Q2 2024 Telesat Corp Earnings Call

August 14, 2024

Speaker Change: Once again, please continue to stand by. We thank you for your patience.

Speaker Change: [inaudible]

Operator: This conference is being recorded. This conference is now ready to begin. Good morning, ladies and gentlemen.

This conference is being recorded. This conference is now ready to begin.

Speaker Change: This conference is now ready to begin.

Unknown Executive: Good morning, ladies and gentlemen. And welcome to the conference called to report the second quarter 2024 financial results of Telesat.

Operator: And welcome to the conference call to report the second quarter 2024 financial results of Telesat. Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat, and Andrew Browne, Chief Financial Officer of Telesat. I would now like to turn the meeting over to Mr. James Ratcliffe, Vice President of Investor Relations. Please go ahead, Mr. Ratcliffe.

Speaker Change: Good morning ladies and gentlemen, and welcome to the conference call to report the second quarter 2024 financial results of Telesat.

Unknown Executive: Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat, and Andrew Brown, Chief Financial Officer of Telesat.

Speaker Change: Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat, and Andrew Browne, Chief Financial Officer of Telesat. I would now like to turn the meeting over to Mr. James Ratcliffe, Vice President of Investor Relations. Please go ahead, Mr. Ratcliffe.

James Ratcliffe: I would now like to turn the meeting over to Mr. James Ratcliffe, Vice President of Investor Relations. Please go ahead, Mr. Ratcliffe.

James Ratcliffe: Thank you all, and good morning everyone. This morning we filed our quarterly report for the period ending June 30, 2024, on 4 on 6K with the FEC and on CDR Plus.

James Ratcliffe: Thank you all and good morning, everyone. This morning we filed our quarterly report for the period ending June 30, 2024, on Form 6K with the FEC and on CDAR Plus. Our remarks today may contain forward-looking statements. There are risks that Telesat's actual results may differ materially from the results contemplated by forward-looking stakeholders as a result of known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat's annual report and updates filed with the FTC. Telesat assumes no responsibility to update or revise these forward-looking statements.

James Ratcliffe: Thank you, Paul, and good morning, everyone.

Speaker Change: This morning, we filed our quarterly report for the period ending June 30, 2024, on Form 6K with the SEC and on CDAR Plus.

James Ratcliffe: Our remarks today may contain forward-looking statements. 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, please see Telesat's annual report and updates filed with the FEC.

Speaker Change: Our remarks today may contain forward-looking statements. 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.

Speaker Change: For a discussion of known risks, please see TELUSAT's annual report and updates filed with the FDC. TELUSAT assumes no responsibility to update or revise these forward-looking statements.

James Ratcliffe: Telesat assumes no responsibility to update or revise before looking statement.

Daniel Goldberg: I will now turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer. Okay, thanks, James, and good morning, everyone. Q2 in the first six months of this year have unfolded consistent with our expectations. As a result, we're reaffirming all of our guidance for the year and keeping focused to make sure we meet those objectives. When we hosted our first quarter call in early May, we indicated we were seeking to conclude our light-speed funding agreements with the governments of Canada and Quebec by the end of this summer. This is obviously a key priority for us.

Daniel Goldberg: I will now turn the call over to Daniel Goldberg, Telesat's President and Chief Executive Officer. Okay, James, and good morning to everyone. Q2 and the first six months of this year have unfolded consistent with our expectations. As a result, we're reaffirming all of our guidance for the year and keeping focused to make sure we meet those objectives. When we hosted our first quarterly call in early May, we indicated we were seeking to conclude our Lightspeed funding agreements with the governments of Canada and Quebec by the end of this summer. This is obviously a key priority for us.

Speaker Change: I will now turn the call over to Dan Goldberg, HealthSats President and Chief Executive Officer. Okay, thanks James and good morning to everyone.

Speaker Change: Q2 and the first six months of this year have unfolded consistent with our expectations. As a result, we're reaffirming all of our guidance for the year and keeping focused to make sure we meet those objectives.

Speaker Change: When we hosted our first quarter call in early May, we indicated we were seeking to conclude our Lightspeed funding agreements with the governments of Canada and Quebec by the end of this summer.

Daniel Goldberg: I'm happy to say that we've had good and sustained engagement with government representatives, and we are optimistic that we remain on track to achieve this timeline. We'll make a further announcement once definitive funding agreements are concluded. Beyond that, we're making strong progress executing on the Lightspeed program. As MDA, our prime satellite contractor, noted on its earnings call last week, they've now selected and onboarded 90% of the suppliers for the Lightspeed program, and they remain on track for their full-year ramp-up. We've increased our own headcount since the start of the year by nearly 20% as we staff up to execute on Lightspeed, and the team is making As we noted in today's earnings release, our focus this year remains twofold.

Daniel Goldberg: I'm happy to say that we've had good and sustained engagement with government representatives, and we are optimistic that we remain on track to achieve this timing.

Speaker Change: This is obviously a key priority for us.

Speaker Change: I'm happy to say that we've had good and sustained engagement with government representatives and we are optimistic that we remain on track to achieve this timing. We'll make a separate announcement once the definitive funding agreements are concluded.

Daniel Goldberg: We'll make a separate announcement once the definitive funding agreements are concluded. Beyond that, we're making strong progress executing on the light-speed program. As MDA, our prime satellite contractor, noted on its earnings call last week, they've now selected and onboarded 90% of the suppliers for the light-speed program, and they remain on track for their full-year ramp-up plan. We've increased our own head counts since the start of the year by nearly 20% as we staff up to execute on light-speed, and the team is making excellent progress on the program.

Speaker Change: Beyond that, we're making strong progress executing on the Lightspeed program.

Speaker Change: As MDA, our prime satellite contractor, noted on its earnings call last week, they've now selected and onboarded 90% of the suppliers for the Lightspeed program, and they remain on track for their full-year ramp-up plan.

Speaker Change: We've increased our own headcount since the start of the year by nearly 20% as we staff up to execute on Lightspeed and the team is making excellent progress on the program. As we noted in today's earnings release, our focus this year remains twofold.

Daniel Goldberg: As we noted in today's earnings release, our focus this year remains twofold. For our geo-activities, the emphasis is on maximizing EBITDA and cash flow by doing what we can to mitigate anticipated revenue declines and rigorously managing our cost structure. And on Leo, it's all about execution, closing our funding agreements, staffing up, building out all the various elements of the light-speed network, including the satellites, the ground infrastructure, and the software that we need, and commercializing it and the key verticals with focus. on. I'm very pleased for the progress we're making in all of those areas. We're hugely bullish on our prospects in the market, as well as our ability to deliver an extraordinary value proposition for our customers and significant value creation for our shareholders.

Daniel Goldberg: For our geoactivities, the emphasis is on maximizing EBITDA and cash flow by doing what we can to mitigate anticipated revenue declines and rigorously managing our cost structure. I'm Leo. It's all about execution, closing our funding agreements, staffing up, building out all the various elements of the light speed network, including the satellites, the ground infrastructure, and the software that we need, and commercializing it, and the key verticals we are focused I'm very pleased with the progress we're making in all of those areas.

Speaker Change: For our geo-activities, the emphasis is on maximizing EBITDA and cash flow by doing what we can to mitigate anticipated revenue declines and rigorously managing our cost structure.

Speaker Change: And on LEO, it's all about execution, closing our funding agreements, staffing up, building out all the various elements of the Lightspeed Network, including the satellites, the ground infrastructure and the software that we need, and commercializing it in the key verticals we're focused on.

Andrew Browne: We're hugely bullish on our prospects in the market, as well as our ability to deliver an extraordinary value proposition for our customers and significant value creation for our shareholders. With that, I'll hand over to Andrew and then look forward to taking any questions. Thank you, Dan, and good morning, everyone. I would now like to focus on the highlights from this morning's press release and filing. In the second quarter of 2024, Telesat reported consolidated revenues of $152 million and adjusted EBITDA of $103 million.

Speaker Change: I'm very pleased with the progress we're making in all of those areas.

Speaker Change: We're hugely bullish on our prospects in the market, as well as our ability to deliver an extraordinary value proposition for our customers and significant value creation for our shareholders.

Daniel Goldberg: With that, I'll hand over to Andrew and then look forward to taking any questions. Thank you, Diane.

Speaker Change: With that, I'll hand over to Andrew and then look forward to taking any questions.

Andrew Browne: In the first six months of 2024, the company generated $66 million in cash from operations, ending the second quarter with $1.4 billion of cash. For the second quarter of 2024, and compared to the same period in 2023, revenues decreased by $27 million to $152 million. Operating expenses increased by $5 million to $56 million, and adjusted EBITDA decreased by $35 million to $103 million.

Andrew Browne: The adjusted EBITDA margin was 67.8% as compared to 77.1% in the first quarter of 2023. The revenue decrease for the quarter was primarily due to a reduction in services and a low rate on the renewal of a long-term agreement with a North American direct-to-home customer, as well as lower revenues from certain mobility and Latin American customers. The increase in operating expenses is primarily due to higher wages and benefits associated with that expense and costs associated with consulting contracts, partially offset by lower non-cash share-based compensation and higher capitalized engineering expenses associated with Telesat like this. However, intense interest expense decreased by 7 million during the second quarter.

Andrew: Thank you, Dan. And good morning, everyone. I would now like to focus on highlights from this morning's press release and filings.

Andrew: In the second quarter of 2024, Tedizat reported consolidated revenues of $152 million.

Speaker Change: and adjusted EBITDA of $103 million. The first six months of 2024, the company generated $66 million in cash from operations, ending the second quarter with $1.4 billion of cash.

Andrew Brown: For the second quarter of 2024, and compared to the same period in 2023, revenues decreased by 27 million to 152 million, operating expenses increased by 5 million to 56 million, and adjusted EBITDA decreased by 35 million to 103 million. They adjusted EBITDA margin with 67.8%. That's compared to 77.1% in the fourth quarter of 2023. The revenue decreased for the quarter was primarily due to production in services, and a low rate under renewal of a long-term agreement with the North American direct-to-home customer, as well as lower revenues from certain mobility and Latin American customers. The increase in operating expenses is primarily due to higher wages and benefits, but that expense and cost associated with consulting contracts, partially offset by lower non-touch share-based compensation, and higher capitalized engineering expense associated with Telesat, Light Speed.

Speaker Change: for the second quarter of 2024 and compared to the same period in 2023.

Speaker Change: Revenues decreased by $27 million to $152 million. Operating expenses increased by $5 million to $56 million. Adjusted EBITDA decreased by $35 million to $103 million.

Speaker Change: The adjusted EBITDA margin was 67.8% as compared to 77.1% in the fourth quarter of 2023.

Speaker Change: The revenue decrease for the quarter was primarily due to a reduction in services and a low rate on the renewal of a long-term agreement with a North American direct-to-home customer, as well as lower revenues from certain mobility and Latin American customers.

Speaker Change: The increase in operating expenses is primarily due to higher wages and benefits, further at expense and cost associated with consulting contracts, partially offset by lower non-cash share based compensation, and higher capitalized engineering expense associated with Telesat Lightspeed.

Andrew Browne: We'll compare it to the same period in 2023. The decrease in interest expense was primarily due to the sale of notes and term loan B. This was partially offset by an increase in the interest rate and the US term loan. The increase in interest expense increased by 7 million during the second quarter.

Andrew Brown: Intense interest expense decreased by 7 million during the second quarter will compare it to the same period in 2023. The decrease in the interest expense is primarily due to the reports of notes and term loan B. This was partially offset by an increase in the interest rate and the US term loan facility.

Speaker Change: Interest expense decreased by $7 million during the second quarter, but compared to the same period in 2023, the decrease in interest expense was primarily due to the repurchase of notes and Term Loan B. This was partially offset by an increase in the interest rate in the U.S. Term Loan Facility.

Andrew Brown: In the second quarter, we recorded a loss and foreign exchange of 34 million, as compared to the gain of 67 million in the second quarter of 2023. The loss of the three months ended June 34, with many the results of the strengthening US dollar, the Canadian dollar spot rate, through the quarter of compared to the spot rate as at December the 31st, 2023, and the resulting one's favorable impact on the translation of a US dollar of denominated debt. Our net income for the second quarter was 129 million, compared to net income of $9 million for the same period in the prior year.

Andrew Browne: In the second quarter, we recorded a loss in foreign exchange of $34 million as compared to a gain of $67 million in the second quarter of 2023. The loss for the three months ended June 30, 2034 was mainly the result of the strengthening U.S. dollar to Canadian dollar spot rate through the quarter as compared to the spot rate as at December 31, 2023, and the resulting unfavorable impact on the translation of our U.S. dollar denominated debt. For more information, visit www. FEMA.gov Our net income for the second quarter was $129 million, compared to a net income of $19 million for the same period in the prior year.

Speaker Change: In the second quarter, we recorded a loss in foreign exchange of $34 million as compared to a gain of $67 million in the second quarter of 2023.

Speaker Change: The loss for the three months ended June 30, 2034 was mainly the result of the strengthening U.S. dollar to Canadian dollar spot rate through the quarter as compared to the spot rate as at December 31, 2023, and the resulting unfavorable impact on the translation of our U.S. dollar denominated debt.

Speaker Change: Our net income for the second quarter was $129 million compared to net income of $519 million for the same period in the prior year.

Andrew Brown: The change was primarily due to one-time recognition of feedback clearing income in the second quarter of 2023, along with the impact of the foreign exchange loss, as I had mentioned earlier. For the six months ended June 30, 2024, cash inflows and operating activities were $66 million, and capital expenditures were $3, $34 million in the same period, almost all of which were related to well, Telesat, Light Speed. Actual cash use and investment activities was $220 million in the four six months of the year. Certain capital expenditures were incurred late in the second quarter, and subsequent to you crude, this is reflected in the increase in trade and other tables of quarter end.

Andrew Browne: The change was primarily due to the one-time recognition of CBAN clearing income in the second quarter of 2023, along with the impact of the foreign exchange loss, as I had mentioned earlier. For the six months ended June 30, 2024, cash inflows and operating activities were $66 million, and capital expenditures were $3.34 million in the same period, almost all of which were related to, well, Telesat likes me. Actually, the cash used in investment activities was $220 million in the four six months of the year.

Speaker Change: The change was primarily due to the one-time recognition of CBAN clearing income in the second quarter of 2023, along with the impact of the foreign exchange loss as I had mentioned earlier.

Speaker Change: For the six months ended June 30, 2024, cash inflows from operating activities were $66 million and capital expenditures were $334 million in the same period, almost all of which were related to telesatellite speed.

Andrew Browne: Certain capital expenditures were incurred late in the second quarter, and subsequently, you crude; this is reflected in the increase in trade and other tables of quarter guidance. As you will also have noted in our errands released this morning, we have reaffirmed the 244 guidance. This guidance assumes a Canadian dollar to US dollar exchange rate of 1.35. For 2024, Telesat still expects its full-year revenues to be between $545 and $565.

Speaker Change: Actual cash used in investment activities was $220 million in the first six months of the year. Certain capital expenditures were incurred late in the second quarter and subsequently accrued. This is reflected in the increase in trade and other payables at quarter end.

Andrew Brown: Guidance, as you will also have noted in our errands released this morning, we have reaffirmed the $24.44 guidance. This guidance assumes a Canadian dollar to US dollar exchange rate of Canadian 1.35. for 2024, Telesat Sillick's taxes for your revenues to be between $5.45 and $5.65. In terms of operating expenses, excluding share-based compensation, we are still looking to spend between 80 million to 90 million, attributed to Telesat Lakefield. At just a deba die, Telesat Sillick's tax to be between $3.40 million to $3.60 million, as promised. We are also showing our geo and leo-resolved rapidly and is reflected in those four of our financial statements filed on $4.6K.

Speaker Change: Guidance. As you will also have noted in our earnings release this morning, we have reaffirmed our 2044 guidance. This guidance assumes a Canadian dollar to US dollar exchange rate of Canadian 1.35.

Speaker Change: For 2024, Telesat still expects its full-year revenues to be between $545,000 and $565,000.

Andrew Browne: In terms of operating expenses, excluding share-based compensation, we're still looking to spend between $80 billion and $90 billion attributed to Telesat Lightspeed. It just did EBITDA. Telesat still expects to be between $340 million and $360 million. As promised, we are also showing our GEO and LEO results separately, and this is reflected in Note 4 of our financial statements file on Form 6K. In respect of expected capital expenditures, we continue to expect our 2024 cash flows used in investing activities to be in the range of $1 billion to $1.4 billion, which is nearly all related to expected Telesat Lightspeed capital to meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures.

Speaker Change: In terms of operating expenses, excluding share-based compensation, we are still looking to spend between $80 billion to $90 billion attributed to Telesat Lightspeed.

Speaker Change: Interested EBITDA, Telesat still expects to be between $340 million to $360 million. As promised, we are also showing our GEO and LEO results separately and as reflected in notes 4 of our financial statements file on Form 6K.

Andrew Brown: In respect to expected capital expenditures, we continue to expect our 2024 cash flows used in investing activities to be in the range of 1 billion to 1.4 billion, which is nearly all related to expected Telesat Lightspeed cap. The major expected cash requirements for the next 12 months, including interest payments and capital expenditures, were approximately 1.4 billion of cash in short-term investments at the end of June, as well as approximately $200 million US dollars of borrowing capacity available on the revolving credit facility. Approximately 1.2 billion in cash was held in our unrestricted subsidiaries at the end of the quarter.

Speaker Change: In respect to expected capital expenditures, we continue to expect our 2024 cash flows used in investing activities to be in the range of $1 billion to $1.4 billion, which is nearly all related to expected Telesat Lightspeed CapEx.

Speaker Change: To meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures, we have approximately $1.4 billion of cash in short-term investments at the end of June , as well as approximately $200 million of borrowing capacity available under a revolving credit facility.

Andrew Browne: We had approximately $1.4 billion of cash in short-term investments at the end of June, as well as approximately $200 million of borrowing capacity available under a revolving credit facility. Additionally, approximately $1.2 billion of cash was held in our unrestricted subsidiaries at the end of the quarter.

Speaker Change: Approximately $1.2 billion in cash was held in our unrestricted subsidiaries at the end of the quarter. In addition, we continue to generate a significant amount of cash from our ongoing operating activities.

Andrew Brown: In addition, we continue to generate a significant amount of cash from our ongoing operating activities. At the end of the second quarter, total leverage ratio has calculated on the terms of the amended senior seashore credit facility was 5.61 times. Telesat is in compliance with all the compliments in our credit agreements and indentures. In terms of our debt reportuses, we have reported year-to-date an amount of 262 million US dollars at a cost of 120 million US dollars, including the included interest. This includes an amount of 43 million US dollars purchased after quarter-end. Combined with the debt report uses completed in 2022 or 2023, we have now reported a thousand principal amounts of $849 million US dollars, but cost of 459 million including the crude interest.

Andrew Browne: In addition, we continue to generate a significant amount of cash from our ongoing operations. At the end of the second quarter, the total leverage ratio, as calculated under the terms of the amended senior security credit facilities, was 5.61. Telesat is in compliance with all the covenants and our credit agreements and indentures. In terms of our debt repurchases, we have repurchased an amount of $262 million U.S. dollars year-to-date at a cost of $120 million U.S. dollars, including accrued interest.

Speaker Change: At the end of the second quarter, total leverage ratio as calculated under the terms of the amended senior security credit facilities was 5.61 times.

Speaker Change: Telesat is in compliance with all the covenants and accredited agreements and indentures.

Speaker Change: In terms of our debt repurchases, we repurchased, year-to-date, an amount of $262 million U.S. dollars at a cost of $120 million U.S. dollars, including accrued interest. This includes an amount of $43 million U.S. dollars purchased after quarter end.

Andrew Browne: This includes an amount of $43 million U.S. dollars purchased after quarter-end. Combined with the debt repurchases completed in 2022 and 2023, we've now repurchased a total principal amount of $849 million at a cost of $459 million, including accrued interest. This also results in interest savings of approximately $55 million annually.

Speaker Change: Combined with the debt repurchases completed in 2022 and 2023, we've now repurchased a total principal amount of $849 million, at a cost of $459 million, including accrued interest.

Andrew Brown: This also results in interest savings of approximately 55 million annually. Including the repayment in 2020 of approximately 356 million US dollars returned on B, our overall debt has been reduced now by approximately 26% at 1.2 billion. Our reconciliation between our financial statements and financial covenant calculations is provided in the report we file this morning. Our 6K provides the inaudible interim condensed consolidated financial information into ending in eight. The non-guarantee or subsidiary shown are essentially one restricted subsidiary with minor differences.

Speaker Change: This also results in interest savings of approximately $55 million annually.

Andrew Browne: Including the repayment in 2020 of approximately $356 million U.S. dollars in term loan fees, our overall debt has been reduced now by approximately 26%, or $1.2 billion. A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning. Our 6K provides the inaudible interim condensed consolidated financial information into NDNA. The non-guarantor subsidiaries shown are essentially unrestricted subsidiaries with minor attachment

Speaker Change: including the repayment in 2020 of approximately $356 million U.S. dollars in term loan fee. Our overall debt has been reduced now by approximately 26% or $1.2 billion.

Speaker Change: A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning. Our 6K provides the analysis interim condensed consolidated financial information into NDNA. The non-guarantor subsidiaries shown are essentially unrestricted subsidiaries with minor differences.

Unknown Executive: So that concludes our prepared remarks for the call, and now we'll be very happy to answer any questions you may have. So, with that, I will turn back to the operator for the question-and-answer session.

Andrew Browne: So that concludes our prepared remarks for the call. And now, we'll be very happy to answer any questions you may have. So with that, I will turn back to the operator for the question and answer session. Thank you. Thank you very much.

Speaker Change: So that concludes our prepared remarks for the call and now we'll be very happy to answer any questions you may have. So with that, I will turn back to the operator for the question and answer session. Thank you.

Unknown Executive: Thank you. Thank you very much.

Operator: Yes, we will now take questions from the telephone lines. If you have a question, please press star one on the device's keypad. You can also cancel your question at any time by pressing star 2.

Unknown Executive: Yes, we will now take questions from the telephone lines. If you have a question, please press star one on the device's keypad. You also can counsel your question at any time by pressing star two. So again, please press star one at this time if you have a question. There will be a brief pause while the participants register. Thank you for your patience.

Speaker Change: Thank you very much. Yes, we will now take questions from the telephone lines. If you have a question, please press star 1 on the device's keypad.

Speaker Change: You also can cancel your question at any time by pressing star 2.

Operator: So again, please press star one at this time. If you have a question, there will be a brief pause while the participants register. Thank you for your patience. We have our first question from Edison Yu from Deutsche Bank. Please go ahead, your line is open. Good morning.

Speaker Change: So again, please press star 1 at this time if you have a question. There will be a brief pause while the participants register.

Speaker Change: Thank you for your patience.

Edith: We have a first question from Edith, and you from Doat Bank. Please go ahead. Your line is up.

Speaker Change: We have a first question from Edison Yu from Deutsche Bank. Please go ahead, your line is open.

Daniel Goldberg: Good morning, thank you for taking our questions. First, just want to clarify that the negotiations are on track. Are you particularly saying that it will conclude in the next couple of weeks based on your end of the summer timeline? Yeah, that's effectively right. Our expectation is that in the next couple of weeks, we will conclude the agreements and make a separate announcement about that.

Edison Yu: Thank you for taking our questions. First, just want to clarify that the negotiations are on track. Are you basically saying that they will conclude in the next couple of weeks based on your end of summer timeline? Yeah, that's effectively right.

Edith: Good morning. Thank you for taking our questions. First, I just want to clarify that the negotiations are on track. Are you basically saying that it will conclude in the next couple of weeks based on your end of summer timeline?

Daniel Goldberg: Our expectation is that in the next couple of weeks, we will conclude the agreements and make a separate announcement about that. Okay. And I guess, is there anything that still needs to be worked out? Or is this sort of more, you know, the right people got to make the right signatures?

Speaker Change: Yeah, that's effectively right. Our expectation is that in the next couple of weeks, we will conclude the agreements and make a separate announcement about that.

Daniel Goldberg: And I guess is there anything that still needs to be worked out, or is this sort of more, you know, the right people going to make the right signatures, or is there anything kind of outstanding? Yeah, no, as I said in my prepared remarks, we've had really good engagement with the government representatives. These are representatives from the Government of Canada and the Government of Quebec. There are a good number of agreements that need to get concluded in order to document all the different features of the funding arrangements. At this point in time, I don't see any significant impediments or obstacles in getting this done in the coming weeks.

Speaker Change: Understood. And I guess, is there anything that still needs to be worked out, or is this sort of more, you know, the right people got to make the right signatures, or is there anything kind of outstanding?

Daniel Goldberg: Or is there anything kind of outstanding? No, as I said in my prepared remarks, we've had really good engagement with the government representatives. These are representatives from the government of Canada and the government of Quebec.

Speaker Change: As I said in my prepared remarks, we've had really good engagement with

Speaker Change: The government representatives, these are representatives from the government of Canada and the government of Quebec.

Daniel Goldberg: There are a good number of agreements that need to be concluded in order to document all the different features of the funding arrangements. At this point in time, I don't see any significant impediments or obstacles in getting this done in the coming weeks, and so, yeah, we're just, you know, it's a big funding arrangement with multiple agreements, and we're just working through all that, but there's nothing, yeah, kind of extraordinary about what remains to get done.

Speaker Change: There are a good number of agreements that need to get concluded in order to document all the different features of the funding arrangements.

Speaker Change: At this point in time, there's...

Speaker Change: I don't see any...

Speaker Change: You know, significant impediments.

Daniel Goldberg: And so, yeah, we're just, you know, it's a big funding arrangement with multiple agreements. And we're just working through all that, but there's nothing. Yeah, kind of extraordinary about what remains to get done.

Speaker Change: or obstacles in getting this done in the coming weeks. And so, yeah, we're just, you know, it's a it's a big funding arrangement with multiple agreements. And we're just working through all that. But there's nothing yeah, kind of extraordinary about what remains to get done.

Unknown Executive: Gotcha.

Daniel Goldberg: Gotcha. You're switching to the guidance on the CapEx, which obviously implies a pretty substantial step up, even at the low end of the range. I guess, how do we think about what determines if you end up, you know, closer to $1 billion or closer to $1.4 billion? And, and what sort of drives the delta?

Unknown Executive: You're switching to the guidance on the Catholics. Obviously, it implies a pretty substantial step up, even at the low end of the range.

Jim: Thank you. Bye, Jim.

Speaker Change: You're switching to the guidance on the CAPEX obviously implies a pretty substantial step up even at the low end range. I guess how do we think about what determines if you end up

Andrew Brown: I guess, how do we think about what determines if you end up in the course of one billion, closer to 1.4 billion, and what sort of the drop to delta?

Speaker Change: You know, closer to $1 billion, closer to $1.4 billion, and what sort of drive to Delta?

Andrew Brown: Andrew, do you want to take that? Yeah, sure. If you look at our flow of CapEx in the second quarter, it's approximately about 309 million or so. So if you kind of multiply that by three, you actually get to a video from a mathematical perspective. So that's why we feel pretty comfortable where we are with the range.

Andrew Browne: Andrew, do you want to take that? Yeah, sure. If you look at our flow of capex in the second quarter, it's approximately about 309 million or so, so if you kind of multiply that by three, you actually get to a billion from a mathematical perspective, so that's why we feel pretty comfortable where we are with the range. Yeah, and maybe I would just add that, you know, it's a sign that the program is on track.

Speaker Change: Andrew, do you want to take that? Yeah, sure. If you look at our flow of capex in the second quarter, it's approximately about 309 million or so. So if you kind of multiply that by three, you actually get to a billion from a mathematical perspective. So that's why we feel pretty comfortable where we are with the range. Yeah, and maybe I would just add that

Daniel Goldberg: Yeah, and maybe I would just add that, you know, it's a sign that the program is on track. I mentioned, again, in my prepared remarks at MDA who's the prime and is going to be the beneficiary of so much of our capital spending this year. And next, they've done a great job of getting all their suppliers online. They're placing orders, and they're moving out exactly as we would like them to. And so, yeah, we felt, you know, everything we're seeing tells us that we're going to be tracking the guidance. And as Andrew said, you know, there was a big spend in Q2, and everything we're seeing is showing good progress.

Speaker Change: It's a sign that the program is on track, I mentioned.

Andrew Browne: I mentioned, again, in my prepared remarks, that MDA, who's the prime and is going to be the beneficiary of so much of our capital spending this year and next, they've done a great job of getting all their suppliers online, placing orders, and they're moving out exactly as we would like them to. And so, yeah, we felt, you know, everything we're seeing tells us that we're going to be tracking the guidance.

Speaker Change: Again, in my prepared remarks at MDA, who's the prime and is going to be

Speaker Change: the beneficiary of so much of our capital spending this year and next.

Speaker Change: They've done a great job of getting all their suppliers online, their placing orders, and they're moving out exactly as we would like them to. And so...

Speaker Change: Yeah, we felt, you know, everything we're seeing tells us that we're, we're going to be tracking the guidance. And as Andrew said, you know, there was a big spend in

Andrew Browne: And as Andrew said, you know, there was a big spend in Q2, and everything we're seeing is showing good progress and that our suppliers will achieve the milestones they need to achieve in order to unlock the payments that we've sort of budgeted for. That's it. Thank you. I'll jump back into the queue.

Andrew: Q2 and everything we're seeing is showing good progress and that our suppliers will achieve the milestones they need to achieve in order to unlock the payments that we've sort of budgeted for.

Daniel Goldberg: And that our suppliers will achieve the milestones they need to achieve in order to unlock the payments that we've sort of budgeted for.

Unknown Executive: Action, thank you. I'm talking to you.

Unknown Executive: Okay, thanks. Thank you.

Andrew: That's it. Thank you and jump back in the queue. Okay, thanks.

David McFadgen: The next question is from David McFadgen from Carmark Securities. Please go ahead. Your line is open.

Operator: Okay. Thanks. Thank you. The next question is from David McFadden from Cormark Securities. Please go ahead; your line is open. Alright, thank you.

Speaker Change: Thank you.

Speaker Change: The next question is from David McFadden from Cormark Securities. Please go ahead. Your line is open.

Unknown Executive: All right. Thank you.

David McFadgen: A couple of questions. Can you just give us an update on where you stand with respect to negotiating with that one DTH customer to take the contract up for renewal this fall? Yeah, thanks, David. So, just for everyone's benefit, we have a renewal with Echostar on our NMIC 5 satellite that comes up in early October. And we've said that, you know, on our last two calls. I think that we've been engaged with Echostar. So we're not done yet.

Daniel Goldberg: A couple of questions. Can you just give us an update on where you stand with respect to negotiating that one DTH customer? I think the contract is up there in the middle of this fall.

Speaker Change: Thank you. I have a couple of questions. Can you just give us an update on where you stand with respect to negotiating that one DTH customer? I think the contract sets for a renewal this fall.

Daniel Goldberg: Yeah. Thanks, David.

Daniel Goldberg: So just for everyone's benefit, we've got a renewal with Echo Star on our Mimic Five satellite that comes up in early October. And we said that on our last two calls, I think that we've been engaged with Echo Star. So we're not done yet. I've mentioned before; we know Echo Star well. We have a good relationship with them. We've done business with them for a very long time. So we've certainly had a number of exchanges, but we're not done yet. So my expectation, obviously, this renewal coming up, you know, in about two months' time, will be landing on a resolution pretty soon.

Speaker Change: Yeah, thanks, David.

Speaker Change: So just for everyone's benefit, we've got.

Speaker Change: a renewal with Echostar on our NMIC-5 satellite that comes up in early October , and we've said that, you know, on our last two calls, I think that we've been engaged with Echostar. So we're not done yet.

Daniel Goldberg: We know EchoStar well, we have a good relationship with them, and we've done business with them for a very long time. So we've certainly had a number of exchanges, but we're not done yet. So my expectation, obviously, with this renewal coming up in about two months' time, we'll be landing on a resolution pretty soon. Certainly, I think that by the time we do our Q3 call, we'll be able to provide a lot of detail around where we landed, but at this point in time, we're still having discussions with them. Okay, and maybe a couple of questions on light beads.

Speaker Change: I've mentioned before, we know EchoStar well, we have a good relationship with them, we've done business with them for a very long time. So we've...

Speaker Change: certainly had a number of exchanges but but we're not done yet.

Speaker Change: So, my expectation, obviously, with this renewal coming up, you know, in about two months' time, we'll be landing on a resolution pretty soon. Certainly, I think...

Daniel Goldberg: Certainly, I think that by the time we do our Q3 call, we will be able to provide, you know, a lot of detail around where we landed. But at this point in time, still having discussions with them.

Speaker Change: That, by the time we do our Q3 call, we'll be able to provide, you know, a lot of detail around where we landed. But at this point in time, still having discussions with them.

Operator: This conference is being recorded. This conference is now ready to begin.

Daniel Goldberg: Okay, and maybe a couple of questions on light bead. So in terms of depending agreements, you know, you've single that you expect as I'm signed by the end of summer. Is that with both the government and the Government of Quebec? If I think in the past, you are referring to the Government of Canada. Yeah, no, it's our expectation that it'll be with both of them. And again, it's why, you know, it's taken a little while. Again, we're tracking the timeframe that we'd envision a few months ago when we put out our Q1 numbers, but because it is the Government of Canada, it is the Government of Quebec.

Daniel Goldberg: So in terms of defending agreements, you know, you're single, but you expect a thousand signed by the end of summer. Is that with both the government of Canada and the government of Quebec? If I think about the past, you are probably referring to the government of Canada.

Speaker Change: Okay, and maybe a couple of questions on light speed.

Operator: Good morning, ladies and gentlemen. And welcome to the conference called to report the second quarter 2024 financial results of Telesat. Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat, and Andrew Brown, Chief Financial Officer of Telesat.

Speaker Change: So, in terms of defending agreements, you know, you're saying that you expect to...

Speaker Change: I'll have them signed by the end of summer. Is that with both the Government of Canada and the Government of Quebec? Because I think in the past you were primarily referring to the Government of Canada. Yeah, no, it's our expectation that it'll be with both of them.

Daniel Goldberg: Yeah, no, it's our expectation that it'll be with both of us. And again, it's why, you know, it's taken a little while, again, we're tracking the timeframe that we'd envisioned a few months ago when we put out our Q1 numbers, but because it is the government of Canada, it is the government of Quebec, we also have this vendor financing and so they're, you know, all of that needs to get done, it takes a little bit longer than if it were, one, just a purely commercial, you know, kind of funding syndicate.

James Ratcliffe: I would now like to turn the meeting over to Mr. James Ratcliffe, Vice President of Investor Relations. Please go ahead Mr. Ratcliffe. Thank you all and good morning everyone. This morning we filed our quarterly report for the period ending June 30, 2024, on 4 on 6K with the FEC and on CDR plus. Our remarks today may contain forward-looking statements. 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, please see Telesat's annual report and updates filed with the FEC. Telesat assumes no responsibility to update or revise before looking statement.

Speaker Change: And again, it's why, you know, it's taken a little while, again, we're tracking the time frame that we'd envisioned a few months ago when we put out our

Speaker Change: Q1 numbers, but

Daniel Goldberg: We also have this vendor financing. And so they're, you know, all of that needs to get done. It takes a little bit longer than if it were one, just a purely commercial, you know, kind of funding syndicate. And two, yeah, with the government funding, there are, yeah, it's kind of special consideration. So, so yeah, it'll be with the Government of Canada, the Government of Quebec. And it all feels like it's moving in the right direction.

Kim Bikaj: because...

Kim Bikaj: It is the government of Canada. It is the government of Quebec. We also have this vendor financing and so there, you know, all of that needs to get...

Kim Bikaj: It takes a little bit longer than if it were, one, just a purely commercial kind of funding syndicate. And two, yeah, with these government funding, there are,

Daniel Goldberg: And two, yeah, with government funding, there is, yeah, it's kind of special consideration. So yeah, it'll be with the government of Canada, with the government of Quebec, and it all feels like it's moving in the right direction. I have to say, just because I'm a former lawyer, it ain't over till it's over, but we're highly confident that we're going to get there in the coming weeks. Okay, and then can you update us on your total spend to date on Lightspeed? Andrew?

Speaker Change: Yeah, it's kind of special consideration. So, so yeah, it'll be with the government of Canada with the government of Quebec and And it all feels like it's moving in the right direction I have to say just because I'm a former lawyer it ain't over till it's over But we're highly confident that that we're going to get there in the coming weeks

Daniel Goldberg: I will now turn the call over to Dan Goldberg, Telesat's president and Chief Executive Officer. Okay, thanks James and good morning everyone. Q2 in the first six months of this year have unfolded consistent with our expectations.

Unknown Executive: I have to say just because I'm a former lawyer, it ain't over till it's over. But we're highly confident that we're going to get there in the coming weeks. Okay.

Daniel Goldberg: As a result, we're reaffirming all of our guidance for the year and keeping focused to make sure we meet those objectives. When we hosted our first quarter call in early May, we indicated we were seeking to conclude our light-speed funding agreements with the governments of Canada and Quebec by the end of this summer. This is obviously a key priority for us. I'm happy to say that we've had good and sustained engagement with government representatives and we are optimistic that we remain on track to achieve this timing.

Andrew Brown: And then can you update us on your total spend to date on Right to Be? And for looking at the half year, as we said, we've spent 324 million total, of which cash is 220, and the balance has indeed been reflected in the accounts payable that we see on the balance sheet. And those are Canadian dollars, right, Andrew? Yes, correct, Canadian. I think the budget for life is three and a half billion. And so that's so you spend three, three, three, four Canadians so far on the project. Oh, man. Okay. No, no, no, no. That's just what we've done so far this year.

Speaker Change: Okay. And then can you update us on your total spend to date on LightSpeed?

Andrew Browne: Looking at the half-year, as we said, we've spent $334 million in total, of which the cap is $220 million, and the balance has indeed been reflected in the accounts payable that we see on the balance sheet. And those are Canadian dollars, right, Andrew? Yes, correct. Canadian dollars.

Speaker Change: Andrew?

Speaker Change: for looking at the half-year, as we said, we've spent $334 million in total, of which capped at $220 million, and the balance has indeed been reflected in the accounts payable that we see on the balance sheet. And those are Canadian dollars, right, Andrew? Yes, correct. Canadian dollars.

Daniel Goldberg: So, you know, I think the budget for Leipzig is three and a half billion, or that's the U.S. number. And so that's, so you've spent $3.34 Canadian so far on the project. I'll only answer that. Yeah. Okay. Oh, whoa, whoa, whoa. Wait.

Daniel Goldberg: We'll make a separate announcement once the definitive funding agreements are concluded. Beyond that, we're making strong progress executing on the light-speed program. As MDA, our prime satellite contractor noted on its earnings call last week, they've now selected and onboarded 90% of the suppliers for the light-speed program and they remain on track for their full-year ramp-up plan. We've increased our own head counts since the start of the year by nearly 20% as we staff up to execute on light-speed and the team is making excellent progress on the program.

Speaker Change: So, you know, I think the budget for Leipzig is $3.5 billion, or that's the U.S. number.

Speaker Change: And so that's, so you've spent $3.34 Canadians so far on the project, all in. Yeah.

Daniel Goldberg: No, no, no. That's just what we've done so far this year. Yeah, but we've been making investments in the program for the past few years, including payments with launch providers, you know, a lot of the non-recurring engineering investment that's gotten made, user terminal development, just kind of across the board. So, Andrew, I don't know if you want to say anything more about that. Yeah, no, I

Speaker Change: Okay.

Speaker Change: Oh, whoa, whoa, whoa, wait. No, no, no. That's just what we've done so far this year.

Andrew Brown: Yeah, we've been making investments in the program for the past few years, including payments with launch providers, a lot of the non-recurring engineering investment that's gotten made. User terminal development just kind of across the board.

Speaker Change: Yeah, but we've been making investments in the program for the past few years, including payments with launch providers, you know, a lot of the non-recurring engineering investment that's gotten made.

Andrew Browne: If you go all the way back to the data, then back to 2020, and on the Canadian dollar face, looking at CapEx, it's about $980 million. CapEx is what we have spent doing all of the work that we have done to get where we are today, in currency and Canadian dollars.

Andrew Brown: So, Andrew, I don't know if you want to say anything more about that. Yeah, no, I can't. If you go all the way back to the data, then back to 2020. And on the Canadian dollar basis, looking at CAPEX, it's about 980 million CAPEX is what we have spent doing all of the work that we have done to get where we are today. In currency and Canadian dollars. Okay. All right.

Speaker Change: user terminal development just kind of across the board. So, Andrew, I don't know if you want to say anything more about that. Yeah, no, I can. If you go all the way back to the development, back to 2020, on the Canadian dollar basis, looking at CapEx,

Andrew: It's about 980 million Catholics, it is what we have spent doing all of the work that we have done to get to where we are today. And currency? And Canadian dollars.

Operator: Okay. Okay. All right. That's great. Thank you. Thank you. Thank you. The next question is from Chris Quilty from Space. Please go ahead; your line is open.

Unknown Executive: That's great. Thank you.

Speaker Change: Okay. Okay. All right. That's great. Thank you.

Christopher Quilty: The next question is from Chris Quilty from Space. Please go ahead. Your line is open.

Speaker Change: Thank you.

Speaker Change: Thank you. The next question is from Chris Quilty from Space. Please go ahead, your line is open.

Daniel Goldberg: Hi, guys. So, congratulations. You put up better results than I was expecting for Q2, but that we get the question. You know, you maintain full year guidance. And so, did you see anything that was pulled forward into Q2? Maybe just first question? No. No, the quarter unfolded. Yeah, like we expected. All right.

Christopher Quilty: So congratulations, you put up better. No. No, the quarter unfolded, yeah, like we expected.

Daniel Goldberg: I'm very pleased for the progress we're making in all of those areas. We're hugely bullish on our prospects in the market, as well as our ability to deliver an extraordinary value proposition for our customers and significant value creation for our shareholders.

Chris Quilty: Hey guys, so congratulations, you put up better results than I was expecting for Q2 but that begets the question, you know, you maintained full year of guidance and so...

Speaker Change: Did you see anything that was pulled forward in the Q&A?

Speaker Change: to maybe just first question.

Andrew Brown: With that, I'll hand over to Andrew and then look forward to taking any questions. Thank you, Diane.

Speaker Change: No. No, the quarter unfolded, yeah, like we expected.

Andrew Brown: Good morning, everyone. I would now like to focus on highlights from this morning's press release and filings. In the second quarter of 2024, Telesat reported consolidated revenues of 152 million, and adjusted EBITDA of 103 million. For six months of 2024, the company generated 66 million in cash for operations, ending the second quarter with 1.4 billion of cash. For the second quarter of 2024, and compared to the same period in 2023, revenues decreased by 27 million to 152 million, operating expenses increased by 5 million to 56 million, and adjusted EBITDA decreased by 35 million to 103 million.

Unknown Executive: So I, I fear for kind of didn't model the back half down as much as perhaps I should have, and to stay at the kind of mid-point of the guidance.

Speaker Change: All right, so I therefore kind of didn't model the back half down as much as perhaps I should have to stay at the kind of midpoint of the guidance.

Daniel Goldberg: But putting aside Mimic Five, which, you know, I had already accounted for, when you look at the base of the business, are there any other large contract role loss or, you know, the other issues you sort of identified, and maritime and Latin America, are they getting better or worse? I think, you know, look, you know, we gave guidance at the outset of the year. Like in any year, there are always puts and takes. In the main, the year has been unfolding like we expected. There were some renewals that we didn't think we were going to get that we did.

Daniel Goldberg: Putting aside the important message from the President, I want to make a clear statement at this meeting. The President has said that he will not delay any decision about the vaccine until the end of the year. I think, you know, look, you know, we gave guidance at the outset of the year. Like in any year, there are always puts and takes. In the main, the year has been unfolding like we expected. There were some renewals that we didn't think we were going to get, but we did.

Speaker Change: Putting aside Mimic 5, which I had already accounted for...

Speaker Change: When you look at the base of the business, are there any other large contract roll-offs or the other issues?

Speaker Change: which you've sort of identified.

Speaker Change: Maritime and Latin.

Speaker Change: Are these getting better or worse?

Speaker Change: I think, you know, look, you know, we gave guidance at the outset of the year. Like in any year, there are always puts and takes. In the main, the year has been unfolding like we expected.

Andrew Brown: They adjusted EBITDA margin with 67.8%. That's compared to 77.1% in the fourth quarter of 2023. The revenue decreased for the quarter was primarily due to production in services, and a low rate under renewal of a long-term agreement with the North American direct-to-home customer, as well as lower revenues from certain mobility and Latin American customers. The increase in operating expenses is primarily due to higher wages and benefits, but that expense and cost associated with consulting contracts, partially offset by lower non-touch share-based compensation, and higher capitalized engineering expense associated with Telesat, light speed.

Speaker Change: There were some renewals that we didn't think we were going to get, that we did. There were some things that we thought would roll off in a certain time frame. We still think they're going to roll off, but they're rolling off a little bit later. And then, you know,

Daniel Goldberg: There were some things that we thought would roll off in a certain timeframe. We still think they're going to roll off, but they're rolling off a little bit later. And then, you know, equally, there's some things that played out in the way that's probably worse than what we thought.

Daniel Goldberg: There were some things that we thought would roll off in a certain time frame. We still think they're going to roll off, but they're rolling off a little bit later. And then, you know, Equally, there are some things that have played out in a way that's probably worse than we thought.

Speaker Change: Equally, there are some things that...

Daniel Goldberg: One of the things I'd note, and we, and we flag it in the 6K, is our customer explorer, which is a Canadian rural broadband provider that serves its customers with a mix of satellite, terrestrial wireless, and fiber. Explorer is going through a restructuring process right now. And as a result, we bumped up our bad debt provision in the quarter, and we're, you know, trimming our expectations for what, you know, will do with them for the rest of this year. So I'd say that was one that we didn't anticipate when we gave our guidance at the outset of the year, but that's something that will be a bit of a headwind in the second half of the year, and potentially next year as well.

Daniel Goldberg: One of the things I'd note, and we flag it in the 6K, is our customer Explore, which is a Canadian rural broadband provider that serves its customers with a mix of satellite, terrestrial wireless, and fiber. Explore is going through a restructuring process right now, and as a result, we've bumped up our bad debt provision in the quarter, and we're trimming our expectations for what we'll do with them for the rest of this year.

Speaker Change: played out in the way that's probably worse than what we thought. One of the things I'd note and we and we flag it in the 6k is our customer explore, which is a Canadian rural broadband provider that

Andrew Brown: Intense interest expense decreased by 7 million during the second quarter will compare it to the same period in 2023. The decrease in the interest expense as primarily due to the reports of notes and term loan B. This was partially offset by an increase in the interest rate and the US term loan facility. In the second quarter, we recorded a loss and foreign exchange of 34 million, as compared to the gain of 67 million in the second quarter of 2023.

Speaker Change: serves its customers with a mix of

Speaker Change: satellite, terrestrial wireless, and fiber.

Speaker Change: Explore.

Speaker Change: is going through a restructuring process right now and as a result we bumped up our bad debt provision in the quarter and we're you know trimming our expectations

Speaker Change: for what we'll do with them for the rest of this year. So I'd say that was one that we didn't anticipate when we gave our guidance at the outset of the year, but that's something that will be a bit of a headwind in the second half of the year and potentially next year as well.

Daniel Goldberg: So I'd say that was one that we didn't anticipate when we gave our guidance at the outset of the year. That's something that will be a bit of a headwind in the second half of the year and potentially next year as well, as they bought all the Biasat and Hughes Canadian payloads for Biasat 1 and 2. Yeah, no, not really. But you're right.

Andrew Brown: The loss of the three months ended June 34, with many the results of the strengthening US dollar, the Canadian dollar spot rate, through the quarter of compared to the spot rate as at December the 31st, 2023, and the resulting one's favorable impact on the translation of a US dollar of denominated debt. Our net income for the second quarter was 129 million, compared to net income of $9 million for the same period in the prior year.

Daniel Goldberg: And remind you, Dan, because that was, they bought all the Biosattons used Canadian payloads from Biosatt's one and two. Thank you, guys. Who are involved in the deal. If I can say it's sort of a middleman through that contract, if I remember correctly, so I wasn't expecting there was a huge revenue or a margin contribution on that. Yeah, no, not really so, but you're right. You're right in the sense that Explore uses satellite capacity from Telesat, Biasat, and Hughes. But no, we didn't act as a middleman for any of that. We owned the payload. I'm sorry, the Canadian payload for Biasat One, and we did a long-term deal with Explore to use that payload.

Speaker Change: And remind me, Dan, because that was, they bought all the Biosat and Hughes Canadian payloads for Biosats 1 and 2.

Andrew Brown: The change was primarily due to one-time recognition of feedback clearing income in the second quarter of 2023, along with the impact of the foreign exchange loss, as I had mentioned earlier. For the six months ended June 30, 2024, cash inflows and operating activities were $66 million, and capital expenditures were $3, $34 million in the same period, almost all of which were related to well, Telesat, light speed. Actual cash use and investment activities was $220 million in the four six months of the year, certain capital expenditures were incurred late in the second quarter, and subsequent to you crude, this is reflected in the increase in trade and other tables of quarter end.

Speaker Change: You guys were involved in the deal.

Speaker Change: If I can say as sort of a middleman through that contract if I remember correctly, so I wasn't expecting there was a huge revenue

Speaker Change: of Margin Contribution on...

Ernst: David McFadgen. David McFadgen, David McFadgen, David McFadgen, David McFadgen,

Daniel Goldberg: You're right in the sense that Explore uses satellite capacity from Telesat, Biosat, and Hue. But no, we didn't act as a middleman for any of that. We own the payload, I'm sorry, the Canadian payload for Viasat-1, and we did a long-term deal with Xplore to use that payload, but they did their own direct deals with Hughes and Viasat for their other capacity so that that doesn't flow through our P&L. Well, you know, that's okay, usually better than I do, so that's good again.

Speaker Change: Yeah, no, not really so, but you're, you're right. You're right in the sense that Explore uses satellite capacity from Telesat, Biosat, and Hughes.

Speaker Change: But no, we didn't act as a middleman for any of that.

Speaker Change: own the payload.

Speaker Change: I'm sorry, the Canadian payload for Viasat-1.

Speaker Change: and we did a long-term deal.

Speaker Change: with Explore to use that payload, but they did their own direct deals with Hughes and Biosat for their other capacity so that that doesn't flow through RP&L.

Daniel Goldberg: But they did their own direct deals with Hughes and Biasat for their other capacity, so that that doesn't flow through RP now. Okay, I got a part way, right? Well, you know, that's usually better than I do, so that's pretty good.

Andrew Brown: Guidance, as you will also have noted in our errands released this morning, we have reaffirmed the $24.44 guidance. This guidance assumes a Canadian dollar to US dollar exchange rate of Canadian 1.35, for 2024, Telesat Sillick's taxes for your revenues to be between $5.45 and $5.65, in terms of operating expenses, excluding share-based compensation, we are still looking to spend between 80 million to 90 million, attributed to Telesat Lakefield. At just a deba die, Telesat Sillick's tax to be between $3.40 million to $3.60 million, as promised, we are also showing our geo and leo-resolved rapidly and is reflected in those four of our financial statements filed on $4.6K.

Speaker Change: PartwayRight.

Speaker Change: Well, you know, that's usually better than I do, so that's pretty good.

Andrew Brown: The second question for Andrew, I guess, you know, spending a billion dollars in the back half of the year is no small feat for the government, but for Telesat. That's a big chunk of money, and clearly people are not building stuff at that rate. How much of that should we think of as, you know, prepayments to, you know, and hand of that flow to MDA to the supplier base in terms of the revenue contribution on the other side.

Christopher Quilty: All right. Second question for Andrew and me: Spending a billion dollars in the back half of the year is no small feat for the government, but for Telesat, that's a big chunk of money. Clearly, people are not building stuff at that rate. How much of that should we think of as prepayments?

Speaker Change: All right. Thank you.

Speaker Change: Second question for Andrew, I guess, you know, spending a billion dollars in the back half of the year is no small feat for the government, but, you know, for Telesat...

Speaker Change: That's a big chunk of money and clearly people are not building stuff at that rate.

Speaker Change: How much of that should we think of as...

Speaker Change: you know, prepayments to...

Speaker Change: And how does that flow through MDA to the supplier base?

Andrew Brown: In respect to expected capital expenditures, we continue to expect our 2024 cash flows used in investing activities to be in the range of 1 billion to 1.4 billion, which is nearly all related to expected Telesat Lightspeed Cap. The major expected cash requirements for the next 12 months including interest payments and capital expenditures, we were approximately 1.4 billion of cash in short-term investments at the end of June, as well as approximately $200 million US dollars of borrowing capacity available on the revolving credit facility.

Daniel Goldberg: Maybe Chris, I'll take this one, and I won't speak to MDA's revenue recognition, or I mean that you have to talk to them about that, but... Our suppliers need the money. They're ordering equipment right now. I mean, don't forget, we're launching satellites two years from now, which means that those satellites are going to be getting built in the coming months. And so they're ordering, you name it, solar rays. I'm sitting there with my CTO helping me out Dave. I know all of the various components of the spacecraft that people are going to be able to see, propulsion system, solar rays, attitude control 100%. People are building stuff.

Daniel Goldberg: So maybe, maybe Chris, I'll take this one and I won't speak to MDA's revenue recognition or I mean that, you gotta talk to them about that. But our suppliers need the money. They're ordering equipment right now. I mean, don't forget, we're launching satellites two years from now, which means that those satellites are going to be, you know, getting built. So in the coming months. And so they're ordering you, name it solar raise. I'm sitting there with my CTO helped me out, Dave. All of the various components of the spacecraft that people are able to propulsion system solar raise at it to control 100% people are building stuff.

Speaker Change: In terms of the revenue contribution, you know on the other

Speaker Change: Rishad. [inaudible]

Speaker Change: So maybe, Chris, I'll take this one. And I won't speak to MDA's revenue recognition, or, I mean, you've got to talk to them about that. But...

Speaker Change: Our suppliers need the money. They're ordering equipment right now. I mean, don't forget, we're launching satellites two years from now, which means that those satellites are gonna be, you know, getting built in the coming months.

Andrew Brown: Approximately 1.2 billion in cash was held in our unrestricted subsidiaries at the end of the quarter. In addition, we continue to generate a significant amount of cash from our ongoing operating activities. At the end of the second quarter, total leverage ratio has calculated on the terms of the amended senior seashore credit facility was 5.61 times. Telesat is in compliance with all the compliments in our credit agreements and indentures. In terms of our debt reportuses, we have reported year-to-date an amount of 262 million US dollars at a cost of 120 million US dollars, including the included interest.

Speaker Change: and so they're ordering, you name it.

Speaker Change: Solar Rays, [inaudible]

Dave: I'm sitting here with my CTO, help me out, Dave, I mean... All of the various components of the spacecraft, that... People are... Mechanical, the propulsion system, solar arrays, attitude controls... A hundred percent. People are building stuff. The supply chain is building stuff. They're ramping up, they're spending money.

Daniel Goldberg: All the supply chain is building stuff. Then they're ramping up. They're spending money. And, you know, as much as I would like to think that, you know, everyone wants to do us a great big favor, in my experience. All these companies want money before they start spending money. So, that's the flow of funds. And here again, and I'm somebody that is really squeamish about spending money, but the reality is, we're hitting the schedule, and they're moving out.

Daniel Goldberg: All the supply chain is building stuff. They're ramping up. They're spending money. And, you know, as much as I would like to think that, you know, everyone, you know, wants to do tell us that a great big favor. In my experience. All these companies want money before they start spending money. So, so that's the flow of funds. And here again, and I'm somebody that is really squeamish about spending money. But the reality is, we're hitting the schedule. And they're moving out. And the worry would be if we weren't spending the money, then our schedule, to me and to other people that, you know, know this industry, it wouldn't be credible.

Speaker Change: And, you know, as much as I would like to think that, you know, everyone, you know, wants to do Telesat a great big favor, in my experience, all these companies want money before they start spending money. So that's the flow of funds.

Andrew Brown: This includes an amount of 43 million US dollars purchased after quarter end. Combined with the debt reportuses completed in 2022 or 2023, we have now reported a thousand principal amounts of $849 million US dollars, but cost of 459 million including the crude interest. This also results in interest savings of approximately 55 million annually. Including the repayment in 2020 of approximately 356 million US dollars returned on B, our overall debt has been reduced now by approximately 26% at 1.2 billion.

Daniel Goldberg: And the worry would be if we weren't spending the money, then our schedule, to me and to other people that know this industry, wouldn't be credible. The reality is, yeah, we're spending a lot of money over the next 24 months because people are buying stuff and building stuff, and that's exactly what's going on. Great. And speaking of stuff, I have to ask, you know, it's a company but also an industry question around your selection of PSAT, you know, for your optical terminal. I think you were involved in that.

Speaker Change: And here again...

Speaker Change: And I'm somebody that...

Speaker Change: is really squeamish about spending money, but the reality is we're hitting the schedule and they're moving out. And the worry would be if we weren't spending the money, then our schedule, to me and to other people that know this industry, it wouldn't be credible.

Daniel Goldberg: The reality is, yeah, we're spending a lot of money over the next 24 months because people are buying stuff and building stuff. And that's exactly what's going on.

Speaker Change: The reality is, yeah, we're spending a lot of money over the next 24 months because people are buying stuff and building stuff, and that's exactly what's going on.

Andrew Brown: Our reconciliation between our financial statements and financial covenant calculations is provided in the report we file this morning. Our 6K provides the inaudible interim condensed consolidated financial information into ending in eight. The non-guarantee or subsidiary shown are essentially one restricted subsidiary with minor differences.

Unknown Executive: Right. And speaking of stuff, I have to ask, you know, it's a company, but also an industry question around your selection of PFAD, you know, for your optical terminal.

Speaker Change: Great, and speaking of stuff...

Speaker Change: I have to ask, you know, as a company but also an industry question around your selection

Andrew Brown: So that concludes our prepared remarks for the call, and now we'll be very happy to answer any questions you may have.

Daniel Goldberg: Paul with Inerak on a couple of phases of Barca's statement. Obviously, that technology is absolutely critical to the sort of performance and economic returns you expect. If you perhaps give us a little tour, are we on the process there?

Speaker Change: for your optical terminal. I think you were involved with INIRAC on a couple of phases of DARPA space station.

Operator: So with that, I will turn back to the operator for the question and the answer session. Thank you. Thank you very much. Yes, we will now take questions from the telephone lines. If you have a question, please press star one on the device's keypad. You also can counsel your question at any time by pressing star two. So again, please press star one at this time if you have a question, there will be a brief pause while the participants register. Thank you for your patience.

Speaker Change: and obviously that technology is absolutely...

Speaker Change: that would be critical, you know, to the sort of.

Speaker Change: Performance and Economic Returns, you expect, so if you perhaps give us a little

David Wendling: Yeah, so all and our world-class long-standing CTO David Wendling, sitting in the room with me, but I'll take the first crack at this day, and you can come around. So, yeah, these optical intersatellite links are a key part of the constellation, and for everything on the constellation, whether that's the onboard processor, the antennas, the digital antennas, or these optical links, we're always, you know, trying to make the right choice between cost, capability, and kind of reliability heritage and whatnot. So, we had, and there are a lot of folks right now that are coming forward with good optical technology, you know, in space.

Daniel Goldberg: Yeah, so all, and our world-class, long-standing CTO Dave Wendling is sitting in the room with me, but I'll take the first crack at this, Dave, and you can come around. So yeah, these optical inter-satellite links are a key part of the constellation, and for everything on the constellation, whether that's the on-board processor, the antennas, the digital antennas, or these optical links, we're always, you know, trying to make the right choice between cost, capability, and kind of reliability, heritage, and whatnot. So we had, and there are a lot of folks right now that are coming forward with good optical technology, you know, in space.

Speaker Change: Two, three on the process. [inaudible]

Speaker Change: Yeah, so all and and our world-class long-standing CTO Dave Wendling is sitting in the room with me but I'll take the first crack at this Dave and you can come around so so yeah these optical inter-satellite links are a key part of the constellation.

Edith Yu: We have a first question from Edith and you from Doat Bank. Please go ahead. Your line is up. Good morning, thank you for taking our questions. First, just want to decarify that the negotiations are on track. Are you particularly saying that it will conclude in the next couple of weeks based on your end of the summer timeline? Yeah, that's effectively right, our expectation is that in the next couple of weeks, we will conclude the agreements and make a separate announcement about that.

Dave Wendling: And for everything on the Constellation, whether that's the on-board processor, the antennas, the digital antennas, or these optical links, we're always trying to make the right choice between.

Dave Wendling: Cost.

Dave Wendling: capability and kind of reliability, heritage and whatnot. So we had, and there are a lot of folks right now that are coming forward with good

Dave Wendling: optical technology in space.

David Wendling: We've worked with MDA in making this selection, so that's something else I'd note. This was kind of a joint effort, a joint determination between Telesat and MDA, and the reality is we landed on T-Sat because they kind of most checked the box on those different variables. Performance, reliability, cost, schedule, all of that. So, T-Sat has good heritage here; they have a very good capable optical link. At the end of the day, it was a competitive process, and at the end of the day, we and MDA judged that T-Sat was the best vendor for it. It's not a black mark against any of the other companies out there that are making optical links.

Daniel Goldberg: We worked with MDA in making this selection, so that's something else I'd note. This was kind of a joint effort, a joint determination between Telesat and MDA. And the reality is we landed on T-SAT because they kind of most checked the box on those different variables, performance, reliability, cost, schedule, all of that. So T-SAT has a good heritage here. They have a very good, capable optical link.

Edith Yu: And I guess is there anything that still needs to be worked out or is this sort of more, you know, the right people going to make the right signatures, or is there anything kind of outstanding? Yeah, no, as I said in my prepared remarks, we've had really good engagement with the government representatives. These are representatives from the government of Canada and the government of Quebec. There are a good number of agreements that need to get concluded in order to document all the different features of the funding arrangements.

Dave Wendling: We worked with MDA in making this selection, so that's something else I'd note, this was kind of a joint effort, a joint determination between Telesat and MDA.

Speaker Change: And the reality is we landed on T-SAT because they kind of most checked the box on those different variables.

Dave Wendling: Performance.

Dave Wendling: reliability, cost, schedule, all of that. So, TESAT has good heritage here. They have a very good, capable optical link.

Edith Yu: At this point in time, I don't see any significant impediments or obstacles in getting this done in the coming weeks. And so, yeah, we're just, you know, it's a, it's a big funding arrangement with multiple agreements. And we're just working through all that, but there's nothing. Yeah, kind of extraordinary about what remains to get done. Gotcha.

Daniel Goldberg: At the end of the day, it was a competitive process, and at the end of the day, we and MDA judged that T-SAT was the best vendor for it. It's not a black mark against any of the other companies out there that are making optical links. We felt like we had a number of good alternatives, but at the end of the day, T-SAT got over the line for us. And Dave, I don't know if there's anything else you want to say. No, I think you said it well, Danny.

Dave Wendling: At the end of the day, it was a competitive process.

Speaker Change: And at the end of the day, we at MDA judged that T-SAT was the best vendor for it. It's not a black mark against any of the other companies out there that are making optical links. We felt like we had a number of good alternatives.

Unknown Executive: We felt like we had a number of good alternatives, but at the end of the day, T-Sat got over the line for us. And Dave, I don't know if there's anything else.

Dave Wendling: But at the end of the day, TShat, you know, got over the line for us.

Unknown Executive: You're switching to the guidance on the Catholics. Obviously, it implies a pretty substantial step up even at the low end of the range. I guess, how do we think about what determines if you end up in the course of one billion, closer to 1.4 billion, and what sort of the drop to delta?

Unknown Executive: No, I think you said it well, Dan. I just note that it was a very disciplined down selection and selection process in the final analysis, Dan. So, as you said, T-Sat came out on top in a very difficult process.

Daniel Goldberg: I just note that it was a very rigorous selection and selection process in the final analysis, Danny. So, as you said, T-SAT came out on top, for a very, So, the short answer is no. You know, they're right down the street from us, about an hour and a half away from us. We know MDA well. Our teams are well integrated. We've got a lot of former MDA employees here. They probably have a couple of former Telesat employees on their side.

Speaker Change: And Dave, I don't know if there's anything else. No, I think you said it well, Danny. I just note that it was a very disciplined down selection and selection process in the final analysis, Danny. So, as you said, T-SAT came out on top.

Unknown Executive: And final question, you know, listening to the MDA call the other day, clearly your top of heat with them, but they apparently have a new underscores customer that's growing in size very quickly. It would lead someone to believe that, like a government customer, which tends to exert priority. Again, all I'm speculating, but, you know, these are things you've seen happen before.

Speaker Change: and a very tough process.

Speaker Change: and, uh...

Speaker Change: listening to the NDA call the other day, clearly you're top of the heap with them.

Speaker Change: But we apparently have a new undisclosed customer that's sort of grown in size very quickly, which would lead someone to believe it might be a government customer which tends to exert priority.

Speaker Change: Again, I'm speculating, but these are the things we've seen happen before. Do you have any concerns? I know they're ramping up to a capacity of like 2,000 satellites a year, but they're ramping up. Is there a growing book of business determination for you?

Unknown Executive: You have any concerns. I know they're ramping up into a capacity of like 2,000 satellites a year, but they're ramping up. You know, is there a growing business term arrangement for you?

Andrew Brown: I mentioned, again, in my prepared remarks at MDA who's the prime and is going to be the beneficiary of so much of of our capital spending this year. And next, they've done a great job of getting all their suppliers online. They're placing orders and they're moving out exactly as we would like them to. And so, yeah, we felt, you know, everything we're seeing tells us that we're going to be tracking the guidance.

Daniel Goldberg: So, the short answer is no. You know, they're right down the street from us, about an hour and a half away from us. We know MDA well. Our teams are well-integrated. We've got a lot of former MDA employees here. They probably have a couple of former tele-side employees on their side. We have actually a really good working relationship with MDA at all the different levels, kind of throughout our organizations. We've worked with MDA for decades, not as a satellite prime, principally, you know, on the antenna side and whatnot, although they've been building satellites for years and years.

Speaker Change: Um...

Speaker Change: So, the short answer is no, they're right down the street from us, about an hour and a half away from us, we know MDA well, our teams are well integrated, we've got a lot of former MDA employees here, they probably have a couple of former tele-site employees on their side.

Daniel Goldberg: We have, I'd say, a really good working relationship with MDA at all the different levels kind of throughout our organizations. We've worked with MDA for decades, not as a satellite prime, principally, you know, on the antenna side and whatnot, although they've been building satellites for years and years. So, no, we don't have any concerns. We're in close contact with them as they ramp up their staff and as they ramp up the supply chain. We, you know, including myself, meet with them on a regular basis, which is not to say that we're relaxed and complacent.

Andrew Brown: And as Andrew said, you know, there was a big spend in Q2 and everything we're seeing is showing good progress. And that our suppliers will achieve the milestones they need to achieve in order to unlock the payments that we've sort of budgeted for.

Speaker Change: We have, I'd say, a really good working relationship with MDA at all the different levels, kind of throughout our organizations.

Speaker Change: We've worked with MDA for decades, not as a satellite prime, principally, you know, on the antenna side and whatnot, although they've been building satellites for years and years.

Unknown Executive: Action, thank you. I'm talking to you. Okay, thanks. Thank you.

Daniel Goldberg: So, no, we don't have any concern; we're in close contact with them as they ramp up. They're staff as they ramp up the supply chain. We, you know, including myself, meet with them on a regular cadence. So, which is not to say that we're relaxed and complacent. This is a huge program for us. It's a huge program for them. Both of us need this program to be successful. I like that dynamic where we both have a lot of skin in the game. But no, I mean, it's something that we're going to keep monitoring very, very closely.

Speaker Change: So no, we don't have any concern. We're in close contact with them as they ramp up their staff, as they ramp up the supply chain, including myself. We meet with them on a regular cadence.

David McFadgen: The next question is from David McFadgen from Carmark Securities. Please go ahead. Your line is open. All right. Thank you. A couple of questions. Can you just give us an update on where you stand with respect to negotiating that one DTH customer? I think the contract is up there in the middle of this fall. Yeah. Thanks David. So just for everyone's benefit, we've got a renewal with Echo Star on our mimic five satellite that comes up in early October.

Speaker Change: So, which is not to say that we're relaxed and complacent. This is a huge program for us, it's a huge program for them. Both of us need this program.

Daniel Goldberg: This is a huge program for us. It's a huge program for them, too. Both of us need this program to be successful.

Daniel Goldberg: I like that dynamic where we both have a lot of skin in the game, but no, I mean, it's something that we're going to keep monitoring very, very closely. But no, I feel good right now about where they are on the ramp up and how our teams are engaging and the like. So, if we feel differently about that, we'll let you know. Thanks, Chris.

Speaker Change: to be successful. I like that dynamic where we both have a lot of skin in the game.

Speaker Change: But no, I mean, it's...

David McFadgen: And we said that on our last two calls, I think that we've been engaged with Echo Star. So we're not done yet. I've mentioned before, we know Echo Star well. We have a good relationship with them. We've done business with them for a very long time. So we've certainly had a number of exchanges, but we're not done yet. So my expectation obviously this renewal coming up, you know, in about two months time will be landing on a resolution pretty soon.

Speaker Change: It's something that we're going to keep monitoring very, very closely.

Daniel Goldberg: But no, I feel good right now about where they are on the ramp up and how our teams are engaging in the live show. So, and if we saw differently about that, we'll let you know.

Speaker Change: But, no, I feel good right now about where they are on the ramp up and how our teams are engaging and the like. And if we feel differently about that, we'll let you know.

Unknown Executive: Great, thanks.

Unknown Executive: Thanks, Chris.

Walter Piecyk: Thank you.

Operator: Thank you. The next question is from Walter Piecyk from Lightshed. Please go ahead.

Speaker Change: Thanks.

Walter Piecyk: The next question is from Walter P. Check from Lightshed.

Speaker Change: Thanks, Chris.

Speaker Change: Thank you. The next question is from Walter Pichek from Likes Ed. Please go ahead, your line is open.

Walter Piecyk: Please go ahead; you'll let us open. Thanks, Dan. Just a quick, first, a quick follow-up.

Walter Piecyk: Your line is open. Thanks, Dan. Just a quick, first, a quick follow-up. I want to ask this question with regard to, you know, this strength in the first half of the year, as guidance. I was basically assuming that Echristar is... Is it zero in terms of revenue for the poor quarter? They kind of worked either catch issues. Well, the problem is probably that there's some probability associated with that when you put together your gun.

Daniel Goldberg: I want to curse this question with regard to, you know, this strength in the first half of the year, relative to guidance. As you basically assuming that Echo Star is zero in terms of revenue for the four quarters, they kind of worked either captures. Well, probably there's some probability associated with that when you put together your guidance numbers. Well, when we put together our guidance, and we said this before, it, you know, captured a range of outcomes with Echo Star, and we haven't changed any of those assumptions in terms of what those range of outcomes could be.

Speaker Change: Thanks Dan. Just a quick, first a quick follow-up on one of Chris's questions with regard to the strength in the first half of the year relative to guidance. Are you basically assuming that EchoStar is zero in terms of revenue for the fourth quarter as they kind of work through their cash issues?

David McFadgen: Certainly I think that by the time we do our Q3 call will be able to provide, you know, a lot of detail around where we landed. But at this point in time, still having discussions with them.

Daniel Goldberg: Okay, and maybe a couple of questions on light bead. So in terms of depending agreements, you know, you've single that you expect as I'm signed by the end of summer. Is that with both the government and the government of Quebec? If I think in the past, you are referring to the government of Canada. Yeah, no, it's our expectation that it'll be with with both of them. And again, it's why, you know, it's taken a little while.

Speaker Change: Is there some probability associated with that when you put together your guidance numbers?

Daniel Goldberg: Well, when we put together our guidance, and we've said this before, it captured a range of outcomes with Echostar, and we haven't changed any of those assumptions in terms of what those range of outcomes could be, so no, the back half of the year, and our thinking about it hasn't changed, unless we've learned something new or our thinking has changed about Echo Star from where we stood at the outset of the year when we And I guess the other thing I'd say is, yeah, we all track, you know, what's going on in the sector, including any what's going on with Echo Star. The reality is, The direct-to-home satellite business is obviously still generating a significant amount of cash flow at Echostar. To date, NMIC 5 is being fully used by Echostar.

Speaker Change: Well, when we put together our guidance, and we said this before, it, you know, captured a range of outcomes.

Speaker Change: with- Um...

Speaker Change: EchoStar, and we haven't changed.

Speaker Change: Any of those assumptions in terms of what those range of outcomes could be, so no, the back half of the year and our thinking about it hasn't...

Daniel Goldberg: So no, the back half of the year and our thinking about it hasn't deteriorated because we've learned something new or our thinking has changed about Echo Star from where we stood at the outset of the year when we gave the guidance. And I, yeah, we all track, you know, what's going on in the sector, including what's going on with EchoStar. The reality is, to date, the direct home satellite business is obviously still generating a significant amount of cash flow at Echo Star. To date, the extent that they renew with us, then that will be a reflection that NIMIK 5 is still an important part of their distribution infrastructure, and they'll find a way to pay for that because it's important that they continue to provide service to their DTH customers and continue to enjoy the benefit of that cash flow.

Daniel Goldberg: Again, we're tracking the timeframe that we'd envision a few months ago when we put out our Q1 numbers, but because it is the government of Canada, it is the government of Quebec. We also have this vendor financing. And so they're, you know, all of that needs to get get done. It takes a little bit longer than if it were one, just a purely commercial, you know, kind of funding syndicate. And two, yeah, with the government funding, there are, yeah, it's kind of special consideration.

Speaker Change: deteriorated because

Speaker Change: We've learned something new or our thinking has changed about Echostar from where we stood at the outset of the year when we gave the guidance. And I guess the other thing I'd say is...

Speaker Change: The direct-to-home satellite business is obviously still generating a significant amount of cash flow at Echostar. To date, NMIC 5 is being fully used by Echostar. My expectation is...

Daniel Goldberg: My expectation is that to the extent that they renew with us, then that will be a reflection that NMIC 5 is still an important part of their distribution infrastructure, and they'll find a way to pay for that because it's important that they continue to provide service to their DTH customers and continue to enjoy the benefit of that cash flow. And my expectation is that they will find a way to make sure that they're paying us. Okay, sorry, there. Our screen was flickering here.

Daniel Goldberg: So, so yeah, it'll be with the government of Canada, the government of Quebec. And it all feels like it's moving in the right direction. I have to say just because I'm a former lawyer, it ain't over till it's over. But we're highly confident that we're going to get there in the coming weeks.

Speaker Change: To the extent that they renew with us, then that will be a reflection that NMIC 5 is still an important...

Andrew Brown: Okay. And then can you update us on your total spend to date on right to be? And for looking at the half year, as we said, we've spent 324 million total of which cash is 220 and the balance has indeed been reflected in the accounts payable that we see on the balance sheet. And those are Canadian dollars, right, Andrew? Yes, correct, Canadian. I think the budget for life is three and a half billion.

Speaker Change: a part of their distribution infrastructure and they'll find a way.

Speaker Change: to pay for that.

Speaker Change: because it's important that they continue to provide service to their DTH customers and continue to enjoy the benefit of that cash flow.

Daniel Goldberg: And so my expectation is that they'll find a way to make sure that they're paying us off. I'm just pausing here. Are we still online? Okay, sorry, our screen was flickering here. I wasn't sure if we had lost the line. That was a good response. You know, just flickering positive feedback. Yeah, I mean, I agree. I mean, look, if you generate some level of free cash flow in one element of the business and they can't switch up NIMIK 5 and you got to get one, I just pretty gunned it or had that and just not let them off the hook for a lower renewal.

Speaker Change #100: And so my expectation is that they'll find a way to make sure that they're paying us. So I'm just pausing here. Are we still online?

Operator: I wasn't sure if we had lost the line, so that was a good response. Maybe it was just flickering positive.

Andrew Brown: And so that's so you spend three, three, three, four, Canadians so far on the project. Oh, man. Okay. No, no, no, no. That's just what we've done so far this year. Yeah, we've been making investments in the program for the past few years including payments with launch providers, a lot of the non-recurring engineering investment that's gotten made. User terminal development just kind of across the board. So, Andrew, I don't know if you want to say anything more about that.

Speaker Change #101: Okay, sorry there. Our screen was flickering here. I wasn't sure if we had lost the line. No, that was a good response. Maybe it was just flickering positive feedback.

Walter Piecyk: Yeah, I mean, I agree. I mean, look, if they have to generate some level of free capital in one element of the business, and they can't switch off and mimic fives, and you got to get it, why not just put a gun to their head then and just not let them off the hook for a lower renewal. Well, I mean, look, you know, with all of our customers, you try to, um, yeah, uh, frame things in a kind of a win-win way as best you can. You don't always get there, but we've been working with EchoStar for nearly 20 years now, and we have a good relationship with them. We've talked about this before. We all know it.

Speaker Change #102: Yeah, I mean, I agree. I mean, look, if they have to generate some level of free capital in one element of the business and they can't switch off and mimic five, then you got to get, why not just put a gun to their head then and just not let them off the hook for a lower renewal?

Daniel Goldberg: Well, I mean, look, you know, with all of our customers, you try to frame things in a kind of a win-win way as best you can. You don't always get there, but we've been working with Echo Star for nearly 20 years now. And we have a good relationship with them. We've talked about this before. We all know it. The director home satellite business is facing real secular headwinds. We try to work with whether it's, you know, Bell or Echo Star or Shaw, you know, try to work with them to sustain that business because there still are millions of households across North America that rely on those services.

Speaker Change #102: Well, I mean, look, you know, with…

Speaker Change #103: with all of our customers.

Speaker Change #103: You try to, uh, yeah.

Andrew Brown: Yeah, no, I can't. If you go all the way back to the data, then back to 2020. And on the Canadian dollar basis, looking at CAPEX, it's about 980 million CAPEX is what we have spent doing all of the work that we have done to get where we are today. In currency and Canadian dollars. Okay. All right. That's great.

Unknown Executive: Thank you.

Speaker Change #104: frame things in a kind of a win-win way as best you can. You don't always get there, but we've been working with EchoStar for nearly 20 years now.

Speaker Change #104: and we have a good relationship with them.

Daniel Goldberg: The direct-to-home satellite business is facing real secular headwinds. We try to work with, whether it's Bell, or EchoStar, or Shaw, to sustain that business because there are still millions of households across North America that rely on those services. And so, yeah. I just feel like on this renewal, however many years it's going to be, and also the longevity of the SAT itself, it's like this is the last one.

Speaker Change #104: We've talked about this before, we all know it, the direct-to-home satellite business is facing real secular headwinds.

Christopher Quilty: The next question is from Chris Quilty from Space. Please go ahead. Your line is open. Hi, guys. So, congratulations. You put up better result than I was expecting for Q2, but that we get the question. You know, you maintain full year guidance. And so, did you see anything that was pulled forward into Q2?

Speaker Change #104: We try to work with, whether it's...

Speaker Change #104: you know, Bell, or EchoStar, or Shaw, you know, try to work with them.

Speaker Change #105: to sustain that business, because there still are millions of households across North America that rely on those services, and so... No, I just feel like on this renewal, however many years it's going to be...

Daniel Goldberg: No, I just feel like on this renewal, however many years it's going to be, you know, also in Ontario and the South itself, it's like, this is the last five years. From now, there are a couple million sub-lower than they're not going to be maybe as nice to you as you're signing like you want to be nice to them in this business. In other words, like, this could be the last negotiation of your 20-year relationship, so why not, like, just squeeze them for everything? Can. Yeah, I don't know. We've been doing this for a long, long time.

Daniel Goldberg: Maybe just first question? No. No, the quarter unfolded. Yeah, like we expected. All right. So, I, I fear for kind of didn't model the back half down as much as perhaps I should have, and to stay at the kind of mid-point of the guidance.

Daniel Goldberg: Five years from now, if there are a couple million fewer subs, then they're not going to be maybe as nice to you as you sound like you want to be nice to them in this negotiation. In other words, like, this could be the last negotiation of your 20-year relationship, so why not just squeeze in for everything?

Speaker Change #106: You know, also longevity of the sat itself, it's like, this is the last one, five years from now, there are a couple million subs lower.

Speaker Change #107: And they're not going to be maybe as nice to you, because you're sounding like you want to be nice to them in this negotiation. In other words, like, this could be the last negotiation of your 20-year relationship. So why not, like, just squeeze them for everything you can?

Walter Piecyk: Yeah, I don't know. We've been doing this for a long, long time. It's not how we approach our customers in the market. And so anyway, so stay tuned. We're, you know, going to conclude, one way or another, our renewal discussions with them, and then we'll be able to provide an update on that in a couple months' time. I think that's also on the Leo, now that the NDA is kind of talking about it more obviously, seemingly more confidence in the market that the project is moving forward.

Daniel Goldberg: But putting aside mimic five, which, you know, I had already accounted for, when you look at the base of the business, are there any other large contract role loss or, you know, the other issues you sort of identified, and maritime and Latin America, are they getting better or worse? I think, you know, look, you know, we gave guidance at the outset of the year, like in any year, there are always puts and takes.

Speaker Change #108: Yeah, I don't know. We've been doing this for a long, long time.

Daniel Goldberg: It's not how we approach our customers in the market. Anyway, so stay tuned. We're going to conclude one way or another. Our renewal discussions with them, and then we'll be able to provide an update on that in a couple of months' time.

Speaker Change #109: Not how we approach.

Speaker Change #110: We're going to conclude one way or another our renewal discussions with them and then we'll be able to provide an update on that in a couple months' time.

Unknown Executive: I think that's also on the Leo. You know, now that NDA is kind of talking about it more, obviously there's seemingly more confidence in the market that the project is moving forward.

Speaker Change #111: HSL's on the Leo, you know, now that NDA is kind of talking about it more, obviously there's...

Daniel Goldberg: In the main, the year has been unfolding like we expected. There were some renewals that we didn't think we were going to get that we did. There were some things that we thought would roll off in a certain timeframe. We still think they're going to roll off, but, but they're rolling off a little bit later. And then, you know, equally, there's some things that played out in the way that's probably worse than what we thought.

Unknown Executive: Has this opened up any additional, you know, presales on the enterprise side of realize? Obviously, the launch is still a couple of years now, but wondering if you've got any additional commitment. And to that end, in terms of the market size on enterprise, you know, what Global Star and Apple have done in this recent phone. Again, getting that to the director device.

Speaker Change #111: seemingly more confidence in the market that the project's moving forward.

Walter Piecyk: Has this opened up any additional, you know, pre-sales on the enterprise side of things realize, obviously, the launch is still a couple of years now, but wondering if you've got any. Update. Again, getting back to the directed device, I know this is not the target market that you want, but is there any rethinking in that in terms of the directed device? I mean, I think SkyGrow had an announcement yesterday about the new Pixel phone.

Speaker Change #112: Has this opened up any additional, you know, pre-sales on the enterprise side? I realize, obviously, the launch is still a couple years out, but wondering if you've got any kind of additional commitment. And to that end, in terms of the market size beyond enterprise.

Speaker Change #113: You know, what Globalstar and Apple have done in this recent phone, um...

Unknown Executive: I know this is not the target market that you want, but is there any rethinking in that in terms of the director device? I mean, I think Skyworld has an announcement yesterday with the new Pixel phone to be on market developing. I've been using the global star stuff. It's been great, you know, in the whole of coverage that exists.

Speaker Change #113: Again, getting back to the director of both, I know this is not...

Speaker Change #114: The target market that you want, but is there any rethinking in that in terms of?

Speaker Change #115: Directed advice? I mean, I think SkyGrow had an announcement yesterday with the new Pixel phone. It seems to be a market developing. I've been using the GlobalStar stuff. It's been great, you know, in the whole coverage that exists. Just curious if your thought process has changed in terms of trying to attack that market.

Daniel Goldberg: It seems to be a developing market. I mean, using the GlobalStar stuff has been great in the holes of coverage that exist. Just curious if your thought process has changed in terms of trying to attack that market. It's a great question, but no, it hasn't. The reality is the spectrum that Lightspeed's operating on, the K-band spectrum, is ideal for broadband connectivity, but it's not ideal for a direct device providing a broadband connection, or even an air-band connection to a handheld smartphone.

Daniel Goldberg: This period of your thought process has changed in terms of trying to tap that market. It's a great question, but no, it hasn't. The reality is, you know, the spectrum that lightspeed operating on the cave and spectrum is ideal for broadband connectivity, but it's not ideal for, you know, direct device, you know, providing a broadband connection, even an air bank connection to a handheld smartphone. And we believe the market that the verticals that were focused on are great opportunities for us. They're large, they're deep, they're fast growing, and we've optimized the constellation to serve that market.

Speaker Change #115: It's a great question, but no, it hasn't.

Speaker Change #116: The reality is the spectrum that Lightspeed is operating on, the K-band spectrum, is ideal for broadband connectivity, but it's not ideal for direct device, you know,

Daniel Goldberg: So I'd say that was one that we didn't anticipate when we gave our guidance at the outset of the year, but that's something that will be a bit of a headwind in the second half of the year, and potentially next year as well. And remind you Dan, because that was, they bought all the, the Biosattons used Canadian payloads from Biosatt's one and two. Thank you guys, who are involved in the deal.

Speaker Change #117: Providing a broadband connection, even an AirBank connection, to a handheld smartphone.

Daniel Goldberg: And we believe the market that the verticals that we're focused on are great opportunities for us. They're large, they're deep, they're fast-growing, and we've optimized the Constellation to serve that market. The frequencies are really well-suited to serve that market, and so, no, that remains the focus. As far as pre-sales activities are concerned, Lightspeed's moving forward. I mean, if anyone still has any questions about that...

Speaker Change #117: So and we believe the market that the verticals that were focused on

Daniel Goldberg: If I can say it's sort of a middleman through that contract, if I remember correctly, so I wasn't expecting there was a huge revenue or a margin contribution on that. Yeah, no, not really so, but you're right. You're right in the sense that explore uses satellite capacity from Telesat, Biasat and Hughes. But no, we didn't act as a middleman for any of that. We owned the payload. I'm sorry, the Canadian payload for Biasat one and we did a long-term deal with explore to use that payload.

Speaker Change #117: are

Speaker Change #117: great opportunities for us. They're large, they're deep, they're fast growing, and we've optimized the constellation to serve that market. The frequencies are really well suited to serve that market, and so...

Daniel Goldberg: The frequencies are really well suited to serve that market. And so, so no, that, that remains the focus.

Daniel Goldberg: And then as far as precells, activities, light speeds moving forward. I mean, if anyone still has any questions about that, yeah, I mean, I don't know what to say, but we're obviously spending money, MDAs ordering stuff, and we're all ramping up our staff. And I mean, light speeds going forward. I think the customer community understands that. We've got salespeople and business development people running all around the world engaged with the customers that we know well in these different verticals.

Speaker Change #117: So know that, that, that remains the focus. And then as far as pre-cells, activities, light speeds moving forward. I mean, if anyone can install us any questions about that.

Daniel Goldberg: I don't know what to say, but we're obviously spending money, MDA's ordering stuff, and we're all ramping up our staff, and I mean, like to be going forward. I think the customer community understands that. We've got salespeople and business development people running all around the world engaged with the customers that we know well in these different verticals, and so nothing to announce right now. [inaudible] No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no,

Speaker Change #117: Yes.

Speaker Change #118: I mean, I don't know what to say, but we're obviously spending money. MDA's ordering stuff, and we're all ramping up our staff. And I mean, Lightspeed's going forward. I think the customer community understands that. We've got...

Daniel Goldberg: But they did their own direct deals with Hughes and Biasat for their other capacity so that that doesn't flow through RP now. Okay, I got a part way, right? Well, you know, that's usually better than I do so that's pretty good.

Speaker Change #118: Salespeople and business development people running all around the world engaged with The customers that we know well in these different verticals and so nothing to announce right now

Daniel Goldberg: And so nothing to announce right now. But you only announced like material contract, but could you leave comment whether there've been incremental booking, but maybe they're not significant enough to call out. No, no, no, I mean, I'm booking the last earnings call. No, no, but it wasn't our expectation that there would be any where we're having good engagement with really good perspective users in the key verticals that were focused on arrow, maritime, government, enterprise. It wasn't my expectation that we'd be announcing anything, you know, since putting out our Q1 numbers, but the market knows what we're building.

Speaker Change #118: [inaudible]

Andrew Brown: The second question for Andrew, I guess, you know, spending a billion dollars in the back half of the year is no small feat for the government, but for Telesat. That's a big chunk of money and clearly people are not building stuff at that rate. How much of that should we think of as, you know, prepayments to, you know, and hand of that flow to MDA to the supplier base in terms of the revenue contribution on the other side.

Daniel Goldberg: [inaudible] no, no, no, no, but it wasn't our expectation that there would be any. We're having good engagement with really good prospective users in the key verticals that we're focused on, aero, maritime, government, enterprise. It wasn't my expectation that we'd be announcing anything since putting out our Q1 numbers, but the market knows what we're building, and users are excited about it. There is clear validation that the customer community is highly receptive to LEO.

Speaker Change #118: No, but it wasn't our expectation that there would be any. We're having good engagement with really good prospective users in the key verticals that we're focused on, Aero, Maritime, Government, Enterprise. It wasn't my expectation that we'd be announcing anything since putting out our Q1 numbers.

Andrew Brown: So maybe, maybe Chris, I'll take this one and I won't speak to MDA's revenue recognition or I mean that, you gotta talk to them about that. But our suppliers need the money. They're ordering equipment right now. I mean, don't forget, we're launching satellites two years from now, which means that those satellites are going to be, you know, getting built. So in the coming months. And so they're ordering you name it solar raise.

Speaker Change #118: but the market knows what we're building. The users are excited about it. There's a clear validation.

Daniel Goldberg: The users are excited about it. There's a clear validation that the customer community is highly receptive to Leo. So you see the traction that Starlink is getting. And we think that we're bringing something really compelling to the market.

Speaker Change #118: that the customer community is highly receptive to Leo. You see the traction that.

Operator: You see the traction that Starlink is getting, and we think that we're bringing something really compelling to the market. So anyway, stay tuned, and we'll be really transparent about the orders we're getting right now. We've got about $750 million of take or pay commitments on light speed, which we do not include when we talk about the $1.1 billion Canadian backlog that we report in the earnings release. The light speed backlog is separate and apart from that. As that happens, we'll report on it, and we'll talk about the wins that we have and the like. Thank you. The next question is from Sean Mahoney from Bank of America. Please go ahead.

Speaker Change #119: Starlink is getting.

Speaker Change #119: And we think that...

Daniel Goldberg: So anyway, stay tuned. And we'll be very transparent about the orders we're getting right now. We've got about, I mean, it's 750 million of take-or-pay commitments on Light Speed, which we do not include when we talk about the 1.1 billion Canadian backlog that we report in the earnings release. The Light Speed backlog is separate and apart from that. And we'll, you know, as that moves, we'll report on it. And we'll talk about the wins that we have and the like.

Speaker Change #120: we're bringing something really compelling to the market. So, anyway, stay tuned and we'll be very transparent about...

Andrew Brown: I'm sitting there with my CTO helped me out Dave. All of the various components of the spacecraft that people are able to propulsion system solar raise at it to control 100% people are building stuff. All the supply chain is building stuff. They're ramping up. They're spending money. And, you know, as much as I would like to think that, you know, everyone, you know, wants to do tell us that a great big favor in my experience.

Speaker Change #120: The

Speaker Change #121: You know, orders we're getting right now, we've got about, I think it's 750 million of take or pay commitments on light speed.

Speaker Change #122: which we do not include when we talk about the 1.1 billion Canadian backlog that we report in the earnings release. The Lightspeed backlog is separate and apart from that.

Speaker Change #122: You know, as that moves, we'll report on it and we'll talk about the wins that we have and the like.

Andrew Brown: All these companies want money before they start spending money. So, so that's the flow of funds. And here again, and I'm somebody that is really squeamish about spending money. But the reality is, we're hitting the schedule. And they're moving out. And the worry would be if we weren't spending the money, then our schedule, to me and to other people that, you know, know this industry, it wouldn't be credible. The reality is, yeah, we're spending a lot of money over the next 24 months because people are buying stuff and building stuff. And that's exactly what's going on. Right.

Unknown Executive: Thank you.

Unknown Executive: Thanks.

Sam Mahoney: Thank you.

Speaker Change #123: Great, thank you. Thanks.

Sam Mahoney: The next question is from Sam Mahoney from Bank of America. Please go ahead. Your line is now open.

Sean Mahoney: Your line is now open. Yeah, thanks for taking the questions. First, I noticed a large working capital outflow for the restricted group and a large working capital benefit for the unrestricted group in the quarter. So, just wondering, does that reflect any inter-company flows, or is it just a coincidence that those numbers are largely offset, or do you use the remaining unsub investment capacity, as you indicated you would on the last call? [inaudible] Yeah, so that's the investment down from Telesat Canada into the unrestricted group. And from a timing perspective, it's just showing up top in operation.

Speaker Change #123: Thank you. The next question is from Sean Mahoney from Bank of America. Please go ahead, your line is now open.

Andrew Brown: Yeah, thanks for taking the questions. First, I know it's the large working capital outflow for the restricted group and a large working capital benefit for the administrative group in the quarter. So just wondering, does that reflect any inner company flows? Or is it just a coincidence for those numbers largely offset?

Sean Mahoney: Yeah, thanks for taking the questions. First, I noticed a large working capital outflow for the restricted group and a large working capital benefit for the unrestricted group in the quarter.

Speaker Change #125: So, just wondering, does that reflect any intercompany flows, or is it just a coincidence that those numbers largely offset, or did you use the remaining unsubbed investment capacity as you indicated you would on the last call?

Andrew Brown: Or do you use the remaining unsub investment capacity as you indicated you would on the last call? Yeah, so that's the investment down from Talisa Canada into the unrestricted group. And from a time perspective, it's just showing up top in operation. But next floor, you'll see it down as an investment in. Okay. Got it.

Speaker Change #126: Yeah so that's the investment down from Telesat Canada into the unrestricted group and from a timings perspective it's just showing up top in operation but next quarter you'll see it down as an investment in.

Daniel Goldberg: And speaking of stuff, I have to ask, you know, it's a company, but also an industry question around your selection of PFAD, you know, for your optical terminal. Paul with Inerak on a couple of phases of Barca's statement. Obviously, that technology is absolutely critical to the sort of performance and economic returns you expect. If you perhaps give us a little tour, are we on the process there? Yeah, so all and our world class long-standing CTO David Wendling, sitting in the room with me, but I'll take the first crack at this day, and you can come around.

Andrew Browne: But next quarter, you'll see it down as an investment. Okay, got it. Thank you.

Operator: And then for GeoOPEX, Q2 was up sequentially. Seems like at least part of that was due to the bad debt expense associated with Explore that you mentioned, as well as higher professional fees. How should we think about run rate for GeoOPEX?

Andrew Brown: Thank you.

Andrew Brown: And then for GeoopEx, Q2 was this up sequentially, completely. At least part of that was due to the fact that expense associated with explore the demand as well as higher professional fees.

Speaker Change #127: Okay, got it. Thank you. And then for GeoOpEx, Q2 was...

Speaker Change #128: and the top sequential. It seems like at least part of that was due to the impact that expense associated with Explore that you may find as well as higher professional fees.

Andrew Brown: How should we think about run rate GeoopEx? Should we look more to like Q1? Or do you expect to continue to incur higher bad debt expense with the with explore? Or higher professional fees just in time?

Speaker Change #129: How should we think about run rate geo-opets? Should we look more to like Q1 or do you expect to continue to incur higher bad debt expense with the with explore or higher professional

Andrew Brown: And if you look at our Geo business overall, the point out are actually the dollar margin is 80%, which is pretty high, pretty significant. And we said on our last call, we were expecting GeoopEx to be down 4% in our plans. And that's contained within the guidance. And that's still what we are actually sticking to now. On the bad debt, I'll just share the bad debt amount delta is about 2 to 3 million. So, on the grand scale, it's not that sort of material. But, as we said in the last call, in terms of off-ex, and that had alluded to, and spending money, we are pretty judicious on what we do and how we spend money, and which is good.

Andrew Browne: Should we look more to Q1? Or do you expect to continue to incur higher bad debt expense with Explore or higher professional fees for some time? If you look at our geobusiness overall, we'll point out our actual EBITDA margin is 80%, which is pretty high, pretty significant. And we said on our last call that we were expecting GeoOPEX to be down 4% in our plans, and that's contained within the guidance, and that's still what we are actually sticking to now. On the bad debt, I just shared that the bad debt amount, delta, is about 2 to 3 million. So on a grand scale, it's not that sort of material.

Speaker Change #130: If you look at our geobusiness overall, we'll point out our actual EBITDA margin is 80%, which is pretty high, pretty significant.

Daniel Goldberg: So, yeah, these optical intersatellite links are a key part of the constellation, and for everything on the constellation, whether that's the onboard processor, the antennas, the digital antennas, or these optical links, we're always, you know, trying to make the right choice between cost, capability, and kind of reliability heritage and whatnot. So, we had, and there are a lot of folks right now that are coming forward with good optical technology, you know, in space.

Speaker Change #131: And we said on our last call, we were expecting GeoOPEX to be down 4% in our plans, and that's contained within the guidance, and that's still what we are actually sticking to now. On the bad debt, I'll just share, the bad debt amount, delta, is about 2 to 3 million, so on a grand scale, it's not that sort of material, but as we said on the last call, in terms of OPEX, and as Dan had alluded to in spending money, we are pretty judicious on what we do and how we spend money, which is good. So as I say, that's what we said on our call, that's our view of GeoOPEX.

Andrew Browne: But as we said in the last call, in terms of OPEX, and as Dan had alluded to in spending money, we are pretty judicious on what we do and how we spend money, which is good. So as I say, that's what we said on our call, that's our view of GeoOPEX. Okay.

Andrew Brown: So, as I say, that's what we said in our call; that's a review of GeoopEx. Okay, got it. And then on the bad debt expense that you mentioned, yeah, let's say it went up like 3.3 million in the quarter. So call it 1.1 million a month. Are you still recognizing revenues from Explore and just kind of offsetting that with bad debt expense? Yeah, we are currently recognizing revenue and explore. They're making partial payments. So we continue to recognize revenue too. We know more about what their plan is going forward.

Sean Mahoney: And then on the bad debt expense that you mentioned, yeah, let's say it went up like $3.3 million in the quarter, so call it $1.1 million a month. Are you still recognizing revenues from Explorer and just kind of offsetting that with bad debt expense? Yeah, we are currently recognizing revenue at Explorer. They're making partial payments.

Speaker Change #132: Okay, got it. And then on the bad debt expense that you mentioned, yeah, let's say it went up...

Daniel Goldberg: We've worked with MDA in making this selection, so that's something else I'd note. This was kind of a joint effort, a joint determination between Telesat and MDA, and the reality is we landed on T-Sat because they kind of most checked the box on those different variables. Performance, reliability, cost, schedule, all of that. So, T-Sat has good heritage here, they have a very good capable optical link. At the end of the day, it was a competitive process, and at the end of the day, we and MDA judged that T-Sat was the best vendor for it.

Speaker Change #133: like $3.3 million in a quarter, so call it $1.1 million a month. Are you still recognizing revenues from Explore and just kind of offsetting that with with bad debt expense?

Andrew Browne: So we continue to recognize revenue till we know more about what they're. The plan is to go for it. Okay, and can you quantify what their remaining obligations are, I guess, under the contract, like how much of your backlog includes the Explore Obligation. Yeah, we'll help you out there. So, John, remind me, it goes out until January 2027. Yeah, so it would be, you know, 25 and 26.

Speaker Change #154: Yeah, we are currently recognizing revenue and explore. They're making partial payments, so we continue to recognize revenue too. We know more about what they're...

Andrew Brown: Okay, and can you quantify like what the remaining what their remaining obligations are? I guess in the contract, like how much of your backlog includes the explore obligations? Yeah, we'll help you out there. So, John, remind me it goes out until January 20, 27. Yeah, so it would be 25 and 26. It's probably order a magnitude about 40 million of Canadian of backlog that's in that 1.1 billion. And they should also know that about a third of that was pre-payment. And so when we recognize revenue from Explore Each Quarter, about third of it is just non-tasked the third revenue.

Speaker Change #134: The plan is go for it.

Speaker Change #135: Okay, and can you quantify what the remaining obligations are? I guess under the contract, how much of your backlog includes?

Speaker Change #135: The Explore Obligations.

Speaker Change #136: Yeah, we'll help you out there. So, John , remind me, it goes out until January 2027. Yeah, so it would be, you know, 25 and 26. It's probably order of magnitude about 40 million.

Andrew Browne: It's probably an order of magnitude, about 40 million Canadians of backlog that's in that 1.1 billion. And you should also know that about a third of that was pre-paid. And so when we recognize revenue from Explore Each Quarter, about a third of it is just non-task deferred revenue, but that's what it is. Okay, I got it. And then the last one. I know a few people have asked for it, so I'll just try it one more time with your guidance.

Daniel Goldberg: It's not a black mark against any of the other companies out there that are making optical links. We felt like we had a number of good alternatives, but at the end of the day, T-Sat got over the line for us, and Dave, I don't know if there's anything else. No, I think you said it well, Dan. I just note that it was a very disciplined down selection and selection process in the final analysis, Dan. So, as you said, T-Sat came out on top in a very difficult process.

Speaker Change #137: Canadian of backlog that's in that 1.1 billion. They should also know that about a third of that was prepayment.

Speaker Change #137: And so when we recognize revenue from Explore Each Quarter, about a third of it is just non-cast deferred revenue. So that's, but that's what it is, Sean.

Andrew Brown: So that's what it is, Sean. Okay.

Daniel Goldberg: And final question, you know, listening to the MDA call the other day, clearly your top of heat with them, but they apparently have a new underscores customer that's growing in size very quickly. It would lead someone to believe that like a government customer, which tends to exert priority. Again, all I'm speculating, but, you know, these are things you've seen happen before. You have any concerns. I know they're ramping up into a capacity of like 2000 satellites a year, but they're ramping up. You know, is there a growing business term arrangement for you?

Daniel Goldberg: The low end of this guidance implies second half revenues of about $240 million, which would be $40 million a month. And you did $305 or about just north of $50 million a month in the first half. I know that there's the renewal with Echostar that comes up, I can't remember, September, October, but in the past, you've said that those DTH birds are about 70 million a year. Could be more, could be less, but just wondering if you could help us understand, like the drop-off of... at least, [inaudible] Or, you know, I guess even if you've lost 100% of that Echo Thanks. Arun Seshadri, I'm looking at Andrew.

Andrew Brown: And then the last one, I know a few people have asked, so I'll just try one more time on the guidance. So the low end of the guidance implies a second half revenues of about 240 million. It could be 40 million drops a month. And you did 305 or about, you know, just north of 50 million per month in the first half. I know that there's the renewal with Echo Star that comes up September, October, but in the past you've said that those DTH birds are about 70 million a year. Could be more, could be less, but just wondering if you could help us understand like the drop-off of at least, or, you know, I guess even if you lost 100% of that, Echo Star contract seems like you're still assuming some pretty steep declines in the rest of the business in the second half of the year.

Sean Mahoney: Okay. Yeah.

Speaker Change #138: And then the last one, I know a few people have asked, so I'll just try it one more time on the guidance.

Speaker Change #139: to the low end of the guidance implies second half revenues.

Speaker Change #139: of about 240 million.

Speaker Change #140: which would be $40 million a month, and you did $3.05 or just north of $50 million per month in the first half.

Speaker Change #140: I know that there's the renewal with Echo Star that comes up.

Speaker Change #141: I think, I can't remember, September, October, but in the past you've said that those DTH birds are about 70 million a year. Could be more, could be less, but just wondering if you could help us understand.

Daniel Goldberg: So, the short answer is no. You know, they're right down the street from us, about an hour and a half away from us. We know MDA well. Our teams are well-integrated. We've got a lot of former MDA employees here. They probably have a couple of former tele-side employees on their side. We have actually a really good working relationship with MDA at all the different levels kind of throughout our organizations. We've worked with MDA for decades, not as a satellite prime, principally, you know, on the antenna side and whatnot, although they've been building satellites for years and years.

Speaker Change #141: like the drop-off of

Speaker Change #142: at least, or, you know, I guess even if you've lost 100% of that EchoStar contract, seems like you're still assuming some pretty steep declines in the rest of the business in the second half of the year. Thanks.

Daniel Goldberg: Thanks. I'm looking at Andrew. Maybe I'll take this. I guess, you know, how we thought about the year. Certainly, we, even if this renews, we expect that, you know, it'll be at a materially lower rate. So, you know, we've captured different, you know, outcomes with this that explain part of the decline. We've got this issue with Explore. We'll see where we land on that. So, it's things like that. I'd note also, there's; we take a look at kind of all of our business activities periodically.

Speaker Change #142: Um, um,

Speaker Change #143: I'm looking at Andrew. Maybe I'll take this.

Sean Mahoney: Maybe I'll take this. I guess, you know, how we thought about the year certainly. Even if DISH renews, we expect that, you know, it'll be at a materially lower rate. So, you know, we've captured different outcomes with DISH that explain part of the decline. We've got this issue with Explorer.

Speaker Change #143: I guess you know how we...

Daniel Goldberg: So, no, we don't have any concern where in close contact with them as they ramp up. They're staff as they ramp up the supply chain. We, you know, including myself, meet with them on a regular cadence. So, which is not to say that we're relaxed and complacent. This is a huge program for us. It's a huge program for them. Both of us need this program to be successful. I like that dynamic where we both have a lot of skin in the game.

Speaker Change #143: Even if this were news...

Andrew: We expect that, you know, it'll be at a materially lower rate. So, you know, we've captured different.

Andrew: outcomes with DISH that explain part of the decline. We've got this issue with Explore, we'll see where we land on that. So it's...

Daniel Goldberg: We'll see where we land on that, things like that. I'd also note that we take a look at kind of all of our business activities periodically. We're giving consideration to selling kind of a non-core business that we own, and that could potentially get done in the near term. So it would be impactful for this year.

Andrew: things like that. I'd note also

Andrew: there's, we take a look at kind of all of our business activities periodically. We're giving consideration.

Andrew Brown: We're giving consideration to selling kind of a non-core business that we own, and that could potentially get done in the near term. So, it would be impactful for this year. It contributes revenue. It doesn't contribute a whole lot of EBITDA to us. But that, if we were to do that, would waste somewhat on the top line, at least. So, it's all those kinds of things. And then, yeah, we gave a range. Right? I mean, there's a low end of the range. There's a high end of the range. And, yeah, Andrew, do you want to add anything?

Daniel Goldberg: But no, I mean, it's something that we're going to keep monitoring very, very closely. But no, I feel good right now about where they are on the ramp up and how our teams are engaging in the live show. So, and if we saw differently about that, we'll let you know.

Andrew: to selling kind of a non-core...

Andrew: business that we own.

Unknown Executive: Great, thanks. Thanks, Chris.

Daniel Goldberg: It contributes revenue. It doesn't contribute a whole lot of EBITDA to us, but that, if we were to do so, would waste somewhat on the top line at least. So it's all those kinds of things. And then, yeah, we gave a range, right? I mean, there's a low end of the range, there's a high end of the range, and, yeah, Andrew, do you want to add anything?

Andrew: and that could potentially get done in the near term. So it would be impactful for this year. It contributes revenue. It doesn't contribute a whole lot of EBITDA to us, but that, if we were to do that, would weigh somewhat on the top line at least. So it's all those kinds of things.

Unknown Executive: Thank you.

Walter Piecyk: The next question is from Walter P. Check from Lightshed. Please go ahead, you'll let us open. Thanks, Dan. Just a quick, first, a quick follow-up. I want to curse this question with regard to, you know, this strength in the first half of the year, relative to guidance. As you basically assuming that Echo Star is zero in terms of revenue for the four quarters, they kind of worked either captures. Well, probably there's some probability associated with that when you put together your guidance numbers.

Andrew: Um, um,

Andrew: And then, yes, we gave a range, right? I mean, there's a low end of the range, there's a high end of the range, and yes, Andrew, do you want to have anything? Yeah, indeed, if you look at the off-ex, you know, as you know, where Stan said, we're hiring people.

Andrew Brown: Yeah, indeed. If you look at the off-ex, you know, as you know where Stan said, we're hiring people. So, our off-ex indeed, well, in Leo, our investment in Leo, from the people perspective, is going to increase. If you look at, on our segmentation, operating expenses for the six months was about 32.8 million. And our guidance would give me for off-ex from Leo's between 80 to 90. So, that will also kind of play in overall, as to what the increase, potential increase in off-ex in second half. There's a fourth half. So, that played in right down to the just the EBITDA as well.

Andrew Browne: Yeah, indeed. If you look at OPEX, you know, as we know, as Dan said, we're hiring people. So our OPEX, indeed, in Leo, our investment in Leo from the people perspective is going to increase. If you look at our segmentation operating expenses for the six months, they were about $32.8 million, and our guidance we've given for OPEX for Leo is between $80 to $90. So that will also kind of play in overall as to the potential increase in OPEX in the second half versus the first half. And that plays in right down to the adjusted EBITDA as well. And I would say we are prudent as well in what we do.

Speaker Change #144: So, our OPEX, indeed, will unveil our investment in the oil fund.

Andrew: The people perspective is going to increase if you look at our segmentation operating expenses for the six months was about $32.8 million and our guidance we've given for OPEX and LEO is between $80 million to $90 million. So that will also kind of play in overall as to what the increase.

Walter Piecyk: Well, when we put together our guidance, and we said this before, it, you know, captured a range of outcomes with Echo Star, and we haven't changed any of those assumptions in terms of what those range of outcomes could be. So no, the back half of the year and our thinking about it hasn't deteriorated because we've learned something new or our thinking has changed about Echo Star from where we stood at the outset of the year when we gave the guidance.

Speaker Change #145: It Potentially Increasing OpEx in Second Half Versus First Half. So that plays in right down to the just the D, but that as well. And I will say we are prudent as well in what we do.

Andrew Brown: And I will say, well, we are proven as well, and what we do.

Andrew Brown: And maybe one other thing, James, is pointing out to me that, and now that we've broken out our geo and Leo numbers separately, it's easier for you guys all to see. But we recognized revenue in Leo for the first half of the year that, and that's chunky, you know, nonlinear kind of revenue. It was the consulting contract that we had. I think this one was with NASA. NASA. Correct. Which there's more revenue recognition in the front part of the year than there's in the back part. Here again, it's not contributing a whole lot of EBITDA, but it'll impact the top line.

Sean Mahoney: And maybe one other thing, James is pointing out to me that, and now that we've broken out our GEO and Leo numbers separately, it's easier for you guys all to see, but we recognized revenue in Leo for the first half of the year, and that's a chunky, you know, nonlinear kind of revenue. It was the consulting contract that we had; I think this one was with NASA, where there is more revenue recognition in the front part of the year than there is in the back part.

Speaker Change #145: And maybe one other thing, James is pointing out to me that, and now that we've broken out our GEO and LEO numbers separately, it's easier for you guys all to see, but we recognized revenue in LEO for the first half of the year that, and that's...

Shunky: Chunky, you know, non-linear kind of revenue, it was the consulting conflict that we had. I think this one was with NASA, which there's more revenue recognition in the front part of the year than there's in the back part here again.

Sean Mahoney: Here again, it's not contributing a whole lot of EBITDA, but it'll impact the top line. So anyway, Sean, it's kind of all of those things, but there's certainly nothing, you know, that other than the Explorer restructuring that's going on, we don't know where that's going to land. There's nothing about how the second half of the year is shaping up that's really anything different from the way we were thinking about the second half of the year at the outset of this year when we gave our guidance.

Walter Piecyk: And I yeah, we all track, you know, what's going on in the sector, including what's going on with Echo Star. The reality is to date, the direct home satellite business is obviously still generating a significant amount of cash flow at Echo Star. To date extent that they renew with us, then that will be a reflection that NIMIK 5 is still an important part of their distribution infrastructure, and they'll find a way to pay for that because it's important that they continue to provide service to their DTH customers and continue to enjoy the benefit of that cash flow.

Speaker Change #147: at the Yankee table tennis program.

Daniel Goldberg: So, anyway, Sean, it's kind of all those things, but there's certainly nothing, you know, that other than the explore restructuring that's going on. We don't know where that's going to land. There's nothing about how the second half of the year is shaping up that's really anything different than the way we were thinking about the second half of the year at the outset of this year when we gave our guidance. And if you look at the segmentation breakout with Don, which I think is very useful and very transparent to numbers. We just sort of are the issues.

Speaker Change #148: about how the second half of the year is shaping up. That's really anything different than the way we were thinking about the second half of the year.

Sean Mahoney: And if you look at the segmentation breakout with Dawn, which I think is very useful and very transparent, the numbers we just sort of mentioned about the OPEX and the revenues in Leo, you can actually see that quite clearly, and particularly pertaining to the... Okay, I've got a thing. And then just last one for me based on what you said. That non-core asset that you mentioned is that in the restricted group, and can you give us any sense of an order of magnitude of what you expect to sell that for?

Speaker Change #148: at the outset of this year when we gave our guidance. And if you look at the segmentation breakout we've done, which I think is very useful and very transparent, the numbers we just sort of, or the issues we just mentioned about the OPEX and the revenues in LEO, you can actually see that quite clearly, and particularly pertaining to the first three months.

Andrew Brown: We just mentioned about the op-ax on either revenues and Leo. You can actually see that quite clearly and particularly pertaining to the. Yeah. Dr. Ford Street. Okay, got a thing.

Sean Mahoney: You know, is that like a five or 10 million, or we talked about 100 million, or Yeah, so one it is in the restricted group. It's certainly not material from an EBITOP perspective because, as I mentioned, it's pretty much EBITOP neutral for us. And then, you know, in terms of top line contribution, order of magnitude, it's kind of in the 10 plus million Canadian contribution top line.

Andrew Brown: And then just last one for me based on what you said. That non-core asset that you mentioned is that in the restricted group, and can you give us any sense for an order of magnitude of what you expect to sell that for? You know, is that like a 5, 10 million, or we talked 100 million? Yeah, it's so one; it is in the restricted group. It's not. Certainly not material from an even out perspective, because, as I mentioned, it's pretty much even on neutral for us. And then, you know, in terms of top line contribution, order of magnitude, it's kind of in the 10 plus million Canadian contribution top line.

Speaker Change #149: Okay, got it. Again, then just last one for me, based on what you've said, that non-core asset that you mentioned is that in the restricted group and can you give us any sense for an order of magnitude of what you expect to sell that for, you know, is that like a five, ten million or we talked a hundred million or.

Walter Piecyk: And so my expectation is that they'll find a way to make sure that they're paying us off. I'm just pausing here. Are we still online? Okay, sorry, our screen was flickering here. I wasn't sure if we had lost the line. That was a good response. You know, just flickering positive feedback. Yeah, I mean, I agree. I mean, look, if you generate some level of free cash flow in one element of the business and they can't switch up NIMIK 5 and you got to get one, I just pretty gunned it or had that and just not let them off the hook for a lower renewal.

Speaker Change #150: Yeah, so one, it is in the restricted group. It's not...

Speaker Change #150: Certainly not material from an EBITDA perspective, because as I mentioned, it's pretty much EBITDA neutral for us. And then,

Speaker Change #150: You know, in terms of top line contribution, order of magnitude, it's kind of in the ten-plus million Canadian contribution top line.

Daniel Goldberg: So that's what it looks like. Oh, and then in terms of proceeds, we can't say yet because, you know, we don't have anything to share yet, but it's not going to be really material. But any proceeds that we do get from that activity, if we sell it, will go into. Okay, thanks. It's all for me. Okay, thanks.

Andrew Brown: So that's what it looks like. Oh, and then in terms of proceeds, we can't say yet because, you know, we don't have anything to show you, but it's not going to be really material. But any proceeds that we do get from that activity, if we sell it, will come into the restricted group. Okay, thanks.

Speaker Change #150: So that's what it looks like. Oh, and then in terms of proceeds, we can't say yet because, you know, we don't have anything to share yet, but it's not gonna be.

Walter Piecyk: Well, I mean, look, you know, with with all of our customers, you try to frame things in a kind of a win-win way as best you can. You don't always get there, but we've been working with Echo Star for nearly 20 years now. And we have a good relationship with them. We've talked about this before. We all know it. The director home satellite business is facing real secular headwinds. We try to work with whether it's, you know, Bell or Echo Star or Shaw, you know, try to work with them to sustain that business because there still are millions of households across North America that rely on those services.

Speaker Change #150: But any proceeds that we do get from that activity, if we sell it, will come into the restricted group.

Walter Piecyk: No, I just feel like on this renewal, however many years it's going to be, you know, also in Ontario and the South itself, it's like, this is the last five years from now, there are a couple million sub-lower than they're not going to be maybe as nice to you as you're signing like you want to be nice to them in this business. In other words, like, this could be the last negotiation of your 20-year relationship, so why not, like, just squeeze them for everything? Can. Yeah, I don't know. We've been doing this for a long, long time. It's not how we approach our customers in the market. Anyway, so stay tuned. We're going to conclude one way or another.

Unknown Executive: Okay, thank you. Thank you.

Operator: Thank you. There are no further questions registered at this time. I will turn the call back to Dan Goldberg. Okay operator, thank you very much and thank you all for joining us this morning, and we look forward to chatting with you again when we release our Q3 numbers. So, thank you very much; thank you very much, Cheryl. Thank you. The conference has now ended. Please disconnect your line at this time, and we thank you for your participation.

Speaker Change #151: Okay, thanks for all for me. Okay, thank you.

Unknown Executive: There are no further questions registered at this time.

Daniel Goldberg: I will turn the call back to Dan Goldberg. Okay, operator. Thank you very much. And thank you all for joining us this morning. And we look forward to chatting with you again when we release our Q3 numbers. So thank you very much. Thank you very much.

Speaker Change #151: Thank you. There are no further questions registered at this time. I will turn the call back to Dan Goldberg.

Dan Goldberg: Okay, operator, thank you very much and thank you all for joining us this morning and we look forward to chatting with you again when we release our Q3 numbers. So thank you very much. Thank you very much.

Unknown Executive: Cheerio. Thank you. The conference is now ended.

Unknown Executive: Please disconnect your line at this time. And we thank you for your participation.

Speaker Change #153: Thank you. The conference has now ended. Please disconnect your line at this time, and we thank you for your participation.

Speaker Change #153: Thank you for joining us today.

Daniel Goldberg: Our renewal discussions with them and then we'll be able to provide an update on that in a couple of months time. I think that's also on the Leo. You know, now that NDA is kind of talking about it more, obviously there's seemingly more confidence in the market that the project is moving forward. Has this opened up any additional, you know, presales on the enterprise side of realize obviously the launch is still a couple of years now but wondering if you've got any additional commitment.

Daniel Goldberg: And to that end, in terms of the market size on enterprise, you know, what global star and Apple have done in this recent phone. Again, getting that to the director device. I know this is not the target market that you want, but is there any rethinking in that in terms of the director device? I mean, I think Skyworld has an announcement yesterday with the new Pixel phone to be on market developing.

Daniel Goldberg: I've been using the global star stuff. It's been great, you know, in the whole of coverage that exists. This period of your thought process has changed in terms of trying to tap that market. It's a great question, but no, it hasn't. The reality is, you know, the spectrum that lightspeed operating on the cave and spectrum is ideal for broadband connectivity, but it's not ideal for, you know, direct device, you know, providing a broadband connection, even an air bank connection to a handheld smartphone.

Daniel Goldberg: And we believe the market that the verticals that were focused on are great opportunities for us. They're large, they're deep, they're fast growing, and we've optimized the constellation to serve that market. The frequencies are really well suited to serve that market. And so, so no, that, that remains the focus. And then as far as precells, activities, light speeds moving forward. I mean, if anyone still has any questions about that, yeah, I mean, I don't know what to say, but we're obviously spending money, MDAs ordering stuff, and we're all ramping up our staff.

Daniel Goldberg: And I mean, light speeds going forward. I think the customer community understands that. We've got salespeople and business development people running all around the world engaged with the customers that we know well in these different verticals. And so nothing to announce right now. But you only announced like material contract, but could you leave comment whether there've been incremental booking, but maybe they're not significant enough to call out. No, no, no, I mean, I'm booking the last earnings call.

Daniel Goldberg: No, no, but it wasn't our expectation that that there would be any where we're having good engagement with really good perspective users in the key verticals that were focused on arrow maritime government enterprise. It wasn't my expectation that we'd be announcing anything, you know, since putting out our Q1 numbers, but the market knows what we're building. The users are excited about it. There's a clear validation that the customer community is highly receptive to Leo.

Daniel Goldberg: So you see the traction that Starlink is getting. And we think that we're bringing something really compelling to the market. So anyway, stay tuned. And we'll be very transparent about the orders we're getting right now. We've got about, I mean, it's 750 million of take or pay commitments on light speed, which we do not include when we talk about the 1.1 billion Canadian backlog that we report in the earnings release, the light speed backlog is separate and apart from that. And we'll, you know, as that moves, we'll report on it. And we'll talk about the wins that we have and the like. Thank you.

Unknown Executive: Thanks.

Sam Mahoney: Thank you. The next question is from Sam Mahoney from Bank of America. Please go ahead. Your line is now open. Yeah, thanks for taking the questions. First, I know it's the large working capital outflow for the restricted group and a large working capital benefit for the administrative group in the quarter. So just wondering, does that reflect any inner company flows? Or is it just a coincidence for those numbers largely offset? Or do you use the remaining unsub investment capacity as you indicated you would on the last call?

Sam Mahoney: Yeah, so that's the investment down from Talisa Canada into the unrestricted group. And from a time perspective, it's just showing up top in operation. But next floor, you'll see it down as an investment in. Okay. Got it. Thank you. And then for GeoopEx, Q2 was this up sequentially, completely at least part of that was due to the fact that expense associated with explore the demand as well as higher professional fees. How should we think about run rate GeoopEx?

Sam Mahoney: Should we look more to like Q1? Or do you expect to continue to incur higher bad debt expense with the with explore? Or higher professional fees just in time? And if you look at our Geo business overall, the point out are actually the dollar margin is 80%, which is pretty high, pretty significant. And we said on our last call, we were expecting GeoopEx to be down 4% in our plans. And that's contained within the guidance.

Sam Mahoney: And that's still what we are actually sticking to now. On the bad debt, I'll just share the bad debt amount delta is about 2 to 3 million. So on the grand scale, it's not that sort of material. But as we said in the last call, in terms of off-ex and that had alluded to and spending money, we are pretty judicious on what we do and how we spend money and which is good.

Sam Mahoney: So as I say, that's what we said in our call, that's a review of GeoopEx. Okay, got it. And then on the bad debt expense that you mentioned, yeah, let's say it went up like 3.3 million in the quarter. So call it 1.1 million a month. Are you still recognizing revenues from explore and just kind of offsetting that with bad debt expense? Yeah, we are currently recognizing revenue and explore. They're making partial payments.

Sam Mahoney: So we continue to recognize revenue too. We know more about what their plan is going forward. Okay, and can you quantify like what the remaining what their remaining obligations are? I guess in the contract, like how much of your backlog includes the explore obligations? Yeah, we'll help you out there. So John remind me it goes out until January 20, 27. Yeah, so it would be 25 and 26. It's probably order a magnitude about 40 million of Canadian of backlog that's in that 1.1 billion.

Sam Mahoney: And they should also know that about a third of that was pre- Payment. And so when we recognize revenue from Explore Each Quarter, about third of it is just non-tasked the third revenue. So that's what it is, Sean. Okay. And then the last one, I know a few people have asked, so I'll just try one more time on the guidance. So the low end of the guidance implies a second half revenues of about 240 million.

Sam Mahoney: It could be 40 million drops a month. And you did 305 or about, you know, just north of 50 million per month in the first half. I know that there's the renewal with Echo Star that comes up September, October, but in the past you've said that those DTH birds are about 70 million a year. Could be more could be less, but just wondering if you could help us understand like the drop-off of at least, or, you know, I guess even if you lost 100% of that, Echo Star contract seems like you're still assuming some some pretty steep declines in the rest of the business in the second half of the year.

Sam Mahoney: Thanks. I'm looking at Andrew. Maybe I'll take this. I guess, you know, how we thought about the year, certainly, we, even if this renews, we expect that, you know, it'll be at a materially lower rate. So, you know, we've captured different, you know, outcomes with this that explain part of the decline. We've got this issue with explore. We'll see where we land on that. So, it's things like that. I'd note also, there's, we take a look at kind of all of our business activities periodically.

Sam Mahoney: We're giving consideration to selling kind of a non-core business that we own, and that could potentially get done in the near term. So, it would be impactful for this year. It contributes revenue. It doesn't contribute a whole lot of EBITDA to us. But that, if we were to do that, would waste somewhat on the top line at least. So, it's all those kinds of things. And then, yeah, we gave a range.

Sam Mahoney: Right? I mean, there's a low end of the range. There's a high end of the range. And, yeah, Andrew, do you want to add anything? Yeah, indeed. If you look at the off-ex, you know, as you know where Stan said, we're hiring people. So, our off-ex indeed, well, in Leo, our investment in Leo, from the people perspective, is going to increase. If you look at, on our segmentation, operating expenses for the six months was about 32.8 million.

Sam Mahoney: And our guidance would give me for off-ex from Leo's between 80 to 90. So, that will also kind of play in overall, as to what the increase, potential increase in off-ex in second half. There's a fourth half. So, that played in right down to the just the EBITDA as well. And I will say, well, we are proven as well, and what we do. And maybe one other thing, James, is pointing out to me that, and now that we've broken out our geo and Leo numbers separately, it's easier for you guys all to see.

Sam Mahoney: But we recognized revenue in Leo for the first half of the year that, and that's chunky, you know, nonlinear kind of revenue. It was the consulting contract that we had. I think this one was with NASA. NASA. Correct. Which there's more revenue recognition in the front part of the year than there's in the back part. Here again, it's not contributing a whole lot of EBITDA, but it'll impact the top line. So, anyway, Sean, it's kind of all those things, but there's certainly nothing, you know, that other than the explore restructuring that's going on, we don't know where that's going to land.

Sam Mahoney: There's nothing about how the second half of the year is shaping up that's really anything different than the way we were thinking about the second half of the year at the outset of this year when we gave our guidance. And if you look at the segmentation breakout with Don, which I think is very useful and very transparent to numbers. We just sort of are the issues. We just mentioned about the op-ax on either revenues and Leo.

Sam Mahoney: You can actually see that quite clearly and particularly pertaining to the. Yeah. Dr. Ford Street. Okay, got a thing. And then just last one for me based on what you said. That non-core asset that you mentioned is that in the restricted group, and can you give us any sense for an order of magnitude of what you expect to sell that for? You know, is that like a 5, 10 million, or we talked 100 million?

Sam Mahoney: Yeah, it's so one, it is in the restricted group. It's not. Certainly not material from an even out perspective, because as I mentioned, it's pretty much even on neutral for us. And then, you know, in terms of top line contribution, order of magnitude, it's kind of in the 10 plus million Canadian contribution top line. So that's what it looks like. Oh, and then in terms of proceeds, we can't say yet because, you know, we don't have anything to show you, but it's not going to be really material.

Sam Mahoney: But any proceeds that that we do get from that activity, if we sell it will come into the restricted group. Okay, thanks. Okay, thank you. Thank you. There are no further questions registered at this time. I will turn the call back to Dan Goldberg. Okay, operator. Thank you very much. And thank you all for joining us this morning. And we look forward to chatting with you again when we release our Q3 numbers. So thank you very much. Thank you very much. Cheerio. Thank you. The conference is now ended. Please disconnect your line at this time.

Operator: And we thank you for your participation.

Q2 2024 Telesat Corp Earnings Call

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