Q2 2025 Telesat Corp Earnings Call

Speaker #3: Thank you for standing by at this time. I would like to welcome everyone to Telesat's second quarter 2025 financial results call. All lines have been placed on mute to prevent any background noise.

Speaker #3: After the speakers' remarks, there will be a question and answer session. If ou would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.

Speaker #3: Thank you. I would now like to turn the conference over to James Ratcliffe, Vice President, Investor Relations. Please go head.

Speaker #4: Thank you, Jenny. Good morning, everyone, and thank you for joining us today. Earlier this morning, we filed our quarterly report for the period ending June 30th, 2025, on Form 6K with the SEC and on Cedar Plus.

Speaker #4: Our remarks today may contain forward-looking statements. There are risks that Telesat's actual results may differ materially from the written results contemplated by the forward-looking statements, as a of known and unknown risks and certainty.

Speaker #4: For a discussion of known risks, please see Telesat's annual report and updates filed with the SEC. Telesat assumes no responsibility to update or revise these forward-looking statements.

Speaker #4: I'd now like to turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer.

Speaker #5: Okay. Thanks, James, and thank you all for joining us this morning. Q2 is in line with our expectations, and I'm pleased with Telesat's performance in the first half of this year, in both our geo and leo segments.

Speaker #5: In geo, our team continues to execute in a highly disciplined, focused manner, with the Nimic 5 renewal with DISH and Q4 last year providing the biggest top-line headwind as far as year-over-year comparisons are concerned.

Speaker #5: In leo, we're ing forward rapidly on both the technical and commercial aspects of Telesat Lightspeed, where making steady progress on the development of the satellites, ground infrastructure, and the software for the network.

Speaker #5: I'm very pleased with the work that's taking place. On the commercial side, we're eing strong interest in Telesat Lightspeed from customers across our target segments, particularly with respect to aero and government users at this time.

Speaker #5: We have a robust pipeline of opportunities at various stages of development, and we're working hard to turn them into completed deals and committed backlog.

Speaker #5: Which for Telesat Lightspeed, was above $1 billion Canadian dollars at the end of the second quarter, and up slightly from the last time we spoke adjusting for movements in FX.

Speaker #5: We'll update you on our progress as the year unfolds. Lastly, and as we've noted before, we remain focused on refinancing the restricted group debt that begins to come due in December next year.

Speaker #5: And expect to engage with our lenders in the near term. We've also been progressing with our search for a new CFO, given Andrew's planned retirement, and we expect to have some clarity there in the near future as well.

Speaker #5: And speaking of Andrew, I'll hand over to him now so that can speak to the numbers in more detail. Before opening the call up to questions.

Speaker #6: Thank you, Dan. Good morning, everyone. A bit now I'd like to focus on highlights from this morning's press release and filings. In the second quarter of 2025, Telesat reported consolidated revenues of $106 million, adjusted EBITDA of $59 million, and year-to-date generated cash from operations of $108 million.

Speaker #6: Those ending the quarter with $547 million Canadian in cash. Million. But in the second quarter of 2025, revenues decreased by $46 million to $106 million, from the second quarter of 2024.

Speaker #6: Operating expenses decreased by $6 million to $51 million, and adjusted EBITDA decreased by $45 million to $59 million. The adjusted EBITDA margin was 55%.

Speaker #6: I would also note that the margin in their geo segment was approximately 70%. The revenue decrease for the quarter was primarily due to a lower rate on the renewal of a long-term agreement with a North American director-home customer.

Speaker #6: Other factors included reductions in services for certain enterprise customers, particularly in Indonesian rural broadband program, lower consulting revenues, and a reduction in services to a lot of North American director-home customer.

Speaker #6: The decrease in operating expenses was primarily due to higher capitalized engineering costs, lower consulting costs, lower share-based compensation, and offset by higher Telesat Lightspeed headcount along with higher legal and professional fees.

Speaker #6: As usual, we'll break out the performance over leo and geo segments separately in those four of our financial statements, filed on Form 6K. Interest expense decreased by $8 million during the second quarter, when compared to the same period in 2025.

Speaker #6: The decrease in interest expense was primarily due to the impact of a debt we purchased. Speaking of which, to note, a cumulative amount of debt we purchased is $857 million US dollars at a cost of $462 million US dollars, an average price of just under $53 cents.

Speaker #6: This also results in interest savings of approximately $53 million annually, including previous repayments of approximately $356 million of a Term Loan B. Overall, debt has reduced by approximately 26%.

Speaker #6: In the second quarter, we recorded a gain of foreign exchange of $150 million, as compared a loss of $34 million in the second quarter of 2024.

Speaker #6: Our net income for the second quarter was $76 million, compared to net income of $129 million, for the same period in the prior year.

Speaker #6: The variance was due to low revenues, loss-related to the change in the fair value of financial instruments, smaller gain on debt we purchased, partially offset by the foreign exchange gain I've ioned a little bit earlier.

Speaker #6: For the first half of 2025, the cash inflows from operating activities were $108 million, and cash flows used by investing activities were $413 million.

Speaker #6: In terms of capital expenditures incurred, almost all were related to Telesat Lightspeed. During the first half of 2025, we completed the first two draws in our financing facilities with the Government of Canada, and Government of Quebec.

Speaker #6: This receiving $340 million Canadian dollars. Guidance. As you will also have noted in our earnings release this morning, we've iterated our guidance for 2025.

Speaker #6: This guidance assumes a Canadian dollar to US dollar exchange rate of Canadian 1.42. For 2025, we continue to expect full-year revenues to be between $4005 and 425 million.

Speaker #6: In terms of operating expenses, excluding share-based compensation, we expect to spend approximately $110 million to 120 million on Telesat Lightspeed this year, compared to $74 million in 2024.

Speaker #6: In terms adjusted EBITDA, we expect to be between $170 million to $190 million. In respect to capital expenditures, and as previously disclosed, we continue to expect our 2025 capital expenditures to be in the range of $900 million to $1.1 billion Canadian, which is nearly all related to Telesat Lightspeed.

Speaker #6: To meet ur expected cash requirements for the next 12 months, including interest payments and capital expenditures, we've approximately $550 million of cash and short-term investments at end of June, as well as $2.2 billion available under our ing agreements with the Government of Canada, and Quebec.

Speaker #6: At the end of the second quarter, the total leverage ratio is calculated on the terms of the amended senior secured credit facilities with 7.51 times.

Speaker #6: Telesat is in compliance with all the covenants in our credit agreements and indentures. A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning.

Speaker #6: Our 6K provides the unaltered interim condensed consolidated financial information in the NDA. The non-guarantor subsidiaries are essentially the unrestricted subsidiaries with some minor differences.

Speaker #6: So with this, I conclude a prepared remark for the call. Very happy now to turn back to the operator and address any questions you may have.

Speaker #6: And thank you very much.

Speaker #3: If, as a reminder, to ask a question, you need to press star, then the number 1 on your telephone keypad. And to withdraw your question, press star 1 again.

Speaker #3: We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of David McFadron with CarMax Securities. Caroline is open.

Speaker #7: Okay. Hi, guys. A couple of questions. So just, first of all, on the LEO backlog, when you reported Q1, you said the backlog was about $1.1 billion, but this time you say it's over a billion.

Speaker #7: So but then, Dan, you said that it's up slightly from when you reported Q1. So it is like slightly above $1.1 then, I ess?

Speaker #5: It is, no. Well, so you know the deal is we report our and David, by the ay, thanks for the estions. We report the backlog in Canadian dollars, but you know for both geo and leo, it's a mix of different currencies for leo, it's a mix of US and Canadian.

Speaker #5: And fundamentally, over the quarter, the and relative to where kind of the US dollar and the Canadian dollar sat at the end of Q1, the Canadian dollar's gotten a little bit stronger.

Speaker #5: So when we take the US dollar backlog and convert it into Canadian dollars, it wasn't showing up with as many Canadian dollars at the end of Q2 as it did at the end of Q1.

Speaker #5: So that's really what it was. Now, we added a little bit of a small incremental leo contract, which on an apples-to-apples basis would have made Lightspeed backlog a little bit higher at the end of Q2 than it was at the end of Q1.

Speaker #5: So anyway, that's what was going on there.

Speaker #7: Yeah, because you guys announced Arabsat and Vocus after you reported your Q1, so.

Speaker #5: Well, to be clear, so Vocus I think Vocus might have been a little something. It wasn't massively material. Arabsat, I think we just signed a term sheet or a letter of intent with them.

Speaker #5: So that has no backlog contribution. At this point, least.

Speaker #7: Okay. And because I think Space Norway as well is a term sheet. Have you concluded that?

Speaker #5: Yeah, same thing.

Speaker #7: With them yet?

Speaker #5: No, not yet.

Speaker #7: Okay.

Speaker #5: Same thing. You know the term we 't count term sheets as until we have a final definitive agreement. It doesn't go in the backlog.

Speaker #7: Okay. All right. So then on the debt negotiations, restructuring the debt, I mean, I believe that you're talking to your debt holders? I was wondering if you can give us any update there and whether you still think it's possible to conclude this in 2025.

Speaker #5: I think you know so I would say that we really haven't started to engage with the restricted group debt holders at this point. We will soon is what our expectation is, but we haven't yet.

Speaker #5: As far as how long it will take to reach an agreement on refinancing, you ow I think it's conceivable that it could get done by the end of this year, but you know until we engage and get a better sense of it, I'd say hard to tell.

Speaker #7: Okay. I mean, I'm just wondering why it's taking so long to start engaging with them. It's just can you provide any information on why it's taking so long?

Speaker #5: Yeah, there's no great mystery. I'd say that you ow it's a process that we need to go through on our side, working with our advisors.

Speaker #5: Working with our board. It is absolutely a priority for us, but obviously, we've got a lot of other things going on at the company as well.

Speaker #5: So anyway, it's a combination of all of that, and but I think that, as I said, I ink we'll be in a position to engage in the near term.

Speaker #5: Yeah.

Speaker #7: Okay. And then just on the geo business, you know, ou referenced a couple of big contracts. That's you know, you renegotiated those and that's why the business is declining the way it is.

Speaker #7: I mean, when do you lap that or those two deals, and then do you think the decline would ease up?

Speaker #5: Yeah. You know, so look, the decline's I mean, I was looking at the numbers earlier. Obviously, you ow, and we highlight in the earnings release basically two North American DTH customers.

Speaker #5: So one was DISH, on the Nimic 5 renewal. The other one would be Shaw. Now, Rogers, which is no longer using Anac F2. And then the other two that we highlighted were a rural broadband program in Indonesia, where some Indonesian domestic satellites have come online and are taking some more of that business.

Speaker #5: And I also think just that whole broadband program was sort of getting refinanced or there were some questions around its funding. And then lastly, on the leo consulting side, we had, you know, been doing some work with NASA, but that, you know, is sort of a lumpy contract.

Speaker #5: Those four things, DISH, Shaw, Indonesia Broadband, and NASA, account for roughly three-quarters of the decrease in revenue. So as far as when things kind of flush out, I ink we did the DISH renewal.

Speaker #5: That's been the biggest headwind this year. We did that in October of last year. So you ow it'll have, well, come Q4, we'll start to kind of get even with that, not entirely.

Speaker #5: And then I'd say the other thing that, and again, not giving guidance for 2026, but I'd say the other North America DTH contract, that will provide a headwind.

Speaker #5: It would be Nimic 4. Nimic 4, is with Bell. that satellite, has about another year-plus of life on it, but it's not our expectation that Bell will renew.

Speaker #5: When that contract comes up in October, you know, they'll they'll consolidate their activities on Nimic 6. So that'll be, you ow, you know, kind of the next contract, that that that's coming up that that I think, will provide a headwind.

Speaker #5: But but at any event, so, you know, we'll we'll we'll ive guidance for 2026. I'd say that, yeah, some of the big headwinds on the North America DTH side, with the exception that Nimic 4 contract, will have flushed way through.

Speaker #5: and then, and then we'll from there.

Speaker #7: Okay. And then just lastly, on the Q1 call, you seem pretty optimistic on the interest or demand for for Lightspeed, you know, just given what's appening.

Speaker #7: Geopolitically, or just what's happening in the market. Are you still, do you still have the same level of optimism?

Speaker #5: Yeah, 100%. You know, I noted in my remarks that the pipeline for Lightspeed is robust. I noted that that's particularly the case for Aero and for government.

Speaker #5: You obviously, we did the bias site deal. It was, you ow, technically in, Q2, although we announced it when we did our Q1 numbers.

Speaker #5: And we see more opportunities there. And, and, and bias site, you know, is, I'd say, you know, principally about commercial aero connectivity, although, although I believe the leverage Lightspeed for some of their other verticals as well.

Speaker #5: And, and I, and we see more opportunities out there on the commercial aero broadband front. And, and, and, and then government. you ow, I've said before, it's always a little bit harder to handicap exactly when you know these government opportunities will land.

Speaker #5: But we see very meaningful opportunities out there for government, including here in Canada, Canada like the rest of the US allies is looking to spend more money on defense and part to meet NATO contribution commitments.

Speaker #5: I ink Telesat Lightspeed is very well-positioned to meet the government's requirements in terms of Northern sovereignty, NORAD modernization, making capabilities available to their allies.

Speaker #5: And so yes, I think Telesat has a really meaningful opportunity there. But you know we've got work to do, and nothing's done until it's done.

Speaker #5: But yeah, we remain very bullish on our commercial prospects.

Speaker #7: Okay. All right. Thank ou.

Speaker #3: Next question comes from the line of Caleb Henry with Qilti Space. Caroline is open.

Speaker #8: Hi. Good morning, everyone. Question, a couple of questions. First is just on OPEX for Lightspeed. Can you provide some visibility into how that's expected to trend throughout 2026 as the constellation moves closer to service entry?

Speaker #5: In the 2026, hey, Caleb. Thanks for the question. So, I mean, Lightspeed expenses are ramping. Particularly, driven by headcount. I'd say we are a ittle bit slower off the mark for the first half of the year.

Speaker #5: We expect—no, we've hired a lot of people, but we're expecting to hire even more. We believe we'll catch up from a headcount perspective toward the back end of the year.

Speaker #5: And yes, that will continue to ramp into 2026. Again, you know we're not giving guidance on 2026 numbers, but our technical staff will continue to grow.

Speaker #5: We'll starting to scale our commercial team in a more meaningful way, starting in 2026. I mean, so much of the headcount growth that we've had has been mostly around technical staff to support the build-out of satellites, gateways, writing software, modems, user terminals and the like.

Speaker #5: But as we get closer to in-service, we've got to scale the commercial organization as well. And we've been doing that, but that'll accelerate in the next year.

Speaker #5: So anyway, but again, you know we'll ide guidance on that as we get closer to it.

Speaker #8: All right. Thanks. And then I know we talked last call a little about the state of user terminals and gateways and things, but can you provide a little more clarity on like when you think the user terminals will be ailable?

Speaker #8: I think we talked about Thincom and Quest and some others. Are you expecting those to be ready like the day Lightspeed turns on, or are they ready now?

Speaker #8: Kind of how is that pacing alongside the constellation's development?

Speaker #5: Yeah. So, I mean, you ow to talk about user terminals, you kind of need to go vertical by vertical. And then you have to, you know, there are flat-panel antennas.

Speaker #5: There are, ou know, dual-parabolic for certain applications. For aero, there are the more mechanically steered antennas that, you know, exist today. And so you know the mechanically steered antennas, they're viously here now.

Speaker #5: And Lightspeed, is sort of backwards compatible with those provided that their operating in KA band. And recognizing also that, you know, they'll quire a Lightspeed modem.

Speaker #5: And so, those are available today. On the flat-panel side, for aero, there are flat-panel aero antennas today. And I'm trying to remember what we've announced and what we haven't announced.

Speaker #5: So the development would guess. Yeah, thank you, Michelle. So, so we've announced, on, flat-panel antennas for the aero segment. development, effort with CAST. which has a promising, antenna.

Speaker #5: But, but, but there are others as well. who are, developing flat-panel antennas. So, and yes, we expect those will be, frankly, all of our user terminals, whether they're flat-panel antennas or in some cases for, I don't ow, kind of community aggregator applications.

Speaker #5: That all of our user terminals, including the antennas, obviously, will be available, in advance of, of our entry into commercial service. So, you ow, we've announced some of that already.

Speaker #5: We announced, development with Intellion. we've, you ow, just now referenced the development with CAST. and I'd say stay tuned. You know, we'll, you'll, we'll, 'll, we'll make some other announcements too on that front.

Speaker #5: But it, but it, it feels good. I mean, we always expected there would be good developments on the user terminal front, particularly with respect to flat-panel antennas.

Speaker #5: And, and that is very much a materializing.

Speaker #8: Okay. Thanks. And then last question, just sort of in the obligatory golden dome question. I know there's been some discussion about Canada being involved.

Speaker #8: Is there any opportunity for Telesat Lightspeed to be involved in that, or is that kind too, too far out or too ulative? You know.

Speaker #5: It's probably all of that. I, I, you ow, only too far out and too speculative. I mean, I ink it's fair to say that golden dome is something that's still being defined.

Speaker #5: It, it, it, it looks like it will be a network of networks, and that space-based architectures, at various orbits, will form, an important part of golden dome.

Speaker #5: whether Canada participates or not, I think is still an open question. I think, from what I've just read, the US is receptive, to Canada participating.

Speaker #5: And, and, and so anyway, so I, I'd that's still, you know, an open question. But, but I believe that Lightspeed, given its capabilities, given, the orbit, that we're flying at up at around 1,300 kilometers, yes, I think that Lightspeed could make valuable contributions to, golden dome.

Speaker #5: And so, so that's something that we're watching. We're certainly making sure that decision makers are aware of the capabilities of Lightspeed. And so, yeah, look, I think, you ow, there's a reason we're esting billions of dollars in in leo.

Speaker #5: We're absolutely convinced that the world and our industry is moving to leo. In all of these different verticals that we're talking about, broadband connectivity, broadband to planes, to ships, to rural communities, to moving vehicles, for government users, it's just the, the, the for us, the, the overall trends are pointing to leo.

Speaker #5: And leo's hard, and there aren't that many of them. And particularly when you talk about, you ow, architectures like golden dome, they need to be multiple networks to ensure resiliency and so, yeah, we're, we're, we're very bullish about the, the positioning that Lightspeed will have.

Speaker #5: So thanks for the estion.

Speaker #8: Thank ou.

Speaker #3: Next question comes from the line of Edison U with Deutsche Bank. Caroline is open.

Speaker #8: Hey, good morning, everyone. Thanks for for taking our estions. One start off on, on Lightspeed, you, you highlighted aero and government. Could you shed some light on the, the discussions around pricing and usage?

Speaker #8: dynamics going on? obviously, you had put out some, some forecasts in, in the past, but I got to kind of venue going to generate.

Speaker #8: And I, I assume there was some pricing embedded in that. Are those kind of discussions implying pricing is, is where you think it is?

Speaker #8: Is it better or worse? And also in terms of the usage patterns, is it, you know, fixed versus variable? Just curious if you could shed more light on, on, on those elements.

Speaker #5: Yeah. I mean, I'll tell you, you know, what we see right . So for sure, you know, we've got, a model, for Lightspeed, it goes vertical by vertical.

Speaker #5: We've got, you know, pricing assumed on a, you know, basically per megabit basis in every vertical. It depends on, what user terminal one uses as well.

Speaker #5: Obviously, the bigger the antenna, the, the, the more efficiency you get on the link. And so, you know, if someone's using a big antenna, tend to give them a lower rate per megabit.

Speaker #5: If have a little antenna, it means they're more inefficiencies in the link, and you're trying. So anyway, so, so just to give you a sense of what, you know, how that, that model's built up.

Speaker #5: And then, for the deals that we've closed to date, I'd say probably on balance, the, the pricing is the, the, the pricing that we're seeing in the market and deals that we've closed is consistent with or higher than our price.

Speaker #5: And I’d say we’ve been not pessimistic on our pricing, but you know, we built a model that, yeah, we think that we can execute on.

Speaker #5: So, so we envisioned a world where pricing would, be lower than where it is today. And would come down over time. You know, I'd ove to be proven wrong on that, but that's what we've assumed.

Speaker #5: And the pricing that has been in the contracts we've closed on has been either consistent with or north of what's in our model.

Speaker #5: I'd say that's true of the conversations that we're having in terms of opportunities in the pipeline. and so, and, as I said before, where we're seeing the most opportunities at this stage of Lightspeed, and by that, I mean, you know, we're not going to be in-service until the end of 2027.

Speaker #5: Where we're seeing the opportunities right now, the most concrete opportunities, are in aero because they are unique a longer horizon for our partners to equip those airlines to be ready for Lightspeed.

Speaker #5: So the, the planning cycles in aero tend to be among the longest. Shorter in maritime, shorter in, I'd say, terrestrial backhaul. and then there's government.

Speaker #5: And the government's tend to, you ow, plan well in advance. And so, so those are the two verticals right now I'd say we're, we're getting the most traction.

Speaker #5: so yeah. And then as far as volumes, yeah, I, I've been, pleasantly surprised. I'm, 'm glad to see that we're getting as much real traction as we're getting.

Speaker #5: Even with Lightspeed still, you ow, not coming online, until, you know, basically another - what is it? - year and a half or something like that.

Speaker #5: Or more. Two and a half.

Speaker #8: Understood. I appreciate the, the, the detailed color. wanted to, to ask about maritime. I, I know you said you just said that, ou know, it's kind of shorter, cycle, cycle time.

Speaker #8: is that a market you think you will, will pursue? I guess, fairly aggressively. I, I would assume the, the pricing dynamics there are probably less favorable than, than aero government.

Speaker #8: But perhaps, perhaps to your point, it, is it just cycle time? Or do you ink that it's more of a pricing or, or pricing, competitive there?

Speaker #5: No. So I, we, we will absolutely, be pursuing maritime today. You know, maritime probably represents, I don't know, a little bit more than 5% of our total revenues.

Speaker #5: And that's down. That's down a lot. It's been cannibalized by Starlink, because the maritime users like, from what the market is telling us, they like the leo value proposition.

Speaker #5: They like the low latency. They like the high throughput. They like the smaller antennas. and so maritime is a great market for leo. And, and, and will be, absolutely adjusting that market with Lightspeed.

Speaker #5: Cruise, maritime transport, you know, high-end yachts, the energy kind of offshore market, all of that we think is, very promising.

Speaker #8: Understood. Understood. And, and last one, actually wanted to, to shift to, to geo side. I, I, I realize you're not providing kind of exact numbers going forward, but, can, can we can we assume that geo should at least be from a kind of standalone basis, cash flow accretive or cash flow positive, in the next few ?

Speaker #8: And, and if so, like when do ou think that kind of becomes neutral or drag or, you know, I understand it could be quite a few years away, but how do you think about, I guess, the cash generation ability of geo as a sort of trickles down?

Speaker #5: Well, I'm no finance guy. But it's pretty straightforward, I think, on geo. I mean, the reality is it's generating a lot of cash right now.

Speaker #5: And, and because we haven't been building new geo satellites, it means you know there's not a lot of CapEx going out. There's very little maintenance CapEx in terms of, geo.

Speaker #5: I ink we do a really good job managing the, operating expenses around geo. We report our segments separately, and you can see that geo still has a, you know, very favorable EBITDA margin.

Speaker #5: So, so we run that business very efficiently. And we still have almost a billion dollars of backlog left on geo. And every quarter, you know, we've got new stuff that comes up for renewal.

Speaker #5: So net, net, we've been running backlog down, but, but we replenish some of it along the way with some renewals. And so, so in terms, so, so yes, for the foreseeable future, it's, it's free cash flow positive.

Speaker #5: It's accretive to our cash position. and that would, I think, only change in the next couple of years if we had a new opportunity.

Speaker #5: To invest in GEO. And so then we're, you know, building a new GEO satellite. So there's cash flows out that would offset the cash flows in.

Speaker #5: So anyway, so that's what it looks like right now. And, and you know, we'd love to build a new geo satellite, provided that we feel good about the business case.

Speaker #5: For the last, like, 10 years, we haven't been able to close a business case on either a new geo satellite or even a replacement geo satellite, just given everything that's been going on in the market.

Speaker #5: but we still see some opportunities out there potentially. And, and so, so yeah. So, ou know, and, and, and we continue to work hard to, develop, you ow, a sound, geo business case.

Speaker #5: So that I, you know, that, that I think is what the outlook looks like yet. Absolutely, Dan. I ree.

Speaker #8: Great. Thank you very much.

Speaker #3: Again, if you would like to ask a question, press the corresponding key on your telephone keypad. Our next question comes from the line of Walter Piechik with Lightshad Partners.

Speaker #3: Caroline is open.

Speaker #8: Thanks. Hey, Dan. With, Kiper, kind of getting a little momentum, at least in launches, just curious if can you update us on, and, and they seemingly are going after a similar market.

Speaker #8: just kind of your competitive analysis there and whether they're under consideration for any of the, the business that you've been attempting win ahead of, your leo launch.

Speaker #5: Hey, Walter. yeah. So, look, we, we, we always knew Kiper was coming. every once in a while, if somebody would question how committed Amazon was to Kiper, I was always convinced that, this was something that they're very, very serious about.

Speaker #5: And I continue to believe that. And I think it will be, like Starlink, a very capable constellation. and you're right. they're, like Starlink, you know, focused on, the same verticals that we're focused on.

Speaker #5: Plus, consumer broadband. So again, like Starlink, we're, we're not, as ou know, focused on the B2C direct-to-consumer market. and yeah, we, we see, Kiper, out there, in the market, pitching, you ow, themselves, in all these different verticals that we're, that, that, that we're focused on.

Speaker #5: So, which is all to say, as far as I'm concerned, nothing's changed. we new they were coming. maybe on balance, they're coming a little bit later.

Speaker #5: than we had anticipated. But, but, but, but they're, you know, they're, they're starting to launch now.

Speaker #8: Do you see them in RFP processes, though? Or no?

Speaker #5: Yeah, that's a good question. I mean, the folks that kind of do more formal RFPs, you know, it seems like the airlines certainly do that.

Speaker #5: We, we tend to support our channel partners in those RFPs. So, so I, I, I have a little less visibility there. But I would say, I assume, they're, you know, pitching, in the aero segment.

Speaker #5: to date, you know, the, the, that, segment, is being, successfully won by the incumbent operator. So the bias sites of the world, the go-go's Panasonic, Hughes has made some inroads there.

Speaker #5: And then, of course, Starlink. But I, you know, I assume that Amazon—I'm sorry. You know, Kuiper's out there as well.

Speaker #5: And then we see them. You know, there are different government opportunities all around the world. So, yeah, I mean, it is as we expected.

Speaker #5: and I think that they'll have a great offering. I ink that they'll get a lot traction in the market. And I continue to believe that, we will too.

Speaker #5: It's a big market. We, we've got certain capabilities that, that are, you ow, differentiated. so yeah.

Speaker #8: I mean, is there, is there a value proposition enhanced because of their ability to tie it into AWS?

Speaker #5: I think, I mean, look, they leverage a large ecosystem, and they will benefit from that. They leverage a large ecosystem in terms of AWS.

Speaker #5: They have deep, you know, capabilities in terms, obviously, software development and development of devices. I mean, Amazon's obviously one of the largest companies in the world.

Speaker #5: They've got Amazon Prime. So, they'll leverage all of those things, I think, you know, in a pretty effective way.

Speaker #8: Okay. And then on the, on the technical side, you know, you have this company, AST, that, that has, is in the process of, of sourcing, some spectrum from Legato, something I've asked you historically on, on past calls, as you know.

Speaker #8: I think there's some other SBAN that they identified today. But also, Starlink, I think, has been attempting to acquire additional spectrum from what's now EchoStar, through an FCC process.

Speaker #8: We'll see how that goes. But it seems like there's some momentum there. I'm just curious, and again, I know this is a question I've asked you many times over the years, but I just want to refresh, not just because if your peers are doing it, doesn't necessarily mean you have to do it.

Speaker #8: But, is, is there any interest or discussion, or kind of where are you in the development process of your birds in that you could integrate additional spectrum?

Speaker #8: And why or, or why is that not important? for the future of connectivity, when you're seeing some of your peers, let's put AST aside for a second, but even Starlink, right, looking to add additional spectrum to their constellation.

Speaker #5: So, we're still sticking to our knitting in terms of, enterprise broadband connectivity. we're well aware, what, you know, others are doing in the direct-to-device market.

Speaker #5: And we, and we wish them well. But we don't really have the spectrum for that. And our satellites that we're building today are absolutely optimized—every amp, every kilo of mass.

Speaker #5: We are absolutely devoted to our core mission. We do not have the capability to modify them in a way to add antennas or payloads to do direct-to-device. The satellites would look massively different than they do.

Speaker #5: We'd lose schedule. So, so that, that's not something that we're being distracted by. and so, yeah, I mean, to come back to it, Lightspeed is a, is a significant undertaking.

Speaker #5: from an engineering perspective, a commercial perspective, a regulatory perspective, a capex perspective. And so, and so, we, we've got to stay focused on that.

Speaker #5: And we are, 1,000% focused on that. And, and I ink making really good progress. I think the value creation opportunity for Telesat, if we execute well on our Lightspeed plan, is massive.

Speaker #5: And so, we have to stay focused to capture that. You know, on the spectrum front, the FCC sounds like it is going to take another look at the portion of the CBAN that they did not, you know, claw back and auction for 5G services.

Speaker #5: We continue to operate on CBAN in, in North America. so maybe there's, you know, an opportunity there. But I don't think that's Telesat building a direct-to-device, constellation.

Speaker #5: That's, not on our radar.

Speaker #8: Got it. Thank you.

Speaker #5: Thank you.

Speaker #3: Seeing no further questions, that concludes our Q&A session. I'd like to turn the call back over to Dan Goldberg for closing remarks.

Speaker #5: Okay. Well, operator, thank you. And thank you for joining us this morning. And we look forward to chatting with you again when we release our third quarter numbers.

Speaker #5: So thank ou.

Speaker #8: Thank you very much.