah, they announced it. We didn't announce it. But they were emphatic. Hey, we did this meaningful deal on Telstar 19V. It's for a bunch of capacity that serves the Caribbean. But we think about it as a bridge to Lightspeed.

And look we announced I thought a good contract with.

<unk>, a long standing customer knew who are earlier in the quarter or maybe a newbie, who announced it I'm looking at John Yeah. They announced it we we didn't announce it but but they were emphatic hey, we did this meaningful deal until start 19 V. It's for a bunch of capacity that serves the Caribbean, but we think about it those are bridged to lightspeed.

And for me I don't know it was just perfectly reinforces what we've been trying to say to everyone, which is like this just works like doing lightspeed. It's good for folks in G. O. The fact that we're current Geo operator is good for our prospects on lightspeed, so anyway, I'm going to keep making the point.

Speaker Change: And for me, I don't know, it just perfectly reinforces what we've been trying to say to everyone, which...

Speaker Change: like this just works like doing light speed. It's good for folks in geo. The fact that we're a current geo operator is good for our prospects on light speed. So anyway, I'm going to keep keep making the points.

Speaker Change: But honestly, I wish I'd get the questions a little bit less, you know.

But honestly I wish I'd get the questions a little bit less.

Speaker Change: But anyway, you asked the question, Walter, why we go out of our way to hammer those points home.

But anyway that you asked the question Walter why we go out of our way to Hammer those point shown it's it's because we keep getting these questions in and some folks have asked us be explicit so we're being explicit I don't know how to be more explicit well.

Walter Pichik: It's because we keep getting these questions and some folks have asked us, be experts.

Walter Pichik: So we're being explicit. I don't know how to be more explicit. Well, you know, in Canada there are two official languages. We can do it in French as well, if that would help us. When you talk to equity holders, the focus may turn towards the Leo and the NPV opportunity of the Leo. Yeah, yeah, yeah, and that's the other thing I tried to say, which is...

In Canada.

There are two official languages, we can do it in French as well if that would help us.

Where you talked to equity holders the focus may turn to towards the Leo and the MPV opportunity you have to leave.

No no no.

And that's the other thing I tried to say which is not bad.

Walter Pichik: And then though, I want to be clear on that, too. You know, we've been told rightly, so guys got to get out there more and tell us what's going on with your lightspeed plans. And when we agree, so we're signed up for more investor conferences than I care to do, but we're doing them anyway. So we're going to be up there a lot. Now we need to finish with

And then though I want to be clear I'm not to we know we've been told rightly. So that's got to get out there more and tell us what's going on with your Lightspeed plans and when we agree so were signed up for more investor conferences, and I care to do but we're doing them anyway. So we're gonna be out there a lot now we need.

To finish with our lenders and I'll talk about that we need to finish with our R. R.

Walter Pichik: our lenders, and I'll talk about that. We need to finish with our contractors on Lightspeed, and then we're going to be able to say more. But look, we posted an investor deck on our website from a non-deal roadshow we did toward the end of last year.

Contractors on Lightspeed in and then we're gonna be able to say more but but look we posted an investor deck on our website from a non deal road show, we did towards the end of last year.

Walter Pichik: we're giving people, I think, some pretty good building blocks so that they can think about light speed. We said what the TAM is, we've said the amount of that TAM that we think that we can capture, we've told people directionally what the total cap x is on

We're we're giving people I think some pretty good building blocks. So that they can think about lightspeed, we said with the Tam as we've said the amount of that Tam that we think that we can capture.

Old people Directionally, what the total capex as a on the constellation we said, what we think our EBITDA contribution margins going to be so.

Walter Pichik: Constellation, we said what we think our EBITDA contribution margin is going to be, so.

Speaker Change: I'm no financial analyst, but that's a lot, you would think, to help people. You provide the basic algebra, yeah, to come up with the revenue. Anyway, I mean, it's not to say we're not gonna... That'd be hard for people. And it's not to say we're not going to give a whole lot more when, you know, this thing's nailed down a little bit more, but we've tried to give people some information so that they can start to appreciate.

No financial analysts, but that's a lot you would think to.

How do you think algebra, yeah to come up with a revenue anyway.

We're not gonna hard for Pizza hut.

And it's not just it's not to say, we're not going to give a whole lot more when you know those things nailed down a little bit more but but but we've tried to give people. Some information. So that they can start to appreciate candidly why why we are so.

Speaker Change: candidly why we are so enthusiastic about Lightspeed. So anyway, but back to your question.

These yardstick about lightspeed, so anyway, but but back to your question.

Speaker Change: uh... dish range of outcomes i mean popular ranger outcomes is they don't renew people who can do here here's what we think right now and it's contracts up you know

Dish range of outcomes I mean, the range of outcomes is they don't renew it fully renewed here here's what we think right now I mean, there's contracts up you know.

Speaker Change: in about six weeks' time, so. My own feeling is it's looking like a partial renewal. I mean, and this satellite's got about three years of life.

It's been about six weeks time, so my own feeling is it's looking like a partial renewal.

And and the satellite Scott about three years of life left on it.

Speaker Change: So, you know, it's feeling like a partial renewal, and then we're not done, but that's what it feels like.

So you know, it's it's it's feeling like a partial renewal.

And and then we're not done but that's what it feels like.

And.

Speaker Change: But even with the partial renewal, I mean, you saw even, you know, at the upper ends of our guidance, you know, revenue is still down. The biggest driver of revenue and EBITDA being down this year, if you look at our guidance, it's still, you know, the impact of the fact that that this contract is, you know, coming to an end. So it feels right now like we'll get a partial renewal.

But even with the partial renewal I mean, you saw even you know the upper ends of our guidance you know revenue was still down but the biggest driver of our revenue and EBITDA being down. This year. If you look at our guidance. It's still you know.

The impact of the fact that that dish contract is coming to an end. So it feels right now like we'll get a partial renault.

Speaker Change: And we've been busy in the market looking to sell the rest of the capacity and we're feeling pretty good about that right now and we've always said it's attractive capacity. So that's, yeah, and as Andrew said in his remarks, our guidance kind of embraces.

And we've been busy in the market are looking to sell.

So the rest of the capacity and we're feeling pretty good about that right now and we've always said it's attractive capacity. So that's yeah and as Andrew said in his remarks, our guidance kind of embraces those outcomes that you know kind of the low end.

Speaker Change: those outcomes that, you know, kind of, you know, the low end of the range, we, you know,

The range, we you know Theres no dish renewal.

Speaker Change: no dish renewal, but if, I don't know, our own guess is to partial renewal and then we'll, I hope, if things go well, have the rest of that capacity under contract, you know, certainly by the end of this year.

Hum.

But if I don't know our own guesses to partial renewal and then we'll I hope if things go well have the rest of that capacity under contract.

Yeah, certainly by the end of this year.

Speaker Change: You're right. Anyway, I'm sorry, Walter. I just want to just, like, that's what it feels like to us right now. So, you know, but that, you know.

Got it anyway.

I'm, sorry, what I was just wrong.

Right, that's what it feels like to US right now so you know, but that's you know that.

Speaker Change: That's our best feel right now for where it's going to land. Right. And without anything announced with DirecTV as of yet, it doesn't sound like anything should change those negotiations substantially. Look, I mean, we've said this before. We never saw a potential Dish-DirecTV combination as any kind of factor influencing whether they would renew.

That's our best feel right now for where it's Gonna look right now without the right and without anything announced with Directv as of yet it doesn't sound like anything should change those negotiations substantially look I mean, we've said this before we're never we never saw a potential dish Directv combination as any kind of.

Factor influencing whether they would renew annick asked three or not that that for US was always about you know just how important those those.

Speaker Change: Anik F3 or not, that for us was always about, you know, just how important those kind of

Foreign language broadcast channels, which is a lot of what they do with that satellite how valuable. It is for them to continue with those activities. So no. We don't you know Directv dish combination for us was never going to be a factor for that renewal.

Speaker Change: broadcast channels, which is a lot of what they do with that satellite, how valuable it is for them to continue with those activities. So no, we don't, you know, DirecTV dish combination for us was never going to be a factor for that reason.

Speaker Change: Just one other, if I may, you know, OneWeb is in a bit of a rough spot right now, but if there's a scramble for launch, you know, launch locations elsewhere.

Just one other if I may you know one web is a bit of a rough spot right now, but if there's a scramble for launch lunch locations elsewhere.

Speaker Change: Do you think that potentially has any impact on the timing of light speed, or is it really just supply chain would tell us at this moment?

Well it did.

Do you think that potentially has any impact on the timing of lightspeed or is it really just supply chain, but tell us at this moment.

Speaker Change: the latter we we feel like we're good on the launch side the the things that have delayed our program uh... yeah i mean it

The ladder, we we feel like we're good on the launch side.

The things that are delayed our program.

Yeah, I mean it.

Speaker Change: It's pretty simple. It's the delays that Dallas shared with us kind of late last year. That's what's caused us to have these few months of delay here.

It's pretty simple, it's the delays that tell us share with us kind of late last year that that's what's caused us to.

These few months of delay here.

Okay. Thank you.

Okay. Thanks.

Thank you.

Speaker Change: The next question is from Mike Pace from J.P. Morgan. Please go ahead.

The next question is from Mike pace from Jpmorgan. Please go ahead.

Hi, good morning, Thanks for taking the questions Dan I appreciate the commentary on the structure and ownership unrestricted subs restricted group things like that I guess, but to have something a little bit more specific.

Mike Pace: Hi, good morning. Thanks for taking the questions. Dan, I appreciate the commentary on the structure and ownership, unrestricted subs, restricted group, things like that, I guess, but to ask something a little bit more specific.

Mike Pace: You know, would you expect there to be any requirements in any pending debt documents for LEO funding that would require the ownership structure to remain in place? Or is this just how you want, how you envision running the two businesses or businesses together or is it both?

Would you expect there to be any requirements and any pending debt documents for Leo funding that would require the ownership structure to remain in place or is this just how you want how you envision running the two businesses or businesses together or is it both.

Speaker Change: Chris, our general counsel is here. Chris, you're closer to the...

Chris <unk>, our general Counsel is here, Chris could you are closer to the vest and items that you want to talk to you well I think that we that we certainly expect covenants with respect to the way that tell us that Canada and the Lea subsidiary are going to deal with each other for sure in terms of.

Chris: that the nines unit popular i think that we that that we certainly expect covenants uh... with respect to uh... the way that tell us that canada and the leah subsidiary of going to deal with each other uh... for sure in terms of

Chris: Covenants with respect to ownership, we don't know right now. It's a little bit early, we haven't gotten to that level of detail in negotiating with

Covenants with respect to ownership, we don't we don't know right now it's a little bit early we haven't gotten to that level of detail and negotiating with with the EC as an end and the other lenders. So it's unclear.

Chris: with the ECA's and the other lenders.

Speaker Change: Okay, appreciate that. And then back to DISH, and I realize, look, revenue in EBITDA guidance is ranges of $20 million or so, and it sounds like the majority or all of that is related to DISH. I guess, just to be clear, that's

Okay I appreciate that.

And then back to dish and I realize look revenue and EBITDA guidance ranges of 20 million or so and you know it sounds like the majority or all of that is related to dish I guess just to be clear that's <unk>.

Speaker Change: versus the dish renewals versus, there's a $20 million range versus your expectations or a $20 million range or potential $20 million lower from what you were getting in prior periods, just to put a little bit more specific.

Versus the dish renewals versus there's a $20 million range versus your expectations or a $20 million range or potential $20 million lower from what you were getting in prior periods just to put a little bit more specificity on that.

Speaker Change: I didn't totally follow that, Mike. I can tell you, you know, if there was no dish renewal

I didn't totally followed that Mike I can tell you you know if there was no dish renewal we're still in the range you know we built the range too.

Speaker Change: We're still in the range, you know, we built the range to.

Speaker Change: uh, you know, deal with that outcome. We haven't given the biggest range in the world either. It's $20 million. So I mean, but that reinforces, I think what we've always said about our business, which is so predictable. We've got so much backlog. We know our customers. I mean, for the most part, we can call this stuff even with a big

You know deal with that outcome, but we haven't given the biggest range of the world either it's $40 million. So yeah. I mean, it's I mean, but that reinforces I think what we've always said about our business, which is so predictable they've got so much backlog, we know our customers I mean for the most part we can call this stuff, even with a big swinger out there.

Speaker Change: swinger out there you know like like like this dish renewal we're still

You know like like like this dish renewal, we still feel confident about giving a guidance range. That's as narrow as it is so to be clear I'll try to be clear.

Speaker Change: Confident about, you know, giving a guidance range that's as narrow as it is. So to be clear.

Speaker Change: If there was no dish renewal, then we're still within the range. Yeah, more at the bottom end, obviously.

If if there was no dish renewal then we're still within the range yeah more at the bottom end obviously.

Speaker Change: So, yeah, I hope that answers your question. Yeah, no, it kind of does, but just to add a little bit to it, is that, like, if there was no dish renewal, is that because...

So yeah, I I hope that answers your question Yeah, no. It kind of does but just to add a little bit to it is that like if there was no dish renewal is that because you can repurpose. The satellite for other uses and can you repurpose that satellite for enterprise I guess as well I forget which of the dish satellites or DPA yeah.

Speaker Change: repurpose the satellite for other uses and and can you repurpose that satellite enterprise i guess as well i forget which of the dissatellites are going to be on the only

Yes.

Speaker Change: Yeah, no, the entire satellite can can be.

Entire satellite can can be repurposed for yeah. Other applications. It's a good ku band satellite with great coverage over kind of North America, good coverage over the Caribbean.

Speaker Change: repurposed for, yeah, other applications.

Speaker Change: KU band satellite with great coverage over kind of North America, good coverage over the Caribbean. So yeah, no, and we've talked about this before, it's what has always made us feel

So yeah, no and and and and we've talked about this before it's what has always made us feel.

Speaker Change: You know, we'd like a dish renewal, but we've always felt confident that if we didn't get one that there'd be, yeah, you know, meaningful demand for the capacity. Now, you know, it might take us a little bit more time to fill it up, and, you know, there's rates and all of that, but, yeah, yeah.

What were you know, we'd like a dish renewal, but we've always felt confident that if we didn't get one.

That there'd be.

You know meaningful demand for the capacity now you know it might take us a little bit more time to fill it up and you know theres rates and all of that but.

But yeah, yeah, we always felt.

Speaker Change: comfortable. And if we end up with a partial renewal, then we'll be getting, you know, obviously some capacity back because it's only a partial renewal. And we're bullish about our ability to resell that capacity and reasonably

Comfortable and if we end up with a partial renewal then we'll be getting you know obviously some capacity back because it's only a partial renewal.

And we're bullish about our ability to.

Resolve that capacity and and and and reasonably timely too.

Speaker Change: But ANIC F3 could be used for enterprise services, not just DTH services? Yeah, 100%. Got it. Okay.

And he kept three could be used for enterprise services, not just dth services, yeah, 100% got it Okay and then standard.

Speaker Change: And then just to ask a little bit more from a prior question, and this is something we get quite often is.

Oh, I'm, sorry, and then just just to ask a little bit more from a prior question and it's just something we get quite often is.

Speaker Change: I haven't had time to read through the entire 20-F yet this morning, but just getting back to what the LEO EBITDA drag was in 2021, and rounding is encouraged here, can you just help us out? I mean, I see an OPEX number for non-guarantor subs. Is that basically the number? And then embedded within the guidance also for 2022, can you help us understand what type of LEO EBITDA drag is incorporated into that?

And I haven't had time to read through the entire 20th forget this morning, but just getting back to what the LIFO EBITDA drag was in 2021 and rounding as encouraged here can you just help us out I mean, I see an opex number for non guarantor subs is that basically the number and then within embedded within the guidance also for 2022.

To can you help us understand what type of Leo EBITDA drag is incorporated into that.

Speaker Change: Yeah, I'll let Andrew talk about it. I mean, just to be clear, we don't think about it as a drag. We think about it as smart investments in our future growth, which we think is going to benefit all of our stakeholders. But anyway, Michael Belytha, do you want to? OK, so yeah, Mike. So in the NOAA Guarantor note.

Yeah, I'll, let Andrew talk about it I mean, just to be clear, we don't think about it as a drag we think about it as smart investments that are in our future growth, which we think is understood benefit all of our stakeholders, but but anyway.

Michael I thought do you want to okay. So yeah, Mike so in the non guarantor notes substantially the operating expenses are the subsidiaries.

Michael Belytha: The incremental drag on that is we sort of think it's about...

The incremental drag on that.

As we sort of think it's about them.

Adjusted EBITDA is down.

Michael Belytha: adjusted EBITDA is down at the midpoint in the

Midpoint.

Our guidance is about $75 million and of that $75 million. The additional REO drag would be on the order of 15% of that yeah, let's not do this drag thing don't find it migration.

Michael Belytha: million dollars and of that seventy five million dollars

Speaker Change: Yeah, let's not do this drag thing. Don't buy in the mic. It's all good. Yeah, we are spending for our future. Yeah, we are. We're investing. I mean, we understand why you're asking the question, but just for everyone's benefit. Like, yeah, we're, we're, you know, we're

Okay. Okay. So yes, we are.

Our spending for our future we are investing I mean, there's we understand why you're asking the question, but just for everyone's benefit like yeah, where we're.

No.

Speaker Change: We husband our money pretty carefully. We don't invest it, we hope, in a dumb way, so. Anyway, but we take care.

My husband, our our our money pretty carefully.

We don't invest it in a we hope a dumb way so anyway before we take your point that.

Speaker Change: Dan, fair enough. From now on, I'll say Leo Investment. How about that? Got it. Sorry, just one more quick one. Might not be easy for you, but I guess as it relates to the TALUS agreement, there's supply chain timing issues and then you talked about...

Dan Fair enough from that one I'll say Leo investments how about that so.

Got it I'm sorry, just one more quick one might not be easy for you, but I guess as it relates to the tower agreements right. There's supply chain timing issues and then you talked about potential incremental costs can you is there a way to quantify I guess you have two choices right pay more for the same constellation or.

Speaker Change: potential incremental cost. Can you, is there a way to quantify, I guess you have two choices, right? Pay more for the same constellation or make the existing project or constellation a little bit smaller and then maybe spend similar amounts. So can you quantify the potential increase in cost on the same constellation? And then if you have to do something on a little bit on the smaller scale side of things.

Make the existing project a constellation of little bit smaller and then maybe spend a similar amount. So can you quantify the potential increase in cost on the same constellation and then if you have to do something on a little bit on the smaller scale side of things.

Speaker Change: What are the implications there for the business plan and revenue?

What are the implications there for the business plan in revenue and things like that.

Speaker Change: Yeah, no, that's a great question. And if you, you know, when you work through the 20F.

Yeah, No. That's a great question and and if you you know when you work through the 20-F, which is voluminous.

Speaker Change: Yeah, that's kind of how we lay it out, which is, you know, yeah, it's a tube of toothpaste. You either, if costs are going up, and we are hearing from TALS that there are cost pressures, right? These supply...

Yeah, that's kind of how we lay it out which is you know yeah. So tubes of toothpaste you either way if costs are going up and we are hearing from towel sit there are cost pressures like the supply chain got it and you see it everywhere, but there are supply chain issues, which are causing delays and there are inflationary pressures just across.

Speaker Change: You see it everywhere, but there's supply chain issues which are causing delays and there are inflationary pressures just across the entire economy.

The entire economy, right now and we're getting bitten by kind of both of those things right now.

Speaker Change: we're getting bitten by kind of both of those things right now. And that's exactly how we kind of frame it in the 20F, which is, you know, it means if we still, you know, are focused on launching, you know, we've talked about light speed is 298 satellites and the costs are going up, then we either need to raise more money or we need to de-scope the constellation.

And that's exactly how we kind of frame it in the 20-F, which is you know it means if if if we still you know we're focused on launching we've talked about lightspeed is 298 satellites and the costs are going up then and where they need to raise more money or we need to scope the constellation and.

Speaker Change: and bring CapEx down so it fits within the same spending envelope that...

And bring capex down so it fits within the same spending envelope that you know we had before those cost pressures emerged.

Speaker Change: you know, we had before those cost pressures emerged.

Speaker Change: Um, but but so you framed it exactly right. That's how we talk about it in the 20 F. And yet, um, it's still a wee bit too early for us to say

But so you framed it exactly right. It's all we talk about it in the 20-F and yet.

It's still a wee bit too early for us to say like which direction. We're going to go here, but I will note. We've got a lot of scope, if we want to to trying to downsize the number of satellites.

Speaker Change: Like which direction we're going to go here, but I will note we've got a lot of scope if we want to.

Speaker Change: To kind of downsize the number of satellites, you know, we, the light speed with 298 satellites, you know, is.

This the lightspeed with 298 satellites you know is.

Speaker Change: provides 15 terabits of capacity, and is kind of all singing and all dancing, and is an immensely advanced and powerful constellation. But I know there was also the case that we were launching.

Provides 15 terabits of capacity and you know, it's kind of all singing all dancing and as you know are immensely advanced and powerful constellation.

But I know there was also the case that we were launching.

First you know our launch cadence was kind of where first putting up 78 satellites and polar and then we're putting up another 110 satellites.

Speaker Change: first, you know, our launch cadence was kind of, we're first putting up 78 satellites in polar, and then we're putting up another 110 satellites in inclined orbits. They're more equatorial orbits. And then we're gonna supplement, you know, that, that'd be 188 satellites combined. Then we're gonna supplement it with another 110, I guess, to make the math right, to get to 298. But it was our plan, once.

And in inclined Orbitz theyre more equatorial Orbitz and then we're going to supplement you know that that'd be 188 satellites. Combined then we're going to supplement it with another 110, I guess to make the math right to get to 298, but it was our plan once the polar and those.

Speaker Change: the the polar in those first inclined satellites were up so you know that's uh... hundred eighty-eight we're gonna uh... global coverage with those hundred eighty-eight satellite we're gonna already start turning on the customers and including all these government of canada customers and start generating revenue and even on the like and then and then the the next hundred and ten we're going to come uh...

First inclined satellites for up so you know that's the 188, we were going to you know.

Have a global coverage with those 188 satellites, we're gonna already start turning on the customers and including all of these government of Canada customers and start generating revenue and EBITDA and alike, and then and then the the next hundred 10, we're gonna come.

So it's.

Speaker Change: All to say that, even with a hundred less satellites, for instance, you still have terabits and terabits of capacity in a very capable global constellation that we feel good about. So, anyway, but we're thinking about which way we go right now. And just sitting here on Friday.

All to say that.

Even with you know 100 less satellites for instance, still have terabits of Terabits of capacity and a very capable global constellation that you know.

But we feel good about so anyway, but we're thinking about which way. We go right now and just sitting here you know on Friday March 18th we'd just rather not put a pin in it right now I do think that by the end of next quarter.

Speaker Change: March 18th, we'd just rather not put a pin in it right now. I do think that by the end of next quarter, so end of June .

So you know end of June .

Speaker Change: we'll have a real good sense for, you know, what's the constellation gonna look like, where we are, I think, with the ECAs.

Well, we'll have a real good sense for you know what's the constantly just gonna look like.

Where we are I think with the E C H.

Speaker Change: And we're going to be able to, yeah, be much more definitive about that.

And we're going to be able to.

Yeah be much more definitive about that so anyway, but it was you.

Speaker Change: So anyway, but it was, that's the right question to ask. And yeah, and that's how we're thinking about it right now.

That's the right question to ask and and Yeah, and that's how we're thinking about it right now great. Thank you.

Thank you.

Thank you. The next question is from our own chassis from credit Suisse. Please go ahead.

Speaker Change: Thank you. The next question is from Aaron from Credit Suisse. Please go ahead.

Okay.

Aaron: Yes, hi guys. Thanks for taking my question. Just, you know, just going back to us for a second on the Thales question.

Yes, hi, guys. Thanks for taking my question.

Just you know just going back to us for a second on the tablet question.

Aaron: You know, I think you said before that by early February , we're supposed to hear a more sort of exact timeline from them updating you from sort of the general guidance they gave you late last year. Did that specifically happen or are you still waiting? I guess if that's the first question. And secondly,

No I think you said before that body by early February we're supposed to hear a more more sort of exact timeline from them updating you from sort of the general guidance. They gave you late last year did that specifically happen or are you still waiting I guess, if that's the first question in the <unk>.

Lee.

Aaron: You know, what has changed, you know, from in your communication with them, I guess, you know, from late last year to today?

You know what has changed from in your communication with them I guess.

<unk> made last year to today.

Aaron: maybe even qualitatively to provide us and obviously we understand that the supply chain issues and specifically but qualitatively what materially has changed relative to your funding the plan and sort of the details related to that?

Even quantitatively to provide us and obviously, we understand that the supply chain issues and specifically, but qualitatively what what materially has changed relative to your funding plan and sort of the details related to that.

Yeah, no so yeah.

Aaron: Things, I would say, are unfolding kind of like we expected, which is to say we have heard from TALIS, and, you know, I think we've got.

Things I would say are unfolding kind of like we expected which is to say we have heard from towers.

Hum.

And I you know I think we've got.

Aaron: So on schedule, it's more or less coming in like we had sort of indicated before. It feels like in terms of when we'll enter kind of global commercial service, it feels like we're, you know, going to be about a year late. We thought we were going to be.

So on schedule.

It's more or less coming in like like we had.

I had sort of indicated before it feels like in terms of when we'll enter kind of global commercial service it feels like we're.

It's going to be about a year late we thought we're going to be.

Aaron: You know, before we hit these supply chain issues, 2025 for global service, it now feels like we're a year behind that. So it feels like 2026, I think, will be, you know, if things unfold the way we think they will right now, we'll be launching in 2025 and entering service in 2026.

Before we hit the supply chain issues 2025.

For our global surface. It now feels like we're a year behind that so it feels like 2026, I think will be you know if things unfold. The way we think they will right now it'll be launching in 2025 and entering service in 2026, it's not where we wanted but that's what that feel.

Aaron: It's not what we wanted, but that's what that feels like right now. I will say we're not the only guys, you know, getting delayed right now when I look at... And we're getting delayed, you know, in part for a lot of the same issues, supply chain issues. I've heard, you know, at least one other LEO constellation is backed up because of supply chain issues.

So like right now I will say, we're not the only guys you know getting delayed right now when I look at it and we're getting delayed.

In part for a lot of the same issues supply chain issues I've heard you know let me just one other Leo constellation is backed up because of supply chain issues.

<unk>.

Other Leo constellations, they've moved to the right just because they've moved to the right.

Aaron: And other LEO constellations, they've moved to the right just because they've moved to the right. And in OneWeb's case, they've now got this launch issue, which I'm sure is going to be kind of schedule impacting for them in terms of when they can enter service. So anyway, so we have heard from TALIS. I mean, God, we speak to TALIS a lot.

And in one web scale, they've now got this launch issue, which I'm sure is going to be kind of schedule impacting for them in terms of when they can enter service. So anyway shall we have heard from Dallas.

We speak to tell us like 20 times, a week it feels like and so.

Aaron: twenty times a week it feels like and so uh... that's what it feels like uh... from a schedule perspective

That's what it feels like from a schedule perspective.

Aaron: And from a cost perspective, we've got, I would say, something that's preliminary right now, but we're expecting to get something more definitive from them. We're hoping by the end of next month.

And.

From a cost perspective, we've got I would say something that's preliminary right now, but we're expecting to get something more definitive from them.

We're hoping by the end of next month.

Aaron: Um, and so, yeah, you know, the, the, the, the pace of communications and the pace at which we're receiving information, yeah, it's kind of consistent with the timeline that that we had talked about.

And so yeah, you know the the the pace of communications and the pace at which we're receiving information yeah, it's kind of consistent with the timeline that we had talked about before.

Great. That's helpful. Dan. Thank you and then as far as the the second question I had was more in terms of you know you've got obviously some cash into restricted sub in the in the G O sub right now.

Speaker Change: Great, that's helpful Dan, thank you. And then, as far as the second question I had was more in terms of, you know, you've got obviously some cash in the restricted sub, in the geo sub right now.

Speaker Change: debt that trades at extremely discounted levels and you have basically cash that...

That the trade at at extremely discounted levels.

You know and and you have basically cash debt.

Speaker Change: It sounds like you're still relatively confident in getting the Leo project in totality fully funded. So, I guess two questions come up.

Like you were still relatively confident.

And getting the Leo project in totality fully funded so so I guess the question two questions come up one what is preventing you from reducing debt by buying that back at a discount Ah and actually making the debt structure, thereby more sustain.

Speaker Change: what is preventing you from reducing debt by buying debt back at a discount and actually making the debt structure thereby more sustainable on the geo side? And second, related to that, do you think the shortfall in your funding capability is so large that it freezes you from doing anything opportunistic to reduce your debt balance?

Double on the Geo side and second do you in it related to that do you think the shortfall in your funding capability is so large that it raises you from doing anything opportunistic to reduce your debt balances.

Speaker Change: Well, I'll start with the second question, which is no. And look, I mean, we know that that.

Well I'll start with the second.

Question, which is.

No and look I mean, we know that.

We were subject to you know a whole range of covenants. It precludes our ability to you know to a point to move money from the restricted group to the unrestricted group. So so we know that we're going to have cash building up there and I'll. Just say you know even if you know we needed to find other you know.

Speaker Change: We're subject to a whole range of covenants. It precludes our ability to.

Speaker Change: you know to to a point to move money from the restricted group to the unrestricted group so so we know that we're gonna have cash building up there and all to say you know even if you know we needed to find other you know uh... of money more you know financing for lights

Money more.

Financing for Lightspeed, you know, we can only do so much you guys probably know better than I do.

Speaker Change: You know, we can only do so much, you guys probably know it better than I do.

Speaker Change: uh... in terms of what you know can come out of the restricted sub so so no i think you know we're gonna be generating a lot of cash in geo

In terms of what can come out of the restricted sub so so no I think you know we're going to be generating a lot of cash in G O.

Speaker Change: it's going to be building up in the restricted group, and so I don't think that...

<unk> be building up in the restricted group and so I don't think that we're gonna be constrained in terms of our ability. If we think it's the right thing to do.

Speaker Change: we're gonna be constrained in terms of our ability if we think it's the right thing to do to reduce debt over time. So that's the second question. First question, what stopped us from doing it today?

To reduce debt over time, so that that second question first question what stopped us from doing it today.

Speaker Change: You know, I mean, you can't be in the market buying your debt or securities if you've got, looking at our general counsel, material non-public information. And so, you know, until we put out our numbers and gave our guidance and whatnot, we were precluded from being in the market, buying that debt, which we also see as, you know, trading at levels that...

I mean, you can't be in the market buying your debtor securities if you've got looking at our general counsel material Nonpublic information and so you know until we put out our numbers and gave our guidance and whatnot, we were precluded from being in the market.

Buying that debt, which we also see as you know trading at levels that.

You know.

Speaker Change: look kind of crazy low to us. And so, yeah, that's what had precluded us and for sure could be a very attractive, creative opportunity for Telesat to use some of that cash that, you know, is in the restricted group to take advantage of what might be an attractive opportunity in the market.

Look kind of crazy low to us and so yeah that that that that's what had precluded us and for sure. It could be a very attractive accretive opportunity for telesat to use some of that cash that you know is in the restricted group too.

Take advantage of what might be an attractive opportunity in the market.

Speaker Change: Got it. Thank you for those comments, Dan. And to your point, is the, I think in prior years, you haven't given point guidance, you know, necessarily. So the fact that you're, you're, you're sort of hinting that that giving point guidance and sort of encapsulating dish there could, could be related to that.

Got it. Thank you for those comments, Dan and to your point it would be I think in prior years, you Havent given point guidance you know necessarily so the fact that you're you're sort of hinting that giving point guidance and sort of encapsulating dish there could could be related to that.

He just said right.

Dan Goldberg: I'm not familiar with the term point guidance. I mean, because our equity wasn't public, the only guidance we ever gave was CapEx guidance, but I think we were always clear, once the equity became public, like other publicly traded companies, it's not our favorite thing to do, but we felt like we had to. We had to give some guidance on revenue, adjusted EBITDA, and CapEx. So that's why we did that. Understood.

But I don't I'm not familiar with the term point guidance.

I mean, we because of our equity wasn't public the only guidance. We ever gave was capex guidance, but I think we were always clear once the equity became public like other publicly traded companies its not our favorite thing to do but we felt like we had to we have to give some guidance on revenue.

Our adjusted EBITDA and Capex, so that that's why we did that.

Understood.

Understood. Thank you very much.

Speaker Change: Thank you.

Thank you.

Yeah.

Thank you. The next question is from Harry <unk> from Aries. Please go ahead.

Yeah.

Hi, guys. Thanks for taking the questions.

Speaker Change: Thanks for taking the questions. I guess a couple of questions on the forecast. Can you just quantify how much of that

I guess couple of questions on the on the on the forecast can you just quantify how much.

Of that revenue in 2022 is coming from the government contract you're talking about.

Speaker Change: revenue in 2022 is coming from the government contract you talked about?

Yeah. It usually you know we actually disclosed it we issued a press release announcing so the government contract that we referred to.

Speaker Change: Yeah, easily. You know, we actually disclosed it. We issued a press release announcing. So the government contract that we refer to, and we think it's a great contract for Telesat. I mean, it's not very accretive from a cash flow perspective, but we won an opportunity back in kind of late 2020 where we're building two satellites for DARPA, you know, the...

It's a great contract for Telesat I mean, it's not very accretive from a from a cash flow perspective, but what we want.

An opportunity a back in the kind of late 'twenty 'twenty, where we're building.

Two satellites up for DARPA.

<unk> stand for Defense Advanced Research projects agency, it's basically the Pentagon.

Speaker Change: Defense Advanced Research Projects Agency, it's basically the Pentagon's internal research

Our internal research group, So we announced that were building two satellites for them Leo.

Speaker Change: So we announced that we're building two satellites for them, LEO, that have inter-satellite links, optical links, so that we can demonstrate and they can start getting comfortable with

Have.

And are satellite links optical links so that we can demonstrate and they can start getting comfortable with optical inner satellite links which is a key feature of the telesat lightspeed constellation. So anyway, we announced that back on October 14th.

Speaker Change: optical inter-satellite links, which is a key feature of the Telesat Lightspeed Constellation. So anyway, we announced that back on October 14th, 2020 and said that, you know, I don't

2020.

And said that you know I'm looking at this press release now.

Speaker Change: phase two base contract represents an $18.3 million program. That's a U.S. dollar number. So yeah, I mean, we've been vastly more specific. We were required to disclose this. I think that's part of U.S. government requirements. When you win a contract like this, you have to tell everyone kind of what you're getting paid. So it's a good contract for us.

The phase two beach contract represents an $18 3 million dollar program. That's a U S. Dollar number so yeah I mean, we've been vastly more specific we were required to disclose this I think that's part of U S government requirements. When you win a contract like this.

To tell everyone kind of what you're getting paid.

So it's a good contract for us as far as I know, it's coming along well I think we're doing what we need to do we're excited to get those satellites up there and start demonstrating the power of of optical inter satellite links.

Speaker Change: As far as I know, it's coming along well. I think we're doing what we need to do. We're excited to get those satellites.

Speaker Change: up there and start demonstrating the power of optical inter-satellite links. But to win that contract, yeah, we did it aggressively, and so we don't think we're gonna lose money. We hope we'll make a little bit of money, but it's – there's a revenue contribution, but there's almost equal expense associated with it, so it's kind of margin dilutive.

But to win that contract.

Yeah, we did it aggressively and so we don't think we're going to lose money, we hope will make it a little bit of money, but but it's you know there's a revenue contribution, but there's almost equal expense associated with it so it's kind of margin dilutive.

Speaker Change: Um, and when you go back and you look at, gee, you know.

And when you go back and you look at G. You know I forget what the numbers are at the midpoint of our guidance revenues down by X percent, but at the midpoint of our adjusted EBITDA guidance. Adjusted EBITDA is down even more I think part of that's because you know where our fixed cost base business.

Speaker Change: get what the numbers are, you know, at the midpoint of our guidance, revenues down by X percent, but at the midpoint of our adjusted EBITDA guidance, you know, adjusted EBITDA is down even more. I mean, part of that's because, you know, we're a fixed-cost-based business.

Speaker Change: for like when we lose, you know, money on the dish renewal.

For like when we lose money on the dish renewal.

Speaker Change: Yeah, I mean, that's almost dollar-to-dollar at the EBITDA line, so you expect to have a bigger impact in terms of percentage of decline in EBITDA, but another big, big contributor to the margin erosion and whatnot that we're expecting for...

Yeah, I mean, that's almost dollar to dollar at the EBITDA line. So so you expect to have a bigger impact.

In terms of percentage of decline in EBITDA, but another big big contributor to the.

The margin erosion and whatnot that we're expecting for <unk>.

Speaker Change: This year, it's that U.S. government contract. Great to have $18 million U.S. top line contribution, but we're getting that in expense as well, so.

This year, it's that U S government contract great to have 18 million or U S. A topline contribution, but we're getting that in expense as well so.

Okay perfect.

Speaker Change: Okay, then my second question is just, can you just quantify the dish revenue from Annex F2 in 2021, just so we have a sense of like, you know, what's...

Okay and then my second question is just can you just quantify the dish revenue from annex two in 2020 . One just so we have a sense of like.

You know what the range of outcomes.

Speaker Change: We've, yeah, we've given, you know, at the high level, we've said, you know, like for these DTH contracts that we have, I'm not necessarily talking about addition.

Yeah, we've given at the highest level. We've said you know like for these dth contracts that we have I'm not necessarily talking about dish in this F. Three in particular, although you know kind of fits the mould.

Speaker Change: this F3 in particular, although, you know, kind of fits the mold. Think, Michael, we've said, order of magnitude, guys, 70 million Canadian, kind of top line, with almost all of that going to EBITDA. So, that'll get you pretty close to what we would have recognized in.

I think Michael we said order of magnitude guys 70 million Canadian kind of topline with almost all of that go into EBITDA. So that's that's that that will get you pretty close to what we would have recognized in 2021 and what the run rate will be you know for the first part.

Speaker Change: 2021 and what the run rate will be, you know, for the first part of this year, right? Because that contract doesn't come up until the end of next month. Right.

This year right because that contract doesn't come up until the end of next month.

<unk>.

And then I guess.

Speaker Change: My next question is just on the CapEx side of the equation. You guys.

My next question is just on the.

Capex side of the play you guys.

Speaker Change: bumped up the satellite program purchases on the Leo side pretty materially this quarter. I think it was $182 million in the quarter. What was that related to? And is that kind of included in the overall CapEx plans? Or is that because obviously you guys haven't started with TALOS or any of these other.

Hmm.

Satellite program purchases on the LIFO side I'm pretty materially this quarter I think it was $182 million in the quarter.

What was that related to that is that kind of included in the overall capex plans or is that because.

Because obviously you guys haven't started with colleagues or any of these other contractors.

Speaker Change: I'm just curious if that's part of the overall $5 billion spend that is going to increase. Could you just talk about that spend this quarter?

Contractors I'm just curious if that's part of the overall $5 billion and what was going on.

Increased but just could you just talk about that spend this quarter.

Speaker Change: I just want to be clear, when you're talking about this quarter, you mean Q4? Yeah, in Q4.

I just wanted to be clear when you were talking about this quarter you mean Q4.

Yeah in Q4, it looked like the like.

Speaker Change: Purchases for satellite. Yeah. Yeah. No, I mean, I'll I'll I'll give my shot on what that was an Andrew But it was it was a big prepayment For long-term

Purchases for satellite.

No I mean, I'll I'll give my shot on what that was and Andrew.

But it was it was a big prepayment.

For a lobster losses.

Speaker Change: Okay. And and so yeah, it's absolutely a part of of

Okay.

And so yeah, it's absolutely a part of.

Hum.

Speaker Change: of that overall $5 billion U.S. CapEx number that we've talked about before. Yeah, that's right. Perfect. Okay. And then, last question. I'll just follow up on Arun's question. So, you guys mentioned, obviously, the restrictions around...

Of that.

That overall, you know 5 billion U S. Capex number that we've talked about before the upfront perfect.

Perfect. Okay, and then last question and I'll just follow up on <unk> question. So you guys mentioned, obviously the restrictions around.

Speaker Change: you know, MMPI and not being able to market to buy bonds at such discounts. Now that numbers are out, um, you know, there.

M P I would not be influenced the market to buy bonds at such discounts now that number's around.

You know there are there restrictions.

Speaker Change: in terms of the credit docs or anything else that would restrict you from going out and buying those bonds at, you know, $0.50 a dollar? No.

In terms of the credit docs or anything else that would restrict you from going and buying those bonds. It you.

You know 50 cents on the dollar.

No no.

My understanding is if we buy them we need to cancel it.

Speaker Change: But, no, we're at liberty to do that if we think that's a good idea.

But no we're at Liberty to do that if we think that's a good idea.

Okay great.

Thank you.

The next question is from Michael.

Make a free from Shenkman Shenkman capital. Please go ahead.

Speaker Change: Thanks for taking the question. Maybe I could just follow up on Harry's question.

Thanks for taking the question maybe I can just follow up on Harry's question I guess.

Speaker Change: Given your prior comment, Dan, that you think the dev levels are at

Given your prior kind of again that you'd think the debt levels.

Dan Goldberg: forget your exact adjective, but you said that they were crazy levels. And the comments you've led the conference call with, as far as bondholders.

And I forget your exact adjective, but you said that they were.

Crazy levels are in the comments you've made.

Conference call with as far as bondholders.

Dan Goldberg: you know, not understanding the story or not believing the story or not listening.

Not understanding the story of not believing the story or not listening to comments you've made before I guess why would you not you said if it makes sense you'd be looking to buy bonds back at these current discounts I guess.

Dan Goldberg: comment you've made before. I guess why would you not, you know, you said if it makes sense, you'd be looking to buy bonds back at these current discounts.

Dan Goldberg: Why would you not? Is there some reason to keep as much cash in a restricted group as you do right now and not take advantage of these current levels?

Why would you not is there some reason to keep as much cash in the restricted group as you do right now and not take advantage of these current levels.

Speaker Change: How would I answer that? I don't know. Mike, I guess we just say that.

How would I answer that I don't know, Mike I guess.

We just say that.

Right.

Speaker Change: Probably not obvious that we'd be explicitly telegraphing everyone in the market exactly what we're going to do.

Probably not obvious that we'd be explicitly telegraphing to everyone in the market exactly what we're going to do.

Speaker Change: You know, we're not in the business of, you know.

We're not in the business of you know I mean, you know our day job is running the satellite company not being out in the market you know buying securities, but when we talk to people, whose day job is being out in the market buying securities.

Speaker Change: I mean, you know, our day job is running a satellite company, not being out in the market, you know, buying securities. But when we talk to people whose day job is being out in the market buying securities,

Speaker Change: usually they're not like advertising what their next move's going to be. So I don't know, it just doesn't seem obvious to us right now that we need to be super explicit about whether we go left or we go right. But no, I mean, we have cash that's building up. It's not lost on us that there could be an attractive opportunity there, but yeah, that's just kind of how we think about it.

Usually they're not like advertising, but what's your next move is going to be so I don't know it just doesn't seem obvious to us right now that that we need to be super explicit about whether we go left or we go right, but but but no I mean, we we have cash that's.

Building up.

It's not lost on us that there could be an attractive opportunity there, but you know.

Yeah, that's just kind of how do we think about it.

Speaker Change: And just one follow-up to that, is there any, as you're finalizing discussions with the export credit agency?

And just one follow up to that is there any as you're finalizing discussions with the export credit agencies.

Speaker Change: Does that put any restrictions on using cash on hand or doing anything as it relates to the bond?

Does that play and does that put any restrictions on using cash on hand or doing anything as it relates to the bond levels and I guess related to that has the deterioration in your arm levels at the restricted group has that caused any.

Speaker Change: the deterioration in your bond levels at the restricted group, has that caused any...

Additional.

Hurdles as it relates to finalizing the export credit financing.

Speaker Change: So I would say, no, there's certainly nothing about our discussions with the ECAs that would constrain our ability to make use of cash in the restricted group to do any range of things, including repurchasing our debt. And then, no, I don't think that where our debt is trading, you know.

So I would say no theres certainly nothing.

About our discussions with.

Do you see as that would constrain our ability to make use of cash and the restricted group to do any any range of things, including repurchasing our debt and then.

No I don't think that are.

We're our debt is trading.

Speaker Change: the ECA lenders will be solely collateralized into Telesat Lightspeed. But as we've said before, we don't like where the debt is trading. I mean, we think that sends messages about Telesat that

The the <unk>.

You see a lenders will be solely collateralized into telesat lightspeed.

But as we've said before we don't like where the debt is trading I mean, we think that sends messages about about telesat that.

Yeah that does that.

Speaker Change: yeah, that don't align with reality, right? You see debt trading at those kinds of levels and you think, you know, the company is under some, you know, extraordinary financial duress and it's certainly not how we're thinking about it. You look at our, how the business is held up, you look at the cash flows, you look at the predictability of our revenues. Yeah.

That don't.

Aligned with reality.

Right you see that traded at those kinds of levels when do you think.

The company is under some no extraordinary financial duress, and it's certainly not how we're thinking about it you look at our other businesses held up you look at the cash flows you look at the predictability of our revenues.

Yeah, you know, we don't get it so so it might not you know a chill are undermined.

Speaker Change: we don't get it so so it might not you know uh... chill or undermine

Speaker Change: And I don't think it will, the outcome of our discussions with the ECA's, but we still don't, it doesn't mean, oh so who cares, you know, we don't like it.

I don't think it will the outcome of our discussions with the <unk>, but we sold it doesn't mean, so who cares.

We we we don't like it.

Speaker Change: And so, but I don't, but to answer your question, no, we don't think that where the restricted debt trades is going to have a bad collateral impact on getting there with the export credit agencies. Okay. Great. Thank you.

And so, but I don't but it but to answer your question no. We don't think that we're the restricted debt trades is going to have a bad collateral impact on.

Getting there with the export credit agencies.

Okay, great. Thank you.

Thank you.

Operator, we have time for one quick question and then we need to wrap up.

Speaker Change: Certainly, the last question will be from Tim Daggett from RBC, please go ahead.

Certainly the last question will be from Tim Daggett from RBC. Please go ahead.

Tim Daggett: Hey, thanks for taking the question. So I believe in the covenants, there's on the revolver, if it's 35% drawn and the covenants come into play, is there any plan or reason to have to draw on that revolver? I guess it would be about 70 million. So is there any plan to draw on that and then the covenants would potentially kick in? Okay, so we'll.

Hey, Thanks for taking the question I believe in the covenants.

On the revolver, if it's 35% drawn into covenants come into play is there any plan or a reason to have to draw on that revolver I guess would be about $70 million. So is there any plan to draw on that and then the covenants with potentially kick in.

Based on what we know at the moment no.

No.

Okay, great. Thank you.

Speaker Change: Okay. Okay. All right. Well, listen, we appreciate everyone's time this morning and we look forward to chatting again when we issue our first quarter numbers. So thank you very much. Thank you.

Okay. Okay. Okay.

Well listen we appreciate everyone's time this morning, and we look forward to chatting again, when we issue our first quarter numbers. So thank you very much. Thank you bye bye.

Thank you. The conference has now ended please disconnect your lines at this time when you. Thank you for your participation.