Q3 2024 Telesat Corp Earnings Call
Speaker Change: Once again, please stay on your side. We thank you for your patience.
Speaker Change: We thank you for your patience, the conference will begin shortly. We kindly ask you to wait a few moments and we thank you for your patience.
This conference is being recorded.
Speaker Change: All participants, please stand by. Your conference is ready to begin.
Speaker Change: Hello Ladies and Gentlemen, welcome to the conference call to announce the financial results for the third quarter 2024 for Telefax.
Speaker Change: Our specialists today will be Dan Goldberg, President and CEO of InvestiRelations, and Andrew Browne, CFO of InvestiRelations. I would now like to turn the floor over to Mr. James Ratcliffe, Vice President of InvestiRelations. Please, Mr. Ratcliffe.
James Ratcliffe: Thank you LaTanya and good morning everyone. This morning, we filed our quarterly report for the period ending September 30, 2024, on Form 6K with the SEC and on CDAR+.
James Ratcliffe: Our remarks today may contain forward-looking statements. There are risks that tell us that actual results may differ materially from the results contemplated by the forward-looking statements as a result of known and unknown risks and uncertainties. For a discussion of known risks, please refer to the TELUSAT annual report and the information filed with the SEC.
James Ratcliffe: Telesat assumes no responsibility to update or revise these forward-looking statements.
Speaker Change: I will now hand over to Dan Goldberg, President of TELUSAT and Chief Executive. Thank you, James, and thank you all for joining us this morning. The third quarter and the first nine months of the year have had an impact largely consistent with our expectations.
Speaker Change: And, as we noted during our acquisition announcement, we have updated our guidance for revenues to be at the high end of the range and for adjusted arbitration to be at or above the high end of the range.
Speaker Change: Q3 was eventful, with the biggest news being that we closed the financing for Lightspeed towards the end of the quarter. We indicated on our Q2 call that the closing was underway, and we are happy to make the announcement soon after.
Speaker Change: I am happy to say that we are making good progress so far in executing the program and that we are satisfied with the work and the good collaboration we have with our key clients.
Speaker Change: I am also happy to see all the new talented individuals we are bringing to TELOSAT as team staff for this important program.
Speaker Change: In addition to the good progress we are making on the technical front, I was very pleased to see the level of engagement we have with the customer community now that the program is fully funded.
Speaker Change: It is increasingly clear that satellite users
Speaker Change: in each of the verticals we have focused on, they see the significant benefits of Léo and also appreciate that Lightspeed, with its very advanced and capable design, can meet its connectivity requirements.
Speaker Change: The assurance of the client's requirements for the speed of light is obviously a very important priority for us, and we will keep the market informed of our progress in advance.
Speaker Change: I am happy to say that we entered into a renovation agreement with Echostar in the month of October for NIMIC 5, a renovation we talked about during our last calls.
Speaker Change: It is a five-year renovation that will allow DISH to reduce its capacity in the first year to half of the capacity they use today. In terms of reimbursement, we will receive a little less than a third of what we had.
Speaker Change: We plan to use the NMIC5 capacity that we receive back to support certain customer demands in Canada, but we do not expect it to completely replace the lost revenue from DISH.
Speaker Change: We mentioned on our Q2 call that we were considering selling a wholly-owned subsidiary that generated approximately 10 million euros per year in revenue, but with a minimal EBITDA contribution.
Speaker Change: We have entered into an agreement, the last quarter, to sell this business, called InfoSat, for taxes of less than millions of dollars, so nothing very material about it.
Speaker Change: The last thing I would like to mention about the developments of the quarantine on the geographic company
Speaker Change: we have restructured our contract with the Canadian ISP Explore, something we also discussed in our last call. Explore went through a financial restructuring, and as part of that, we took a debt tax provision increase last year to reflect this situation.
Speaker Change: On our Q2 call, we noted that the Explorer accounted for approximately 40 million dollars of backlog and that about one-third of that was a pre-payment that we recognize as deferred revenue each quarter.
Speaker Change: In light of the financial challenges of the Explorers, we have restructured the contract, which will expire at the end of next year, a little earlier than expected.
Speaker Change: Following the restructuring, we hope that Explorer's revenue will be less than 4 million dollars next year, compared to the previous year, but indeed, at the EBITDA line scale.
Speaker Change: Basically, it was a busy quarter and we did a good job in terms of guidance as we approached the end of the year. We are very happy to have Energy Lightspeed fully funded for global service and we are making strong progress so far on the execution of the program.
Speaker Change: We remain very far from LightSpeed's prospects in the market, as well as from our ability to offer an extraordinary value proposition to our customers and significant value creation for partners.
Speaker Change: With that, I give the floor to Andrew and I look forward to addressing your questions.
Andrew Browne: Thank you, Dan. Good evening, everyone. I would now like to focus on the key points of this morning's press release and filings.
Speaker Change: In the third quarter of 2024, Telesat announced consolidated revenues of 138 million.
Speaker Change: and Justin Hibbouda at 96 million euros. For the first 9 months of 2024, the company generated 64 million euros in operating cash, and in the third quarter, it earned 1.1 billion euros in cash.
Speaker Change: Operating expenses decreased from 4 million to 46 million and the adjusted tax margin decreased from 27 million to 96 million. The adjusted tax margin was 69.5% compared to 75.9% in the total quarter of 2023.
Speaker Change: The warming of quarantine revenues is mainly related to reductions in services and the slowdown in the pace of renewing the long-term agreement with a direct home client in North America, as well as decreased revenues from certain mobility and Latin American clients.
Speaker Change: The decline in operating expenses was primarily related to non-cash partner-based compensation and capitalized engineering related to Telesat's Lightspeed, partially offset by tax expenses, professional fees, and the increase in interest accounts in the interest segment.
Speaker Change: Interest money decreased by 6 million dollars during the quarantine, compared to the same period in 2023. The decrease in interest money was primarily linked to the repurchase of notes and leisure B. This was partially offset by an increase in interest money from the American leisure institute.
Speaker Change: In the third quarter, we recorded a gain on foreign exchange of 36 million compared to a loss of 77 million in the third quarter of 2023.
Speaker Change: The revenue for the three months ended in September of Turkey in 2024 was one of the results of the increase in the US dollar, the Canadian dollar figure, during the quarantine compared to the figure in June of Turkey in 2024, and the favorable result, in fact, on the translation of a debt denominated in US dollars.
Speaker Change: The revenue for the third quarter was 68 million compared to a net loss of 4 million for the same period in the previous year. The change was primarily due to the foreign exchange gain I mentioned earlier, partially offset, but declined in revenues.
Speaker Change: For the 9 months ended September 30, the cash flow from operating activities is 64 million.
Speaker Change: The money expenditures amount to 661 million, almost all related to the speed of electricity. Of this amount, 550 million consists of cash payments. With the remainder, 111 million have been accrued. This amount is reflected in trade and other payments on the financial plan of district N.
Speaker Change: As you noted in our announcement this morning, we have also revised our guidance for the year 2024. This guidance assumes an exchange rate of Canadian dollars to US dollars of 1.35.
Speaker Change: For the year 2024, Telesat expects its full-year revenues to be at the high end of the guidance range, between 5.45 and 5.65.
Speaker Change: In terms of operational expenses, including base share compensation, we now expect to spend approximately 65 million to 70 million dollars on satellite telecommunication speed this year, compared to our previous expectation of 80 to 90 million. All of this reflects the overall balance of new jobs.
Speaker Change: In terms of total EBITDA, we now expect to reach a guidance level of approximately 340 to 360 million, which reflects better revenue and a decrease in OPEX.
Speaker Change: As planned, we are showing you your GEO and LEO results separately, as seen in note 4 of our financial file and our 6K.
Speaker Change: In terms of capitalized expenditures, we expect that the capitalized expenditures for the year 2024 will be between 1 and 1.4 billion, which is almost entirely related to Telesat's Lightspeed. This also reflects the estimated time that taxes will be received, and the corresponding tax at the end of the year.
Speaker Change: To meet our anticipated cash requirements for the next 12 months, including interest repayments and capital expenditures, we had approximately 1.1 billion in short-term investments at the end of September, as well as 2.54 billion available under our funding agreements with the Government of Canada and Quebec.
Speaker Change: about 850 million dollars of waste remained in our subsidiaries without restriction at the end of the quarantine. In addition, we continue to generate a huge amount of waste from our ongoing operational activities.
Speaker Change: At the end of the third quarter, the total arbitration ratio is calculated in terms of secured credit insurance for adolescent admission at 5.84 times. Telesat is in compliance with all the covenants of our credit agreement and sales.
Speaker Change: In terms of our debt, we have purchased up to this day 262 million US dollars, at a cost of approximately 190 million US dollars, including increased interest.
Speaker Change: Combined with the debt we purchased, completed in 2022 and 2023, we have now purchased principal amounts of 849 million US dollars at a cost of 459 million US dollars, including accrued interest. This also results in interest savings of approximately 54 million US dollars per year.
Speaker Change: including the repayment in 2020 of approximately 3.56 million US dollars on term loan B, where the total debt was reduced by approximately 36%.
Speaker Change: The reconciliation between our financial statements and our financial calculations is provided in the report we published this morning. Our 6K provides the condensed and consolidated financial information in the MDA. The unsecured grants are essentially unrestricted grants with minor differences.
Speaker Change: This concludes our prepared remarks for the call, and we are very happy to answer your questions. We will return to the operator.
Speaker Change: Thank you. We will now take questions from the telephone lines. If you have a question, please press star 1. You may cancel your question at any time by pressing star 2. Please press star 1 at this time if you have a question.
Speaker Change: There will be a brief pause while the participants register for questions. Thank you for your patience.
The first question comes from David McFadgen of Coremark Securities.
David McFadgen: Hi, just a couple of questions. So first of all, just on the Echostar renewal, you indicated that the revenue would be down about a third or 30%, but you expect to offset some of that. So I was just wondering what do you think the net impact would be?
David McFadgen: Oh, I don't know, David. It's Dan. Thanks for the question. I'm not sure yet.
Speaker Change: We have some satellites that are at the end of their life. We plan to use the capacity that returns from NIMIC 5 to support some of the customers who use these satellites.
There it is.
Speaker Change: So stay tuned on that. When we do, we'll try to give some more insight into that. But don't think of it as new revenue. I think it's more going to be revenue that's moving from...
Speaker Change: and other clients who are currently working on satellites like ANIC F3 and other satellites that are approaching the dawn of life.
Speaker Change: Okay, so a few questions on the topic of the microphone. So, you are in contact with the CapEx of 1 to 1.4 billion. When I look at the purchase figure, does this figure appear on the purchase figure of satellite programs? Because so far, it's about 500 million dollars per year.
Speaker Change: I will answer it. In fact, David, as I mentioned in my notes,
Speaker Change: If you look at the CAPEX, if you go to page 8, and on the cash flows used and generated for investment activities, you will see two amounts, the cash reimbursements related to the Satellite program, of 502 million.
Speaker Change: and other equipment that is also related to the aspect of our Lightspeed program. So that gives you 550 million. And as we said, depending on the timing of Dynvoices,
Speaker Change: The rent had not been paid, but nevertheless, they were hired.
Speaker Change: and I can remind you that on page 7, 'Trades and other payables', there is an amount of 157 million and included in this amount is the figure I mentioned of 111. So if you take the 111 accrued and add the repayment of 5.50, it gives you the 661 that was called for the capital.
Very well.
Speaker Change: Ok, so if you actually record the 1 to 1.4 billion and these items online in the expense list will be impacted, right? Yes, that's correct, 100%.
OK, OK.
Thank you all.
Speaker Change: No, no, no, it was just a clarification. Just a few questions about the development of agriculture. There have been discussions on the market, maybe a number of...
Speaker Change: that you are working on. Can you give us information about Taiwan? Your discussions with the government of Taiwan or something like that?
Speaker Change: We saw that there were reports on this subject.
or other potential discussions.
Speaker Change: have been extraordinarily impactful and useful for governments, particularly regarding the communication conditions that have evolved, and we have seen how the conflict in Ukraine has developed.
Speaker Change: you may have seen that Australia recently canceled a multibillion-dollar agreement.
G.O. !
and the stationary program with Lockheed Martin.
and defense applications.
Speaker Change: and there was speculation that it was due to budget constraints. But I believe it was yesterday that the Australian Minister of Defense came out.
and Czech.
Speaker Change: No, it's a function of the fact that technology has evolved and we need to meet these requirements, but we think that LEO is just a much better, more resilient, distributed architecture to do it. So, in any event, we can't comment on...
and Anne-Marie.
Speaker Change: in the discussions we have had, but I would note that there has been a lot of...
Speaker Change: and other opportunities to work with governments to manage light-speed capabilities. In saying this, not counting our policy of not commenting on discussions that might be pending,
Speaker Change: We will accept that Biosat announced on their earnings call, I believe it was last week, that they were in discussions with us about a purchase of light-speed capacity. We will therefore affirm that this is the case.
Speaker Change: Once again, I think that Viasat, like many other users, sees the need, at least, to complement the existing satellite infrastructure with LEO.
Speaker Change: and the customer community. We recently saw this with United Airlines, which is moving away from some of its existing owners. They announced that they will transition to Starlink.
These are big profits for the trip to Lyon.
Speaker Change: The communication services across all these verticals are looking for a way to support Leo to remain competitive.
Speaker Change: Certainly, the conversations we have had with Biosat are a reflection of that. The speed of light is going to be transformative in terms of...
Speaker Change: of what users will be able to do. And Starlink, I think, has really validated how powerful it is.
Speaker Change: But users also want competitive alternatives, and Lightspeed will be a very competitive alternative.
Speaker Change: Just following on that, you know, Lightbeam would be or is expected to be better than Starlink today, for sure. But no one expects Starlink to stay scammed still, right?
and Peter Armstrong.
Speaker Change: Change its orbit, use additional spectrum, because they want to be able to offer a gig download speed as well, so I was just wondering...
Speaker Change: Do you have any comments on that and how can we compare them?
Speaker Change: with what Starlink proposes to do. Maybe you don't know what they propose to do, but if you have any comments, it would be helpful.
Speaker Change: Yes, I agree with you. Starlink is an excellent service. That's why they attract so much attention in the market. That's why they are so impactful. It's an excellent service today and it will become better.
Speaker Change: people don't recognize it, I think they are unfolding. So, it's incumbent on...
to ensure that we bring services to the market.
Speaker Change: who can rely not only on the Starlink that exists today, but also on the Starlink that will continue to improve over time.
Subtitling ST' 501
Speaker Change: This is the competitive environment we think we are entering into. We must rely on all the things we have always had to rely on. We must rely on the quality of service. We must rely on the price. We must rely on the level of customer service and accountability.
and then we are going to have some features.
Speaker Change: that we think business users will particularly appreciate, whether it is about...
You know...
Speaker Change: on autonomy, on how they manage the bandwidth they provide us. We think these are all important features. It may be the case that these things are ultimately duplicated by our competitors, and we must be ready for that.
That's how we think.
Speaker Change: But fundamentally, we are used to competing in markets that are very competitive.
Speaker Change: and we must bring a good value proposition to the market. I think we will be successful because
Speaker Change: It will be an excellent constellation and an excellent network. We are, I think, well known in the industry for providing levels of service to our customers. Starlink, I believe, will continue to gain market share.
Speaker Change: But they will not take 100% of the market. The market is big, it is growing. Even with customers who...
They serve today.
These clients will want multiple suppliers, that's what we do.
David McFadgen: that these corporate clients operate. That's what we think, David. But I agree with you. Starlink is an excellent service today and we are clearly tracking what they are doing.
David McFadgen: I hope it will be a network that gets better and better over time.
OK. All right. Thanks.
Speaker Change: Thank you. The next question is from Edison Yu of Deutsche Bank. Please go ahead.
Good evening everyone and thank you for taking our questions.
Speaker Change: I would like to go back to the 4Q, the management involved. It seems that there is, you know, if you take the rank you indicate to us, we can see that it is the first third.
Speaker Change: so that they can make decisions. Can you tell us about the drivers of that? Is it basically all about the MIC 5?
Speaker Change: I said that we receive a third of the money in advance based on what we have done before. And I said the money because...
Speaker Change: in the revenue we previously recognized with Dish, most of what we received was money, but there was also...
Speaker Change: a piece of revenue recognized from a pre-payment that we had received at the time we executed this contract. So, it will be the most important driver.
and I don't know if there is...
and Amine.
Speaker Change: There is nothing else that comes to mind in terms of other things. On the EBITDA side, we continue to improve the structure of the State. We have added head accounts, mainly for EO activities, but this will be the most important for us.
Speaker Change: I noticed there was an update on Shaw. Can you tell us more about this situation?
Speaker Change: There isn't much. There isn't much announced. Shaw took the position some time ago, a year ago, that they felt they had the right to stop paying us.
Speaker Change: We do not share this point of view. We are therefore taking legal action against them.
Speaker Change: and the income, the payments they give us in relation to the contract. The balance would be punitive damages and things like that.
Speaker Change: It's not a big change, looking at our General Council. As I said, the subject has been recorded and it's gone. But we feel strongly...
Speaker Change: and we continue to do so. There is no real change beyond that.
Speaker Change: I understand, I understand. And for me, I know that you have confirmed the discussions with...
Goodbye, Charles.
Speaker Change: Can you remind us of the discussions you've had, I suppose it's more than just what Levi said, does it apply more to the ISC, the government, Maritime, how are these discussions going in terms of...
Speaker Change: and the different far-right markets if one appears more than the other.
Speaker Change: We are having active discussions with clients from all over the world, in all the different verticals we have talked about.
Speaker Change: The level of engagement with the customer community is very, very high.
Speaker Change: We have always told everyone that Lightspeed was going to be fully funded, and I think most people believed us, but I would say there has been a change of mind in terms of...
Speaker Change: Just the qualitative nature of the discussions we have had with clients and all these different verticals since the beginning of the year.
Speaker Change: we announced that we were completely funded. I think it's two things. One, the fact that we are completely funded.
Speaker Change: Maybe it's more than two things. Thirdly, the fact that we are going to launch...
Speaker Change: in two years, and the way many of these networks operate, you need a period of adaptation, especially when you work with the Aero, or when a plane needs a new antenna. Many planes can communicate with Lightspeed, even with their existing antennas, but you still need a new modem. So, there is a period of adaptation. Customers need to start working now, if they are going to...
Speaker Change: And the other thing that happened is that the day we announced that we were fully funded, the Unit announced that it was going to move all its planes to Starlink. And I think the money disappeared with the user community.
Speaker Change: If you think that the future is entirely Leo, or if you think that the future will have a significant Leo component,
But I think...
Speaker Change: Everyone believes in one or the other currently. So I noticed...
Speaker Change: between being fully funded, between all the attraction that Starlink is drawing,
Speaker Change: The seriousness and concreteness of the discussions we have with the clients is...
Speaker Change: It's a company across the world. It's Arrow, it's Maritime, it's government services, and then it's the old, the traditional, the back-haul, the global broadband.
Speaker Change: In any case, we are working with the clients, very focused on the signed commitments. And as we do this, we will, you know...
Speaker Change: And for now, we have not declared Lyo's backlog in our financials, but we will start doing so next year, so that everyone is aware.
Thank you for your attention.
Speaker Change: Thank you. The next question comes from Caleb Henry of Quilty Space.
Please, go ahead.
Speaker Change: Thank you all. There are some questions about the speed of light and about the constellations of Leo.
Speaker Change: Telesat recently announced a contract for, I think it was, 127 antennas from Inteleon. Here's how far that gets you with...
Speaker Change: and to know your door needs and also the status of the doors for the speed of light so far. My mind is that it seems to be about half the antennas you need, but I'm not sure.
Speaker Change: I am currently looking at our CTO, Dave Wendland. I think the order we made with Intelligence is about, Dave, something between 25 and 30 gateways, help me.
It's between 25 and 30, so 27 doors.
and we are really satisfied with...
and other user antennas.
Speaker Change: So, yes, we are moving forward. Some of the sites, at least in Canada, will be more natural.
Speaker Change: and the Greenfield sites. We have therefore worked on locations in North America, Asia, Europe, Australia, and Latin America. And yes, we feel happy with the progress we are making there.
Speaker Change: Alright, thank you. And then a question on this, this one might go a bit further back, but in 2020, Telsat was working on interoperability with the Space Development Agency. And since you have the same terminal obstacles, will Lightspeed be able to communicate with the military constellation in the United States, PWSA?
Listen, we really tried hard.
Speaker Change: to track what the American government has said about interoperability.
It's really important for us.
Speaker Change: The American government, as a partner of the Proliferated Leo initiative,
Speaker Change: that these different constellations of Leo are interoperable. This gives them more resilience, more flexibility, more diversion value, etc. It was certainly a consideration for us.
Speaker Change: Telosat and MDH have chosen T-SAT, so I think we will be interoperable. But it goes beyond just the ISLs, we are also using Illyria, we announced it as well.
Speaker Change: We have announced Illyria, which is a computer that offers a certain level of the platform that we will use to manage the traffic of the consolation. The American government, I believe,
Speaker Change: also work with Illyria. It's not just the ISL who do that.
Speaker Change: to be able to communicate with each other in order to facilitate traffic flows across networks. In any case, we have been very intentional in trying to do...
Speaker Change: and therefore work with, whether it is the American government or other operators, to offer as much interoperability as possible. It's good for the customers, it's good for the ecosystem at large, it's good for Telesat.
Speaker Change: The last question. I know that Canada is not part of the European Union, but Canada is part of the European Space Agency.
Speaker Change: I wonder if there are chances of an overlap or maybe discussions on interoperability. I don't know to what extent there might be a connected fabric between Canada and Iris Square, or if there isn't one.
I mean, there is...
Speaker Change: Tel Assad was not involved in the Irish Square initiative. It is an activity very focused on Europe. But I assume that the Europeans, like the Americans,
to maximize resilience, to maximize...
I would like to see the flexibility.
Iris Square interoperable with other constellations.
and allied constellations.
Speaker Change: The manufacturer of OISL is T-SAT, Airbus. So I have to think that there is a high probability that we will be interoperable with Iris Square. And I have to believe that...
...uses for their own...
for their own reasons, the Europeans will want...
Speaker Change: to be interoperable with other constellations. Certainly, Canada and the members of the European Union, those nations, are great allies. So, yes, I think that... And look, we are the Bloc Québécois.
Speaker Change: the government's conditions are N/A and maybe not N/A. This would also facilitate interoperability between what I believe the Irish Square is dealing with and what we are doing.
Thank you.
Speaker Change: Thank you. The next question comes from Walt Pysik of Light Chef.
Please, go ahead.
Subtitles created by the Amara.org community
Speaker Change: Operator, I think we're going to need to... Can you hear me now? Oh, there you go.
Speaker Change: Sorry. No worries. I will return to the first question. I thought the prepared comments...
describing the DISH transaction.
Speaker Change: to a 50% reduction in time and capacity, and a 70% reduction in time and capacity.
see you later
Speaker Change: and what they were paying. The first questionnaire, I believe, stated that it was 30% and that you did not correct it. I just want to clarify if I heard the prepared comments correctly.
Speaker Change: I believe there was a 70% reduction and a 30% reduction. I just want to make sure I heard that correctly.
Speaker Change: and, once again, the money we took. We tend to take care of money here. So, it's true.
Speaker Change: I am sorry to interrupt you, Walter, but it is about a year from now with half the capacity and a third of what they used to pay.
Speaker Change: So, you know, the lower cash we receive reflects that they are taking less capacity and the capacity they are taking, they are taking at a slightly lower level per unit.
Speaker Change: Okay. And the expectation would be to reach the end of the five years.
Speaker Change: which could effectively go down to zero in terms of their use and their need not to undergo another renovation.
Six. Thanks, John.
Yes, they put their hands behind.
with 16 transponders, but they may need more.
at that moment, and if we haven't already...
Speaker Change: who have found other uses, so maybe they will extend on this subject until the year 2026. I don't know. And obviously, there is a lot going on with Dish and EchoStar right now, so we'll see. But look, they still have a lot of subscribers who are reaching
Speaker Change: of the NMIC 5, and that's why they renewed. We'll see how it goes.
Ladies and Gentlemen,
and Peter Goldberg.
and Grégoire States.
Speaker Change: I think you claimed that it was the case for Liza.
Speaker Change: have already contracted. No, no, no, no. Asserted discussions. They said on their last call that they were engaged in discussions with us about a commitment at light speed. And that's all they claim.
And look, we have... I understand.
Goodbye!
Speaker Change: We have worked with them for years. They are one of our clients today, using our geographical capacity. Over the years, we have bought VSAT hubs and other things from them to support our broadband business in two ways here in Canada. So, anyway, we will get back to that.
In terms of...
I suppose, let's call it L-band and S-band.
Speaker Change: in the spectrum that is over there. Is there anyone who has come close in terms of the possibility of integrating or integrating the use of...
Speaker Change: through what you have already planned for the speed of light before the launch of the device.
Speaker Change: People have asked us if we have capacity on our satellites to handle these outputs. The answer is no, we do not.
of power and mass to support our mission.
Speaker Change: global star and they're leveraging I'm looking at Dave the leveraging the same advice
Certainly, the bus we use can support...
Speaker Change: and other satellites used to direct a device using lower spectral bands.
Are we thinking of doing something with... today?
Speaker Change: an entity that wants to launch a constellation of direct devices and for us to do something together with them. Yes, it could make sense for them and for us.
Speaker Change: What is the timeline for acquiring an agreement like this? Do we need to implement it for it to be shared? No, at the moment, for the first 198 satellites we have, the ship is out, we are doing it. It will be further than that.
Speaker Change: My last question is that you talked, once again, in the prepared remarks, about how AFRS clients, the concept of a LEO constellation, resonated with them, perhaps even a preference.
Speaker Change: and then later, you mentioned, maybe at the end of the year, providing registration figures. Does that imply that you have already started to...
Speaker Change: have signed a certain level of records with enterprise clients that may not be significant enough to trigger in this quarter's meeting, but ultimately, there are records that are starting to build up that you will then report, I suppose, at the end of the fourth quarter.
Yes, and listen, I have...
Speaker Change: I am always proud to set high expectations at home and at work. We do not set targets for the backlog. We have a lot of discussions with many people. I have been in this industry for a long time. I know that some things can take time, especially the first ones.
Speaker Change: but also for the company Geo, but also for the company Leo. So, let's leave it like that for the moment. We will see where we are when we start making these confessions. But, for the moment, we are focusing on this. And for the moment, we have a lot of good results.
Speaker Change: and we are going to have concrete discussions with people, so stay comfortable.
Thank you very much.
Speaker Change: The next question comes from Chris Colty of Colty Space. Please, go ahead.
Speaker Change: Thank you. Congratulations on closing the debt contract. Now you no longer need to worry about repaying again. Where did your free time go?
Speaker Change: Is there a particular area in terms of manufacturing, regulation, or customer sales that has become one of the main focuses of current management?
Speaker Change: Well, I mean, management is a big word. We try to divide and conquer. But you are absolutely right, Chris, it's important to note that...
Speaker Change: I mean, implicit in your question is that getting it from the fund consumed a lot of our time, which it did.
and we are...
Speaker Change: I am happy for all sorts of reasons to have this in the rearview mirror, one of them being...
This gives us more time to...
Speaker Change: and others. So, certainly, I look at Dave, our CTO, as I said, him and his team.
Speaker Change: who spend much less time answering vendor due diligence questions and who are currently at the extreme with the AMDA, with people like Intelian and Elyria.
Speaker Change: I spend a lot of time with our partners to improve the program, I spend a lot of time hiring many people at the moment, it takes a lot of time. And then for myself, I spend much more of my time.
Speaker Change: working with the client community. And we will focus a little on investor relations activities, which...
It wasn't very fun to talk about the funds.
We wanted to know when we were going to close our funding.
Speaker Change: The time that was invested in financing was completely invested on the technological side, improving light speed.
Speaker Change: On an international scale, we will discuss with our clients and partners and share the idea of Last Speed?LASt Speed.
Speaker Change: We have received regular approval for the use of NMIC-5, not only for transmission applications in Canada, but also for...
Speaker Change: and other non-broadcast services, in order to gain more utility regarding what we can do with this satellite. In any case, there are many activities, like gates, many activities.
Speaker Change: and to gain access to the market worldwide. In any case, it's great to be able to be much more advanced by looking at all this right now.
Speaker Change: Honestly, I'm happy that you asked the question. It feels good to me. We are really making a lot of progress right now. And we are really delivering great results.
Speaker Change: and we have excellent reception throughout the ecosystem.
Speaker Change #100: Users think that Starlink is an excellent service. They want more competitive alternatives. I think people recognize that we are one of those alternatives.
Speaker Change #100: The cost of the sale was half of what it was as a result, as well as the team costs, and obviously there were timing issues with the schedule.
Speaker Change #101: Can you perhaps give us a sense, and I suppose your guidance implies, sorry, your guidance implies, your guidance implies that you will see a sequential increase in both cases.
Speaker Change #101: The numbers move away from one point to another, and you keep increasing.
Speaker Change #101: Obviously, our program, we are building the capacity of our program. We are hiring people, etc. So I think moving forward, you will see that we will take steps, and just to share some numbers and headcounts,
Speaker Change #102: and the incendiary costs that come from that. So, in essence, that's what we will see. We have not given any sort of guidance for the year 2025-2026.
Speaker Change #103: and the investor deck that we published. This gives you an idea of what the revenue construction looks like.
Speaker Change #104: which started in 2027-2028 and also shows you the level of EBITDA. That's what I would say, Chris, if you want to have a view of what's happening in the future, and the implication, you can see what the steps in OPEX will be. But, you know, with such a large program,
Speaker Change #104: What you are saying is absolutely correct. This is what we will see in the team's function as we grow.
Speaker Change #105: I understand, but was there a reason for the variability in Q3?
Speaker Change #106: And, the variability, and what exactly is it, Chris, just so we can answer?
Speaker Change #106: I mean, labor costs were the lowest in a few years.
Speaker Change #106: and, in the same way, the cost of income has decreased.
normal, end of time.
Speaker Change #106: The most important thing is the contract we have with NASA. It's lumpy. We did this work with NASA. It was all about satellite network interoperability.
et...
Speaker Change #106: But it was very clear, so we recognized revenue earlier in the year, and then there were a lot of expenses related to that as well. It didn't contribute much to the EBITDA line. So, I think that would account for a large part of that. And we would have capitalized on engineering as well, in terms of accounting, so that's going to have an impact, and it will also be the case for the laws.
Okay.
OK.
Speaker Change #107: Finally, you have awarded contracts with Inteleon for the Gateway antennas and FATX-5 for the landing stations. Are there any other awards or parts needed on the ground?
at the University of Ottawa, at the University of Ottawa.
Speaker Change #108: We see that there is an operational constellation in orbit, but the service launch has been delayed.
arius www.manifacture-strong-pq.com
and I argue that you will not be in this situation.
from two years in life.
Speaker Change #109: I don't think we will be in this situation. It's not like we just started this program. We have excellent equipment on the landing station side. We have mapped all the landing stations we need. We are in discussion with...
Speaker Change #109: There are several parts in the world at the moment, in terms of where these landing stations are going to go. Intelligence has a good track record in terms of antenna production. So, when we look at our schedule and all the interdependencies, the landing stations arrive when we need them. We will start with a few. There will probably be five or six around the world.
Speaker Change #109: in two years, because when we launch our first satellites, we need to...
Speaker Change #109: and a few landing stations around the world, just for testing and orbiting, etc. of these satellites.
Speaker Change #110: the suppliers for the BSS and OSS for the Constellation. These are up there for the dispenser for the satellites. All of this has been announced.
Speaker Change #110: What interests me at the moment is that we are working with different parties on platform antennas for the different verticals.
Speaker Change #110: It's a good time for the development of platform antennas, and we are engaged with many people on this subject. But the application chain is, at that moment, engaged, announced, and is proceeding ahead of schedule.
Thank you.
Congratulations and keep up the good work.
Chris, thank you.
Speaker Change #111: Thank you. There are no additional questions recorded at this time. I would now like to pass the session to Mr. Goldberg.
Speaker Change #112: Thank you all for joining us this morning and we look forward to speaking with you when we release our fourth quarter and your figures. Thank you.
Speaker Change #113: Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.
This conference is no longer recorded.