Q3 2023 Telesat Corp Earnings Call
Speaker 1: This conference is being recorded. This conference is being recorded.
This conference is being recorded so it goes to the homes that don't have as you see.
Speaker 2: All participants please stand by. Your conference is ready to begin. Good morning ladies and gentlemen and welcome to the conference call to report the third quarter 2023 financial results for Telesat. Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat and Andrew Brown, Chief Financial Officer of Telesat. I would now like to turn the meeting over to Mr. Michael Bolieto, Director of Treasury and Risk Management. Please go ahead.
All participants please standby your conference is ready to begin good morning, ladies and gentlemen.
Conference call to report the third quarter of 2020 financial results for tennis at all.
All speakers today will be Dan Goldberger, President and Chief Executive Officer.
And Andrew Brown, Chief Financial Officer.
I would now like to turn the meeting over to Mr. Michael <unk>.
Director of Treasury and risk management. Please go ahead Sir.
Speaker 3: Thank you and good morning. This morning we filed our quarterly report on Form 6K with the SEC and on CDAR. Our remarks today may contain forward-looking...
Thank you and good morning. This morning, we filed our quarterly report on form 6K, with the SEC and SEDAR. Our remarks today may contain forward looking statements. There are risks to tell us that actual results may differ materially from the results contemplated by the forward looking statements as a result of known and unknown risks.
Speaker 3: There are risks that Telesat's actual results may differ materially from the results contemplated by the forward-looking statements as a result of known and unknown risks and uncertainties. For a discussion of known risks, see Telesat's annual and quarterly reports filed with the SEC. Telesat assumes no responsibility to update or revise the...
Sure.
For a discussion of known risks she tell us its annual and quarterly reports filed with the.
C C Telesat assumes no responsibility to update or revise these forward looking statements.
Speaker 4: I will now turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer. Okay, thank you Michael. This morning I'll share some thoughts on our financial results and give an update on the business. I'll then hand over to Andrew who will speak to the numbers in detail and then we'll open the call up to questions.
I will now turn the call over to Dan Goldberg, Telesat, as President and Chief Executive Officer. Okay. Thank you Michael This morning, I'll share some thoughts on our financial results and give an update on the business I'll, then hand over to Andrew who will speak to the numbers in detail and then we'll open the call up to questions.
Speaker 4: We've been executing well so far this year and are on track with the key financial, strategic, and operational objectives we've been focused on.
We've been executing well so far this year and are on track with the key financial strategic and operational objectives. We've been focused on tracking our guidance received the final roughly U S $260 million of U S. C band clearing proceeds and completed some meaningful.
Speaker 4: for tracking our guidance, received the final roughly US $260 million of US C-band clearing proceeds, and completed some meaningful additional debt repurchases in the corridor that we think will strengthen our financial position and create value for shareholders.
Additional debt repurchases in the quarter that we think will strengthen our financial position and create value for shareholders.
Speaker 4: Obviously, a huge focus for us is executing on Telesat light.
Obviously, a huge focus for us is executing on telesat Lightspeed, our advanced broadband Leo network and I'll give some updates on that since sharing on our Q2 call, but we selected M. D. A is our prime contractor and are fully funded for the program. We've done a significant amount of work with M. D. A to advance the program.
Speaker 4: our advanced broadband LEO network, and I'll give some updates on that. Since sharing on our Q2 call that we selected MDA as our prime contractor and are fully funded for the program, we've done a significant amount of work with MDA to advance the program, including further engagement with the supply chain.
Including further engagement with the supply chain.
Speaker 4: Both Telesat and MDA are ramping up their teams to execute light speed, and I've been really pleased, though not surprised, by the extraordinarily capable people we're bringing on board and the really strong interest we're seeing from professionals throughout the industry to join us to work on this flagship program.
Telesat at M. D E are wrapping up their teams to execute lightspeed and I've been really pleased but not surprised by the extraordinarily capable people, we're bringing on board and the really strong interest received from professionals throughout the industry to join us to work on this flagship program.
Speaker 4: We also announced in the quarter another key light speed contract. This one with SpaceX for 14 Falcon 9 rockets to launch the advanced satellites making up the light speed network.ue
We also announced in the quarter. Another T. Lightspeed contract. This one with Spacex for 14 Falcon nine rocket to launch the advanced satellites, making up the Lightspeed networks I believe at Spacex is largest commercial launch contracts back in line as the most reliable rocket out there in space.
Speaker 4: I believe it's SpaceX's largest commercial launch contract.
Speaker 4: Falcon 9 is the most reliable rocket out there, and SpaceX has a demonstrated high launch cadence that will go a long way toward ensuring that we bring light speed to market consistent with our schedule.
Rex has a demonstrated high launch cadence that will go a long way toward ensuring that we bring light speed to market consistent with our schedule they've been a great partner for total southern on a number of our prior programs and we're very pleased to be working with them on lightspeed.
Speaker 4: They've been a great partner for Telesat on a number of our prior programs, and we're very pleased to be working with them on Lights.
Speaker 4: Our other key focus is concluding our funding arrangements with our Canadian, federal and provincial partners. We're fully engaged with them at this time and remain optimistic that we'll be able to reach financial close consistent with the timeframe we shared previously, which is to say later this year or early next year.
Other key focus is concluding our funding arrangements with our Canadian Federal and provincial partners are fully engaged with them at this time I remain optimistic that we'll be able to reach financial close consistent with the timeframe. We shared previously which is to say later this year or early next year the telesat.
Speaker 4: The Telesat Lightspeed Program advances a wide range of important public policy goals, including bridging the digital divide, spurring advanced manufacturing, IP development, exports and high-quality jobs, as well as important climate and national security objectives. Our federal and provincial partners in Canada have been strong and consistent supporters of the Lightspeed Program and we're grateful.
Speed program advances a wide range of important public policy goals, including bridging the digital divide spring advanced manufacturing IP development exports and high quality jobs as well as important climate and national security objectives, our federal and provincial partners in Canada.
Have been strong and consistent supporters of the Lightspeed program and we're grateful for that.
Speaker 4: We remain hugely bullish about Telesat Lightspeed and are looking forward to sharing more detailed information with investors about our business plan and expectations. To that end, Andrew and I plan to get on the road to meet with investors in both the US and Canada over the next couple of weeks. We're looking forward to it. With that, I'll hand over to Andrew and then look forward to addressing any questions you may have.
We remain hugely bullish about telesat lightspeed and are looking forward to sharing more detailed information with investors about our business plan and the expectations to that and Andrew and I plan to get on the road to meet with investors in both the U S and Canada over the next couple of weeks, we're looking forward.
Do it.
With that I'll hand over to Andrew and then look forward to addressing any questions you may.
Speaker 5: Thank you, Dan. Good morning everyone. I would now like to focus on highlights from this morning's press release and filings. In the third quarter of 2023, Telesat reported revenues of $175 million. It just hit EBITDA of $133 million and for the nine months ended September 30th, 2023, we generated cash from operations of $156 million and we held $1.8 billion of cash on the balance sheet.
Thank you Dan Good morning, everyone I would now like to focus on highlights from this morning's press release and filings.
Fourth quarter of 2023, Telesat reported revenues of 175 million adjusted EBITDA was 33 million and for the nine months ended September 30 of 2023, we generated cash from operations of 156 million and we held 1.8 billion of cash on the balance sheet.
Speaker 5: In the third quarter of 2023 and compared to the same period in 2022, revenues decreased by $5 million to $175 million, operating expenses decreased by $6 million to $50 million and adjusted EBITDA decreased by $4 million to $133 million. We adjusted EBITDA margin was 75.9% compared to 76% in 2022.
And the third quarter of 2023 and compared to the same period in 2022 revenues decreased by 5 million to $175 million operating expenses decreased by 6 million to $50 million and adjusted EBITDA decreased by 4 million to 133 million. The adjusted EBITA margin was 75, 9% compared to 76% in two.
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Speaker 5: Between 2022 and 2023, changes in the US dollar exchange rate had a positive impact of 3 million on revenues, a negative impact of 1 million on operating expenses, and a positive impact of 2 million on adjusted EBITDA. When adjusted for changes in foreign exchange rates, revenues decreased by 8 million, operating expenses decreased by 7 million, and adjusted EBITDA decreased by 7 million.
Between 2022, and 2023 changes in the U S. Dollar exchange rate had a positive impact of 3 million on revenues and negative impact of 1 billion in operating expenses and a positive impact of 2 million unadjusted EBITDA when adjusted for changes in foreign exchange rates revenues decreased by $8 million operating expenses decreased by 7 million.
Adjusted EBITDA decreased by $7 million the.
Speaker 5: The revenue decrease for the quarter was mainly due to lower revenue from certain South American customers. OPEX, the decrease in operating expenses, is primarily due to lower non-cash share-based comp, partially offset by higher costs associated with the procurement of third-party satellite capacity, required to support certain customers' networks that could no longer be supported on ANIC S2 once it commenced in client operation.
The revenue decrease for the quarter was mainly due to lower revenue from certain South American customers Opex. The decrease in operating expenses is primarily due to lower noncash share based comp partially offset by higher costs associated with the procurement of third party satellite capacity required to support certain customers networks.
Longer be supported on acas too once it commenced in client operations.
Speaker 5: Interest expense increased by 11 million during the third quarter when compared to the same period in 2022. The change was due to an increase in interest rates on the US Terminal B facility, combined with the foreign exchange impact and US dollar denominated interest expense. This was partially offset by the impact of the repurchase of notes in 2023, combined with the impact of the maturity of one of the interest rate swaps in September of 2022.
Interest expense increased by 11 billion during the third quarter when compared to the same periods in 2022. The change was due to an increase in interest rates of the U S term loan B facility combined with the foreign exchange impact on U S. Dollar denominated interest expense. This was partially offset by the impact of the repurchase of notes in 2023.
Combined with the impact of the maturity of the interest rate swaps in September of 'twenty to 'twenty two.
Speaker 5: In the third quarter, we recorded a loss in foreign exchange of $77 million as compared to a loss of $99 million in the second quarter of 2022. The loss of the three months ended September 30, 2023 was mainly the result of a stronger US dollar than the Canadian dollar, with the resulting unfavorable impact on the translation of our US dollar denominated debt.
In the third quarter, we recorded the loss in foreign exchange of 77 million, that's compared to a loss of 19 9 billion in the second quarter of 2022, the loss of the trade months ended September with the Turkey is 20th how you trade with many of the result of a stronger U S dollar and the Canadian dollar with the resulting favorable impact on the translation of our U S dollar denominated debt.
Speaker 5: Our net loss for the third quarter of 2023 was 3.3 million compared to net loss of 228.7 million in the prior year. The variation was principally due to the positive impact on the conversion of a US dollar debt into Canadian dollars and the gain on the repurchase of our debt.
Our net loss for the third quarter of 2020 trade was $3 3 million compared to a net loss of $2 $28 7 million in the prior year. The variation was principally due to the positive impact on the conversion of the U S dollar debt into Canadian dollars and the gain on the repurchase of our debt Ultra dimension for the nine months ended September the 30th.
Speaker 5: Also to mention for the nine months ended September 30th 2023 our net income was $545 million. This significant net income was primarily due to the US C-Mant clearing proceeds recognised in the second quarter of 2023 and combined with the year to date gain on the repurchase over debt.
<unk> net income was $5 45 million the significant net income was primarily due to the U S. C band carrying proceeds recognized in the second quarter of 2023, our combined go to year to date gain on the repurchase of our debt, but the nine months ended September 30 of 2020 trade the cash inflows from operating activities of $1 56 billion.
Speaker 5: For the nine months end of September 30th, 2023, the cash inflows from operating activities are $156 million. The cash flow is generated from the investing activities, or $264 million.
Cash flows generated from the investing activities were $2 64 million.
Speaker 5: The cash flows generated from our investing activities due to the proceeds received from Phase II C event clearing, as we mentioned, and partially offset by capital expenditures. In terms of capital expenditures incurred, they were primarily related to lower corporate confolation, teleset light speed, and the newly acquired and a F4 satellite.
I suppose generated from investing activities was due to the proceeds received from phase to see if that clarity does he mentioned and partially offset by capital expenditures in terms of capital expenditures incurred they were primarily related to a low earth orbit constellation that he felt like feed and the newly acquired a fourth satellite.
Speaker 5: During the guidance, as you will also have noted in our earnings released this morning, we have maintained or previously provided revenue and adjusted EBITDA 2023 guidance. The guidance assumes a Canadian dollar to US dollar exchange rate of Canadian 1.35. Telesat continues to expect its full year 2023 revenues to be between 690 million and 710 million. In terms of adjusted EBITDA, Telesat continues to expect between 500 million to 515 million.
Turing to guidance as you would also have noted in our earnings release. This morning, we've maintained our previously provided revenue and adjusted EBITDA at 2023 guidance. The guidance assumes a Canadian dollar to U S. Dollar exchange rate of Canadian won't punchy pie.
<unk> continues to expect its full year 2022 revenues to be between $6 billion to $19 billion and 710 billion in terms of adjusted EBITDA Telesat continues to expect between 500 million to 515 million in respect to capital expenditures. We continue to expect our 'twenty 'twenty trade cash flows used in investing activities to be in the range of 175.
Speaker 5: In respect to capital expenditures, we continue to expect through 2023 cash flows using investing activities to be in the range of 175 minutes to 225 minutes.
The children in 25 minutes.
Speaker 5: To make sure we've expected cash requirements for the next 12 months, including interest payments and capital expenditures, we've approximately 1.8 billion of cash in our time investments at the end of March, as well as approximately 200 million US dollars of borrowings available in their air revolving credit facility.
To make sure I expected cash requirements for the next 12 months, including interest payments and capital expenditures, we have approximately 1.8 billion of cash and short term investments at the end of March that's about it's approximately 200 million U S dollars of borrowings available.
They're a revolving credit facility.
Speaker 5: Approximately 1.3 billion in cash was held in our unrestricted subsidiaries. In addition we continue to generate a significant amount of cash from our ongoing operating activities.
Ultimately 1.3 get any cash was held in our unrestricted subsidiaries. In addition, we continued to generate a significant amount of cash from our ongoing operating activities at the end of the tour corporate leverage as calculated under the terms of the amended senior secure credit facilities was 546 times to one <unk> has complied with all the covenants.
Speaker 5: At the end of the tour quarter, leverage is calculated on the terms of the amended senior secure credit facilities with 5.46 times the one. Tadi said has complied with all the covenants in our credit agreement and indenture. As Dan has indicated in the tour quarter, and including the subsequent period, we've repurchased debt with a principle of aggregate amount of $195.3 million US dollars at a cost of $137.4 million US dollars.
Our credit agreement and indenture as Dan has indicated in the third quarter and including the subsequent period, we've repurchased debt with a principal aggregate amount of $195 3 million U S dollars at a cost of $137 4 million U S dollars combining these repurchases with repurchases starting in 2022 will be passed.
Speaker 5: Combining these repurchases with repurchases done in 2022, we repurchased a total amount of US $587 million at an aggregate cost of $332.7 million. In addition, this also results in interest savings of approximately $40 million annually.
The total amount of U S 587 million at an aggregate cost of $332 7 million. In addition to this also results in interest savings of approximately $40 million annually.
Speaker 5: Further, since the end of 2020, when Telesat repaid approximately 340 million US dollars of its term loan B, our overall debt has been reduced by approximately 28%.
Florida since the end of 'twenty 'twenty, even telesat were paid approximately 340 million U S dollars of its term loan b overall with that has been reduced by approximately 28%.
Speaker 5: A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning. Our 6K provides the in-orbitant, in-term condensed, consolidated financial information in the NDNA. The non-guarantor subsidiaries shown are essentially unrestricted subsidiaries with minor differences. So that concludes our prepared remarks for the call and now we'll be very happy to answer any questions you may have. And with that we'll now turn back to the operator.
A reconciliation between our financial statements and financial Covenant calculations is provided in the report we filed this morning. Our 6K provides the unaudited interim condensed consolidated financial information in the MD&A. The non guarantor subsidiaries shown are essentially unrestricted subsidiaries with minor differences.
So that concludes our prepared remarks for the call and that will be very happy to answer any questions. You may have and with that we'll now turn it back to the operator.
Thank you.
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Speaker 6: Our first question is from Walter Bysick from Light Shed. Please go ahead. Thanks. I just wanted to focus on the
Our first question is from Walter <unk> from.
Please go ahead.
Thanks, just wanted to focus on the.
The reaffirmation of guidance I think as it relates to Capex.
Speaker 6: That would require obviously a pretty big step up in the fourth quarter. And then I'll also connect that question to OPEC.
That would.
Require obviously, a pretty big step up in the fourth quarter.
And I also connect that question to Opex.
Speaker 6: If I look at your SG&A and things like that, it didn't really move much sequentially. So I guess the question is, is fourth quarter the quarter when we're gonna start seeing.
If I look at your SG&A and things like that it didn't really move much sequentially.
I guess the question is its fourth quarter to quarter, when where we're going to start seeing.
Speaker 6: Some of these Leo project costs taking, I think on a prior call I asked us, anything like if things, obnox costs are capitalized until the satellites are launched, I think the answer was no. But if you just kind of refresh us on.
Some of these Leo project costs kicked in I think on a prior call I asked us.
Anything like if things opex costs are capitalized until.
The satellites are launched I think the answer was no, but if you could just kind of refresh us on.
Speaker 6: when those expenses are gonna start to ramp up? And if they aren't, why would CapEx guidance be maintained at, I think your guidance is 175 to 225, which would...
When those expenses are going to start to ramp up.
And if they arent why would capex guidance being maintained at I think I think that your guidance is $1 75 to 225, which would.
Imply a pretty big step up in the fourth quarter.
Speaker 5: Walter, yeah, this is Andrew. I think you're implicit in that.
Well Walter Yeah. This is Andrew and I think implicit in that is the timing when we will commence our program and so we've made assumptions that we will commence in quarter four and hence we will see the additional capex being spent in the quarter and in terms of the of SG&A and Opex you know as you know given our high.
Speaker 5: timing when we will commence our program and so we've made assumptions that we will commence in quarter four and hence we will see the additional capex being spent in the quarter and in terms of sgna and opex.
Speaker 5: As you know, given our high margins, we really control that very, very closely. But also we are preparing, as you will imagine, in terms of headcount and other resources getting ready for the commencement of the program. That's why historically, if you look at our SG&A, it's pretty well, sort of flat and very well contained. And in terms of the capitalisation of the OpEx.
Margins, we really control that very very closely and but also we are preparing as you would imagine you know when parents of head count and other resources getting ready for the commencement of the program. That's why historically if you look at our SG&A is pretty is pretty well set is flat and very well contained and it turns out.
The capitalization of the Opex in our previous calls we said that that's not the case there is something to do with engineering people involved but once we get going and we're very excited to get going and hopefully that will be Q4, I think as all of this will be.
Speaker 5: in our previous calls, we said that that's not the case. There is some to do with sort of engineering people involved. But once we get going, we're very excited to get going and hopefully that will be a Q4. I think a lot of this will be.
More apparent.
Speaker 6: Got it. Can you give us any sense on, at least on the OPEX side of things, obviously, CAPEX you've already guided to.
Got it so and can you give us any samsung at least on the Opex side of things, it's obviously capex you've already guided to.
Speaker 6: how long it takes, how many cores it takes to really get that engine going in terms of.
How how long it takes how many quarters it takes to really get that engine going in terms of.
Speaker 5: So how much of a vertical ramp are we going to see in SG&A in the upcoming quarters? What I would say to Walter, when we give our full year numbers, I think we will give pretty comprehensive guidance, I think around LEO and about the steps in LEO and what our ramp will be in OPEX in addition to GEO. So I think we'll make it very clear so it will be very obvious looking at a boat of our customers.
Expenses, how much of a vertical ramp are we going to see them in SG&A in the upcoming quarters right, but.
But what I would say there Walter.
We give our full year a full year numbers I think we will give pretty comprehensive guidance I think around the deal.
The steps and they are a lot of our Robin flu B and an Opex. In addition to G. O. So I think it would make it very clear so it would be very obvious looking at our boat of all of our companies.
Speaker 7: And maybe I'll just say Walter, it's Dan, maybe I'll just add that.
And maybe I'll just.
Walter It's Dan maybe I'll just add that.
Speaker 7: A couple things, one, we're ramping up now. I mean, I think I mentioned in my remarks, we're out there staffing up as is MDA, so we're out there right now, hiring a lot of people. Not everyone's on board at this point in time, but we've certainly had a lot of our offers accepted, so the team's ramping up really nicely. And as Andrew said, we'll give detailed guidance for 2024. A lot of the spending that we're doing though, a lot of that's gonna be capitalized, right? So a lot of the engineers that we're hiring, and Andrew will go over all that I know when we give our guidance, but that's our expectation. Yep.
A couple of things one where we're ramping up now I mean, we're I think I mentioned in my remarks, we're up there are staffing up as is M D as to where we're out there right now hiring a lot of people not everyone's onboard at this point in time, but we are.
Certainly had a lot of our offers accepted so the team is ramping up really nicely and as Andrew said will give detailed guidance for 2020 for a lot of the spending that we're doing though a lot of that's going to be capitalized right. So a lot of the engineers that were hiring and Andrew will go over all of that I know when we when we give our guidance but.
But that's our expectation yes.
Speaker 6: What is the since the last earnings call has there been any alteration and kind of how you're planning out the constellation itself and then similarly Have you seen any initial traction in getting additional capacity commitments ahead of the launch or when and if not when? You know what quarter do you think?
What what is the since the last earnings call has there been any.
Alteration and kind of how you're planning out the constellation itself and then similarly.
Have you seen any initial traction in getting additional capacity commitments ahead of the launch or went in and if not when.
What quarter do you think.
Speaker 6: or how much before the actual first, you know, Sats go up in the air, would you start to see additional revenue or excuse me capacity.
Or how how much before but the actual first.
Sounds go up in that and that and the air would you start to see additional revenue.
Or excuse me capacity commitments.
Speaker 7: So on the first one, since we announced the deal with MDA two months ago, everything's, I mean, we kicked off.
So on the first one since.
Since we announced the deal with M. D. Eight two months ago Everything's a I mean, we kicked off a we're working hand in glove with M. D. A AR as we move the program forward I mentioned that.
Speaker 4: We're working hand in glove with MDA as we move the program forward. I mentioned that we're spending and MDA is spending a lot of time in the supply chain right now. That all seems to be going well. So there hasn't been, I think you would ask, is there been any alterations or something in the plan? And the answer, there's no.
We're spending an M. D. A is spending a lot of time in the supply chain right now that all seems to be going well. So so they're there hasn't been I think you would also has there been any alterations or something in the plan.
And the answer there is no.
Speaker 7: you know, what, and look, we've been working on this for a long time, so things are, I'd say, pretty well set in terms of what the program looks like, and so that's all kicked off and going well. And then as far as, um,
What what and look we've been working on this for a long time so so.
Things are I'd say pretty well set in terms of what the program looks like and so that's all kicked off then and going well and then as far as sort of backlog I mean, I think we've said we've already got order of magnitude around 500 million U S.
Speaker 4: sort of backlog. I mean, I think we've said we've already got order of magnitude around $500 million US and kind of committed backlog to the program. Our first launch is mid-2026 and we do expect to be ramping backlog between now and then. I think that, look, we're engaged with the customer community right now.
And kind of committed backlog to the program. Our first launch is mid 2026, and we do expect to be ramping backlog between now and then I think that look we're engaged with the customer community right now there's a huge amount.
Speaker 4: There's a huge amount of interest in light speed and it's been gratifying to see that now that we've announced the program. I think that there will be things that is customer commitments that we'll be able to announce over the course of next year. We're not sort of giving any guidance about exactly what that looks like, but based on the discussions that we're having with folks, my expectation is that we'll be signing additional
Of interest in Lightspeed, and it's been gratifying to see that now that we've announced the program I think that there will be things that as customer commitments that we'll be able to announce over the course of next year, we're not giving any guidance about exactly what that looks like but based on the discussions that we're having.
With folks my expectation is that will be signing additional a customer backlog commitments throughout the course of next year and we'll update on that.
Speaker 7: customer backlog commitments throughout the course next year. And we'll update on that as we.
Yeah.
Speaker 6: Right, which you said before. So when you think about those conversations.
Right, which is what you've said before so when you think about those conversations.
Speaker 6: you know, are the verticals, the business verticals, the applications, different, um,
Are the verticals the business verticals the applications different.
Speaker 6: you know, at all from what you were thinking about when you, you know, when you sized this market initially and you, and you were looked at the kind of the low hanging fruit, you know, what do you think, you know, in terms of enterprise applications or otherwise that that people are going to gravitate to your consolation, you know, in terms of some of these commitments that we may see next year. No, I just
You know at all from what you were thinking about when you know when you size. This market initially and you looked at the kind of the low hanging fruit you know what do you think.
You know in terms of enterprise applications or otherwise that that people are going to gravitate to yours constellation.
In terms of some of these commitments that we may see next year.
No I'd say look I mean these are markets that we're active in like every day right. It's backhaul connectivity with mobile network operators and Isps, it's providing a capacity for maritime and aeronautical services, it's engaging with governments those are exactly the verge.
Speaker 4: These are markets that were active in like every day, right? It's back all connectivity with mobile network operators and ISPs, it's providing capacity for maritime and aeronautical services, it's engaging with governments. Those are exactly the verticals that we've always expected, light speed to have a real competitive edge in. And so nothing's changed though, that continues to be...
Nichols that we've always expected lightspeed to have a real competitive edge and and and and so.
So nothing's changed there that that continues to be.
Speaker 4: or our expectation. And so yeah, when we're announcing things between now and being in service, and again, my expectation is we'll have some commitments over the course of next year. We'll talk about.
Our our expectation and so yeah. When were you know announcing things between now and being in service and again my expectation is we'll have some commitments over the course of next year, we'll what we'll talk about you know where those are coming from but those are the verticals.
Speaker 4: you know, where those are coming from, but those are the verticals.
Speaker 4: that we expect to get really good traction.
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That we expect to get really good traction.
Speaker 6: And the last question I guess. Hey, Wilker, you're monopolizing our call. You got one for us. All right, I'll let you go to the next one, then I'll circle back in. All right. Thank you, appreciate the answers. All right, Manchia. Bye.
And the <unk>.
Last question I guess capitalized in our call you got them all right I'll, let you go to the next one that I'll circle back and alright.
Alright excellent.
Speaker 2: Thank you. Following question is from Caleb Henry from Querytie Space. Please go ahead.
Thank you.
<unk> question is from Caleb Henry from Quilty space. Please go ahead.
Yes.
Speaker 8: Hey guys, a couple of questions. One about launch. So, notice there's 14 rockets from SpaceX and each can carry up to 18 satellites each. Just kind of quick math there, it kind of equals 252 satellites, which is more than what's been ordered or currently planned. So, I was wondering if you can walk through the logic. I know it's up to 18 permission, but what's the reason for having so many launches planned there?
Hey, guys a couple of questions one about launch.
I noticed there's 14 rockets from Spacex and each located up to 18 satellites each.
Just kind of quick math, there equals 252 satellites, which is more than what's been ordered it apparently plan. So I was wondering if you can walk through the logic I know, it's up to 18 permission, but what's the reason for kind of having so many launches planned there.
Speaker 4: Caleb, thanks. So, listen, we've worked with SpaceX for a long time. We've got a good relationship with SpaceX by
Caleb Thanks, So listen we've we've worked with Spacex for a long time, we've got a good relationship with Spacex by committing to the number of launches that we did we think that we've been able to get kind of an overall.
Speaker 4: committing to the number of launches that we did. We think that we've been able to get kind of an overall compelling case in terms of just the overall value proposition for the launch capacity that we've lined up. And as you know, our expectation, we have rights from MDA.
Impelling case in terms of just the overall value proposition for the launch capacity that we've lined up and as you know our expectation we have rights from M. D. A to add more satellites over time, we've said that you know.
To the extent that we do that it's all going to be demand driven Spacex has been very constructive in terms of working with us to position our the timing of the rockets kind of you know when we think we need them. So so that that's really what it is it was a function.
Of the good commercial terms that we have with Spacex to.
<unk> provide those rockets wanting the certainty in terms of our ability to expand the constellation overtime and then having a constructive launch partner that allows us to lineup those rock, it's kind of consistent with what we're seeing in the market and our commercial plans.
Speaker 8: Okay, thanks, I appreciate it. It didn't see segment numbers from you guys this quarter. That's something you're still sharing. Can you kind of break out revenue in terms of broadcast, enterprise, anything else?
Okay. Thanks I appreciate it.
It didn't see segment numbers from you guys this quarter or if that's something you're still Sharon can you kind of break out revenue in terms of broadcast enterprise anything else.
Speaker 7: Yeah, I mean, for sure it's in the 6K. Oh, okay. Yeah, I mean, order magnitude, it's like, you know, looking at my colleagues, like 48% broadcast, you know, order magnitude, 48% broadcast, 48% enterprise, and sort of 2% other, but I'm staring at my colleagues. Is that, did I know that? Okay, so there you go. But it'll be in the 6K as well.
Yeah, I mean for sure it's in the 6K.
Oh, Okay, Yeah, I mean order of magnitude. It's like you know I'm looking at my colleagues like 48%.
Broadcast you know order of magnitude, 48% broadcast, 48% enterprise and sort of 2% other but I'm staring at my colleagues that I never yep. Okay. So there got.
But it'll be in the 6K as well.
Speaker 8: Okay, thanks. And then it looks like tell us how reporting is better than expected gross margins to this quarter. Just wondering if that's something that you expect to see sustained or if that's gonna change, you know, kind of on the assumption that, you know, third party capacity will be needed to kind of bridge the gap between now and light speed.
Okay. Thanks, and then it looks like tell us have reported better than expected gross margins. This quarter. Just wondering if that's something that you expect to see sustained or if that's going to change on the assumption that there are more third party capacity will be needed to kind of bridge the gap between now and late.
Steve.
Speaker 4: Yeah, maybe I'll take the first crack at that, and then Andrew can talk about it.
Yeah, maybe I'll take the first crack at that and then Andrew Ken can talk about it.
Speaker 4: You know, we are, as always, really focused on managing our cost structure as tightly as we can. And I think as a result, we've always sort of had industry leading operating margins, but there are headwinds for the business. And, you know, we renewed with.
We are as always really focused on managing our cost structure as tightly as we can and I think as a result, we've always sort of had industry, leading operating margins, but there are headwinds for the business.
No we renewed with a bell on mimic for that would've.
Speaker 7: bell on NIMIC 4. That would have been in early October . But as we've said, it was at a lower rate than what the old rate was.
Been in early October, but as we've said it was at a lower rate than what the old rate was and so you know there will be some kind of revenue headwinds as we head into 2024 you.
Speaker 4: And so, you know, there will be some.
Speaker 4: kind of revenue headwinds as we head into 2024.
Speaker 4: You know, in the beauty of a fixed-class business is when your rampant revenues up, you know, you can grow your operating margins nicely, sadly the, you know, converse is true as well when you're facing some of these revenue headwinds and you're facing revenue declines.
And the beauty of a fixed cost business is kind of ramping revenues up.
Grow your operating margins nicely sadly the.
Converse is true as well when when you're facing some of these revenue headwinds and you're facing a revenue declines you cant really reduce your.
Speaker 4: You can't really reduce your cost structure kind of in a proportionate way. So I'd say on balance heading in the next year there's definitely going to be some downward pressure on operating margins.
Cost structure kind of in a proportionate way. So so I'd say on balance heading into next year, there's definitely going to be some downward pressure on operating margins and we'll just do the best job. We can as we always do and trying to manage through that in terms of being.
Speaker 5: and we'll just do the best job we can as we always do in trying to manage through that in terms of being as disciplined as we can around the cost structure. Yeah, no, that's right, Dan. And just to add that, indeed, our margins are probably one of the highest in the industry. And our previous comments around OPEX and CAPEX investments into LEO, obviously when we start full blast with our program next year, then of course, we will see that investment coming through in both CAPEX and indeed in both our operating expenses.
Disciplined as we can around the cost structure.
That's right just to add that indeed, our margins are probably one of the highest in the industry.
Our previous comments around Opex and Capex investments at Toledo office, they've let me start full full blast would've probably gone next year. Then of course, we will see that investment coming true if the capex and the data and thought our operating expense.
Okay. Thanks, so much guys.
Speaker 2: Thank you.
Thank you.
Speaker 2: Our following question is from Aaron from BNP Paribas. Please go ahead and Could you explain to them why both the BNP Paribas and our following question was Autism?
Thank you all.
The following question is from Albert.
BNP Paribas. Please go ahead Sir.
Speaker 6: Yes, thanks for my questions. First, just wanted to confirm the cash balances. I think you said 1.8 billion total with 1.5 in the restricted group. So I could just, the assumption there is that the C-band cash inflow just went into the unrestricted group. Do you expect to fund more in the near term from the restricted group into the unrestricted entities?
Yes, hi, thanks with my questions first.
First just wanted to confirm the E. The cash balances are I think you said 118 billion in total at 1.5 and the restricted groups. So I could just be the assumption there is that the C band a cash inflow just went into the unrestricted group do you expect to.
Expect to fund more in the near term from the restricted group into the unrestricted entities.
Speaker 3: Okay, so it's Michael Boletho. Yeah, the CBAN proceeds, we have what we said, we have $1.3 billion in cash in the unrestricted entities. The CBAN proceeds went to the unrestricted entities. And we've been fairly consistent, certainly in our discussions with investors. There is still a little bit of money to be funded to the unrestricted entities from the restricted group. The general basket of $150 million US is available.
Okay. So its Michael boy, so yeah. The C band proceeds we have what we said we had $1 3 billion in cash and unrestricted entities C band proceeds went to the unrestricted entities.
And we've been fairly consistent certainly in our discussions with investors are there he is.
Still a little bit of money can be funded to the unrestricted entities from the restricted group the general basket of 150 million new licenses available to fund that.
Speaker 6: dot it thank you michael and then uh... as far as the additional funding uh... the vendor financing and the government contributions can you is there any update in terms of the terms of the canada and the cobec funding and and any updates in terms of the vendor financing and uh... the small bits of additional financing that were
Got it. Thank you Michael and then as far as the additional funding the vendor financing and the government contributions can you is there any update in terms of the terms of the Canada, and Quebec funding and and any updates in terms of the vendor financing and E smaller bits of additional <unk>.
Financing that were required.
Speaker 4: We don't have any updates on the terms yet when that's all nailed down. We'll share more information about it. We are, as we said at the outset of the call, making good progress, I think, with the government partners, kind of federal and provincial, to move the funding forward. We had said before that.
We don't have any updates on the terms yet when that's all nailed down we'll we'll share more information about it we are as we said at the outset of the call, making good progress I think with.
The.
Government partners kind of federal and provincial to move the funding forward. We had said before that you know funding was subject to the government completing confirmatory diligence and put in definitive agreements in place.
From from where I sit that all seems to be going well and moving in the right direction. So our expectation is that we'll reach financial close either late this year or sometime early next year.
Speaker 4: And at that point we'll be able to share more information about the funding terms and whatnot. But I know it also.
And at that point, we'll be able to share more information about the funding terms and whatnot, but I'd note also it's it's and it's probably a sign of our confidence that we're going to get there in the near term we're moving out on the program and that's why Capex is ramping in Q4, that's why we've been ramping up.
Speaker 4: we're going to get there in the near term, we're moving out on the program. And that's why CAPEX is ramping in Q4. That's why we've been ramping the hiring of all the people that we've been doing. We're moving out.
The hiring of all the people that we've been doing like where we're moving out I'm sure.
But again, we will share more specifics about the financing once it's all wrapped up.
Speaker 6: Got it, thanks. And then as far as the buybacks, nice to see them continue this quarter and after the quarter, just two questions there. You expect to continue to do buybacks with the cash that sits in the restricted group. In other words, have you any thoughts around other uses of cash? Number one, and then number two, I assume, as usual, that the choices on what you bought back were primarily governed by liquidity in the appropriate instruments. If you can confirm that as well.
Got it thanks, Dan and then as far as the buybacks.
Nice to see them continue this this quarter and after the quarter.
Just two questions there.
To continue to do buybacks with the cash that sits in the restricted group in other words have you any any thoughts around other uses of cash number one and then number two I assume as usual that the choices on what you bought back or primarily governed by our liquidity and the appropriate instruments, if you could confirm that as well.
Speaker 4: Yeah, I mean, Andrew, if you want, I'll take the first shot at it. So I mean, consistent with things we've said before.
Yeah, Andrew if you want I'll take the first shot at it but so I mean, consistent with things we've said before.
Speaker 4: There is cash that has been building up in the restricted group and we you know always try to make use of that cash in a way that we think strengthens the business and so over the past.
There is cash that has been building up in the restricted group and and we.
Always try to make use of that cash in a way that we think strengthens the business and so over the past few.
Speaker 4: you know, few quarters, we have used, you know, a considerable amount of it to repurchase our debt. And we think, you know, that's been the right thing to do. But equally, we're, you know, open minded about other uses for that cash, if it would strengthen the business, including, you know, looking at.
Few quarters, we have used you know a considerable amount of it to repurchase our debt and we think you know that's been the right thing to do but equally where you know open minded about other uses for that cash if it would strengthen the business, including you know looking at.
Speaker 4: other satellite programs, you know, particularly geo programs that would be accretive to the business. We've looked at a number of opportunities to do that. To date, we haven't closed a business case. We've always said we're.
Other satellite programs.
Particularly G O programs that are would be accretive to the business. We've looked at a number of opportunities to do that to date, we haven't closed a business case, we've always said we're.
Speaker 4: never going to invest a nickel in CapEx if we're not persuaded that we have a compelling business plan and can achieve the kinds of returns that our shareholders expect. And so, I guess, you know, a long way to save.
Never you know going to invest in <unk>.
On Capex, if we're not persuaded that we have a compelling business plan and can achieve the kinds of returns that our shareholders expect and so.
So I guess you know a long way to say that we will be open minded about additional debt repurchases going forward, but equally you know, we'll evaluate other ways to use that cash that can strengthen the business and then as far as you know what we bought.
Speaker 4: We will be open minded about additional debt repurchases going forward, but equally, you know, we'll evaluate other ways to use that cash that can strengthen the business. And then as far as, you know, what we've...
Speaker 4: It's it's a range of different considerations. You mentioned liquidity. That's certainly one
It's a range of different considerations you mentioned liquidity. That's certainly one we noted that you know we bought some of the term loan b back over the last quarter, certainly you know because that floats that that's sort of you know a more expensive part of the outstand.
Speaker 4: We noted that we bought some of the term loan be back over the last quarter. Certainly because that floats, that's sort of a more expensive part.
Speaker 4: of the outstanding debt that's out there right now. So that's obviously a consideration. So it's a range of...
And that that's out there right now so so that's obviously a consideration. So so it's a range of different Ah Ah variables should we think about when when we do engage in those debt repurchases and I'd say, we're just yeah, just kind of pragmatic about all of that yeah. It absolutely does.
Speaker 4: different variables that we think about when we do engage in those debt repurchases and I'd say we're just...
Speaker 5: Yeah, just kind of pragmatic about all that. Yeah, absolutely done. I mean, just to add a couple of comments.
I I mean, just add a couple of comments.
Speaker 5: As Dan said, our business margins are so high which means we generate very, very good amounts of cash and we will do that going forward and we assess our liquidity needs, cash balances and requirements and then indeed as you see we have bought back 587 million face value of bonds which is pretty attractive and it's a good use of cash. And I simply would add that.
It has down et cetera business you know our margins are so high which means we generate you know very very good amounts of cash and we will do going forward and we assess our liquidity needs cash balances and requirements and then indeed as you see with bought back $587 million face value of bonds, which is which is pretty attractive and it's a good <unk>.
A cash and I simply would add that you know since the December 2020, we've reduced our overall debt by about 28% at that'd be convention, but indeed, we're very focused.
Speaker 5: You know, since the 7th of 2020, we've reduced our overall death by about 28% of the kind of mentions. But indeed, we're very focused.
Speaker 4: Got it. Thank you. Last question for me is, is this really in terms of capacity deals in the works, are there any new deals that you're kind of working on, either from a geographic standpoint or a specific business standpoint, to sort of add to the, to the capacity commitments that you already have on Lightspeed? Thanks. Yeah, thanks for the question.
Got it thank you.
Last question for me is it's just really in terms of the capacity deals in the works are there any new deals that you have today kind of working on either from a geographic standpoint, or a specific business standpoint just.
Just sort of add to the did the capacity commitments that you already have on lightspeed. Thanks.
Yeah. Thanks for the question I Wouldnt know anything.
Speaker 4: You know, anything, you know, in particular, but you know, justifies to say we're engaged with...
Particular, but just suffice to say, where we're engaged with customers in each of the verticals that we're focused on and pretty much every region of the world I mean, the the benefit of of being an existing operator is that we're already doing business.
Speaker 4: customers in each of the verticals that we're focused on in
Speaker 4: pretty much every region of the world. I mean, the benefit of being an existing operator is that we're already doing business in virtually every country in the world where we have regular engagement with the key satellite users in all those different verticals. So there's no one that I would highlight.
In virtually every country in the world where regular engagement with the key satellite users are in all of those different verticals and so so there's no one that I would highlight.
Speaker 4: And again, as we sign material deals, we'll announce them and then we'll talk about them on the calls that we do. So folks will have good visibility into that.
And again as we signed material deals, we'll announce them and then we'll talk about them on the calls that we do so so folks will have good visibility into that.
Thank you.
Speaker 9: Thank you. Our following question is from Brandon Karsh from Kennedy Lewis. Please go ahead.
Thank you. The following question is from Brandon.
Tom Kennedy Louis Please go ahead.
Speaker 3: Hi, thanks for taking the questions. Just turning back to guidance here, if I back out the implied Q4 revenue from what you've done year to date, it looks like a pretty steep decline here. And I know there's some noise in Q4 last year from some non-recurring equipment sales. Is the rest of the Delta just the Bell Canada renewal? Or is there anything else missing? Or should I view this guidance as conservative at this point? It just looks like a pretty big step down even from the recent run, right?
Hi, Thanks for taking the questions just turning back to guidance here, if I back out the implied Q4 revenue from what you've done year to date, it looks like a pretty steep decline here and I know, there's some noise in Q4 of last year from some non recurring equipment sales.
The rest of the Delta just the Bell, Canada renewal or is there anything else I'm missing or should I view this guidance as conservative at this point it just looks like a pretty big step down from the recent run rate.
Speaker 7: Yeah, I'm trying to, I mean, the decline was what, you know, year over year, it's 4% on the quarter, year to date, it's 5% top line adjusted for FX. So certainly, you know, declines would be driven by the renewal with Dell. So,
Yeah, I'm trying to I mean.
But the.
The decline was what you know year over year, it's 4% on the quarter year to date, it's 5% topline adjusted for FX. So so certainly you know declines would be driven by the renewal with bell.
So.
Speaker 4: you know, there was that and we noted that there was some softness in Latin America that we experienced over the quarter and I would say kind of, you know, throughout the first three quarters of this year. But anyway, those...
You know there was that and we noted that there was some softness in Latin America that we experienced over the quarter and I would say kind of.
Throughout the first three quarters of this year, but anyway, those those would be the things that are you know.
Speaker 4: Those would be the things that have acted as a headwind. And that I think, as I mentioned, will carry on in the next year, given the timing of the Bell renewal and the like.
Acted as a as a headwind and that I think as I mentioned will.
Carry on in the next year, given the timing of the bell renewal and alike.
Speaker 5: I would just add in terms of the OPEX in quarter four as earlier comments that as we continue to ramp we will anticipate sort of a higher run rate of OPEX coming in quarter four so hence that's part of the equation.
And I would just add in terms of the opex quite a far earlier comments that as.
As we continue to ramp we will you know anticipate sort of at a higher higher run rate of opex coming in quarter four so hence that's part of the a part of the equation.
Speaker 4: Yeah, and then maybe one other colleague is just flagged for me. I guess in Q4 last year we recognized sort of a one time with DARPA. This is the US government sort of research lab that we've been, you know, winning different projects for for Leo related activities. And so, I think we had said at the time we had called it out that sort of, there's other work that we're doing with DARPA, but that's...
Yeah, and then maybe one other colleagues just flag for me I guess in Q4 of last year, we recognized sort of a one time with a DARPA. This is the U S government sort of research lab that we've been.
You know our winning different projects for for Leo.
<unk> activities and so I think we had said at the time, we had called it out.
Sort of there's other work that we're doing with DARPA, but that's that's kind of a revenue opportunity is lumpier in nature and I think we even called out the exact amount because I think we're required to it was.
Speaker 4: That kind of revenue opportunity is lumpier in nature. And I think we even called out the exact amount because I think we're required to. It was...
Speaker 4: 25 million. Yeah, I mean it's significant. It's 25 million in the quarter. So certainly that would be a big contributor if you're trying to do the math on the guidance and extrapolate from that.
$25 million, Yeah, I mean, it's significant it was $25 million in the quarter. So so so so certainly that would be a big contributor if you're trying to do the math on the guidance and extrapolate from that.
Speaker 4: Yeah, I had been adjusting that out of my number and it still looked like a somewhat meaningful decline, which is why I was asking. Yeah, well, I'm going to be a question there. Yeah, then it would be mostly the bell renewal. I just have the provision for OpEx as well.
Yeah. It had been adjusting that out of my number and it still looked like a somewhat meaningful decline, which is why I was asking but yes. It should.
My question there.
Then it would be mostly the bell.
Renewal as we should have that provision for opex as well as we said.
Yeah.
Speaker 3: Okay, and then on the enterprise side, could you provide a little bit more color on some of that softness in Latin America as well as just general update on the geo side for enterprise?
Okay, and then on the enterprise side could you provide a little bit more color on some of that softness in Latin America as well as just general update on the Geo side for enterprise.
Speaker 4: Yeah, I mean, LATAM, it's been, I mean, you know, like all these things, it's sort of, you know, contract by contract that comes up for renewal. I think the biggest softness that we had in LATAM, you know, over the quarter was one particular contract in Peru. If memory serves, it had been a long time.
Yeah, I mean, Latam, it's been I mean, you know like all these things and it's sort of you know.
Contract by contract that comes up for renewal I think but the biggest softness that we had in.
In Latam you know over the quarter was one particular contract in Peru.
If memory serves it had been a long standing contract of ours that came up for renewal some of that a move to one of our competitors something that we expected would be would be coming it was a customer that had already made a commitment to a new satellite that was coming on to <unk>.
Speaker 4: Standing contract of ours that came up for renewal some of that move to
Speaker 4: One of our competitors, something that we expected would be, would be.
Speaker 4: It was a customer that had already made a commitment to a new satellite that was coming on the market and once that new satellite came online they migrated traffic off of us over to them.
Marketing once that new satellite came online they migrated traffic off of us over to them. So there was that and then beyond that I'd say I'm, just kind of taken a step back more broadly, but the market is competitive I mean for sure it's been competitive for some years now.
Speaker 4: So there was that, and then beyond that, I'd say just kind of taking a step back more broadly, but the market's competitive. I mean, for sure, it's been competitive for some years now.
Speaker 4: But it continues to be a competitive market and the enterprise segment. And we're certainly starting to see the impact of Starlink coming into the market. I mean, the reality.
But it it continues to be a competitive market and the enterprise segment and we're certainly starting to see the impact of Starlink coming into the market I mean, the reality is enterprise users like the VAT.
Speaker 4: Enterprise users like the value proposition and the performance advantages that you get from low Earth orbit satellite constellations, which is why we're so bullish around our light speed constellation. But I'd say that.
<unk> proposition in the performance advantages that you get from lower orbit satellite constellations, which is why.
We're so bullish around our lightspeed constellation, but I'd say that yeah. The enterprise segment.
Speaker 4: Yeah, the enterprise segment remains competitive and I'd say increasingly Starlink is featuring into that.
Remains competitive in and I'd say increasingly starlink is is featuring into that.
Speaker 3: Look at that, Paul. And just one last one following up on that on Starlink. Previously that I'd be more of a consumer use case, but it's been pressed about the moving more to the enterprise space. Have you seen a meaningful pickup in competitive density just from their pivot into more of the enterprise use case?
Okay. That's helpful. And then just one last one following up on that on Starlink previously that had been more of a consumer use case, but there's been press about them moving more into the enterprise space have you seen a meaningful pickup in competitive intensity just from their pivoted and said Mark the enterprise use cases I shall we see.
Speaker 4: I'd say we see it mostly at this point in time in the maritime space. They've been pretty successful in attracting some of the cruise line requirements and some of the other sort of maritime shipping requirements. So I'd say it's most evident there. We knew and we know that we'll be competing with Starlink for some of the Enterprise activities.
It mostly at this point in time in the maritime space, they've been a pretty successful in attracting some of the cruise line requirements in some of the other sort of maritime shipping requirement. So I'd say, it's most evident there we knew and we know that we'll be competing with.
Total length for some of the enterprise activities.
Speaker 7: But I'd say if I had to...
But I'd say, if I had to highlight any particular area.
Speaker 4: highlight any particular area. It's been more there. And, you know, we've said before for light speed our focus is on enterprise and government services. A lot of what Starlink's doing right now is on the consumer side. And I think that they're getting good traction on the on the consumer side. But that's not an area that we're focusing on with light speed or really that we focus on with our existing business.
It's been more there.
You know we've said before for Lightspeed, our focus is on enterprise and government services a lot of what Starlink is doing right now is on the consumer side and I think that they are getting good traction on the on the consumer side, but but that's not an area.
We're focusing on with lightspeed or really that we focus on with our existing business.
Alright, Thank you for all that.
Speaker 9: Thank you. The following question is some of the visit, Ms. Fagin. Some of the common security. Thanks for your heads.
Thank you. The following question is from that.
Sanjay.
<unk> Securities.
Go ahead.
Speaker 10: Yeah, hi, thank you. Um, but just a question on light speed and the funding. So I want to read the personally that says, but the, it's fully funded. However, subject to concluding definitive funding agreements to grow through global service delivery. As if just, uh, mailing down your, uh, contracts, funding with the Canadian provincial governments are just also impaled someone out.
Yeah, Hi, thank you.
So it's just a question on like either in the funding so when I read the press release it says that.
It's the only find out however, subject to concluding definitive funding agreements.
Two global service delivery.
Yes, just nailing down.
Our contracts finding ways that they can do.
Gideon provincial governments are also tell someone else.
Speaker 4: It is in the main of the funding arrangements with the federal and provincial partners here in Canada.
It is in the main.
Of the.
Finding arrangements with the federal and provincial partners here in Canada.
Okay.
Speaker 4: I mean, we've said, you know, that in the aggregate is about two billion in US dollars worth of funding. We've got, you know, 1.6 billion that tell us that's contributing. So that's exactly what it is. And we flag that, you know, back in August when we announced the contract with MDA.
I mean, we've said you know that in the aggregate is about 2 billion in U S dollars worth of funding. We've got you know $1 6 billion that tell us that it's contributing so so that that's exactly what it is in the end and we had flagged that.
Back in August when we announced the.
Contract with M D.
Right.
Speaker 10: So when you're talking about through global service delivery, is this meaning?
So [noise].
When you were talking about true global centers, telling me is this meaning.
Speaker 10: your commitment to provide connectivity in areas that they want. Is that what that means?
New York Amendment to provide connectivity in areas that they wanted to start with that and I think what we're you know I don't know exactly the words.
Speaker 7: I think what we're, you know, I don't know exactly the words that you're focused on, but I think what we've said is with the $1.6 billion that Telesat's contributing, the, you know, $2 billion U.S. in federal and provincial government funding, that gives us sufficient star bullet.
Words that you're focused on but I think what we've said is with the one 6 billion. The Telesat has contributed in the you know 2 billion U S federal and provincial government funding.
That gives us a sufficient a capital to launch the first 156 satellites plus all the other capex in terms of the rockets. The ground infrastructure you know when the other capital investments that we need to.
Speaker 4: capital to launch the first 156 satellites plus all the other capex in terms of the rockets the ground infrastructure You know in the other capital investments that we need to make that gives us full Global coverage in a very capable system and then we've noted that we'll be launching Another 42 satellites to bring us to 198 satellites
That gives us full global coverage and a very capable system and then we've noted that we'll be launching another 42 satellites to bring us to 198 satellites.
Speaker 4: Those final 42 satellites will get funded with the cash flows that the consolation is generating. That's the plan.
Those final 42 satellites will get funded with the cash flows that the constellation is generating that that's the plan yes.
Speaker 10: Yeah. So when you talked about closing with the government maybe later this year or the next year, what does closing mean? Does that mean that they have an intellectual commitment to find that certain dates based on certain milestones? Does that mean they're actually going to give you the cash right away?
Yep.
So when you talked about closing with the government now maybe later this year early next year, but as clothing means does that mean that they've entered into a commitment to find that certain dates based on certain milestones does that mean, they actually end up getting into cash right away.
Speaker 4: Yeah, I mean that all once we're closed off of the government will provide more details about exactly all the mechanics around the financing, but yeah, I mean what that means is that the government of, you know, the federal and our provincial partners will have committed to the funding that we need so that we can pay MDA, that we can pay SpaceX and our other vendors.
Yeah, I mean that that battle when once were a closed off with the government will provide.
More details about exactly all the mechanics around the financing, but yeah. I mean, what that means is that the government of you know the federal and our provincial partners will have committed to the funding that we need so that we can pay M. D. A that we can pay spacex and in our other vendors it it'll be.
Speaker 4: It'll be, yeah, I mean, we'll close our financing. Those funds will be available for us to make the payments that we need to make.
Yeah, I mean, well, we'll close our financing those funds will be available for us to make the payments that we need to make.
Speaker 11: Okay. All right. Thank you. Okay. Thank you.
Okay Alright.
Alright, thank you.
Okay. Thank you.
Speaker 9: Thank you. Once again, please press star one at this time for any questions or questions.
Thank you once again, please press star one at this time for any questions or comments.
Speaker 9: The following question is from Matt Lapidiz, from A.B. Partners. Please go in.
Our following question is from Matt <unk>.
From a partner.
Please go ahead.
Speaker 3: Hey guys, thanks for all the color here. A couple clarifying ones for me. So the C-band proceeds which went into the unrestricted group, can you just clarify whether or not that used any of the $150 million general basket that's available in the credit agreement or is the $150 million that's available, what's available today?
Hey, guys. Thanks for all the color here couple a couple clarifying ones for me so the.
The C band proceeds which went into the unrestricted group can you just clarify whether or not that used any of the 150 million dollar general basket that's available in the credit agreement, whereas the $150 million that's available what's available today.
Speaker 3: after those proceeds were moved to the unrestricted entity.
After those proceeds were moved to.
To the unrestricted entity.
Speaker 12: No, Matt the the CBAM the CBAM Assets were in an unrestricted solve and have been for a couple of years So the 150 million didn't have anything to do with 150 million the 150 million is a day
No Matt.
The C band the C band assets, where in an unrestricted sub and have been for <unk>.
Couple of years, so the $150 million.
Didn't have anything to do with $150 million $150 million is available.
Speaker 3: Got it. I appreciate the clarification. And then can you just remind us, you mentioned some interest rate hedges rolling off last year. What the current hedge position both on interest rates and FX looks like for the business.
Got it I appreciate the clarification and then can you just remind us.
Mentioned.
Some interest rate hedges.
Hedges rolling off last year.
What the current hedge position both on rates on interest rates and FX looks like for the business.
Speaker 13: I mean, sure, effectively Matt.
Yeah, I mean sure effectively Matt.
Speaker 12: you know, with that balance of cash, the cash balances, which obviously the rates you were on that flow.
<unk>.
With that balance in cash.
On the cash balances, which obviously the rates you weren't on that flow.
Speaker 12: at a spread, a negative spread to the base rate, but they float. So effectively, from the floating interest rate exposure, viewpoint where hatched, or close enough to it, that we don't need any edges in place. And we have not hatched before in this game.
At a spread negative spread to the base rate, but they flow so effectively from a floating interest rate exposure viewpoint. We're hedged we're close enough to it that we don't need any hedges in place.
And we have not hedged the foreign exchange.
Speaker 12: And there again, there's kind of a natural hedge with our business because we receive a mix of US and Canadian oil. That's right. And then the last thing I would add there is we hold most of our cash balances in US dollars.
And there again, there's kind of a natural hedge with our business because we receive a mix of U S and Canadian dollars. That's right and then the last thing I would add there is we hold most of our cash balances in U S dollars not Canadian dollars.
Speaker 3: Got it. Okay. Thanks guys. Appreciate the clarifications. Let's say for me.
Got it okay. Thanks, guys I appreciate the clarifications that's it for me.
Thank you.
Speaker 4: We have no further questions, Regis or at this time. I would not like to turn the meeting back over to Mr. Goldberg. Okay, operator, thank you. And thank you all for joining us this morning. And we look forward to speaking again when we release our Q4 and four year numbers. So thank you very much.
No further questions registered at this time I would now like to turn the meeting back over to Mr. Goldberg. Okay. Operator, Thank you and thank you all for joining US. This morning, and we look forward to speaking again, when we release, our Q4 and full year numbers. So thank you very much.
Thank you.
Speaker 9: The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation.
The conference has now ended.
Please disconnect your lines at this time.
Thank you for your participation.
Yeah.
Yeah.