Telesat Corporation

Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the Telesat fourth quarter 2025 financial results. All lines having place on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star one. I would now like to turn the conference over to James Ratcliffe, Vice President of Investor Relations. You may begin.

James Ratcliffe Thank you, Desiree, and good morning, everyone. This morning, we filed our annual report for the period ending December 31st, 2025 on Form 20F with the SEC and on CDAR+. 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 see TELUSAT's annual report and updates filed with the SEC. TELUSAT assumes no responsibility to update or revise these forward-looking statements. I will now turn the call over to Dan Goldberg, TELUSAT's President and Chief Executive Officer.

Dan Goldberg Okay. Thanks, James, and thank you all for joining us this morning. I'll say a few words about the business and our focus for this year, and then I'll hand over to Donald to speak to the numbers in more detail, and we'll then open the call up to questions. I'm pleased with the results we achieved last year and the steps we've taken to position Telesat for significant growth and to capture the compelling opportunities we're seeing in the market today. Our geo business faces structural challenges, We've discussed that before, but we came in ahead of our adjusted EBITDA guidance for last year, and within the constraints of what's essentially a fixed-cost business, we've optimized our cost structure where we can to maximize the cash flow of that business. Turning to Leo, I'm very pleased with the significant progress we've been making on Lightspeed, including the very tangible progress on the development of the network. the satellites, the multiple software platforms that power the constellation and support our customers, and the development of the advanced user terminals and landing stations that comprise the terrestrial portion of the Lightspeed network. It's very positive, and it's very exciting. As we've said previously, our first satellites are scheduled to launch at the end of this year, and then we have a very heavy launch cadence planned throughout next year, 2027. Although our expectation has been for Lightspeed to enter full global commercial service around the end of next year, it now looks like we'll enter service about three months later than that, so around the end of Q1, 2028. The cause of the slight slip is the readiness of the chips, the ASICs, which power the onboard processor and phased array antennas of the Lightspeed satellites. These chips were being developed by Satix 5, which some of you may know was acquired by MDA last year. The delivery of these chips is one of the key schedule risks our program faced, and for that reason, we were pleased that MDA acquired Satix 5, given that MDA has much greater financial and technical resources and is also our prime contractor for the Lightspeed satellites. We're tracking the development of these chips pretty forensically. And based on that and the assurances we're getting from MDA, we feel good that the chips will be available in time to support the program schedule. Turning to the commercial landscape for Lightspeed, it's absolutely the case that global market dynamics are involving in ways that I believe are very accretive to the Lightspeed business case. The fact of the matter is, There's a transition taking place across the verticals we serve toward LEO. The impressive progress Starlink has achieved is a clear testament to that. And so, too, are the very significant opportunities we're seeing for Telesat Lightspeed. Last year, as you know, we signed a substantial agreement with Viasat to use Lightspeed for a range of services, prominently among them broadband to commercial airlines. Airlines and business jet users around the world are showing a strong appetite for high throughput, low latency satellite connectivity, and light speed has been optimized to serve their fast-growing requirements. But without a doubt, some of the most compelling near-term opportunities we're pursuing are in the government defense market. I've said on previous calls that we've become increasingly bullish on the government and defense opportunity for Telesat Lightspeed, and the trends there only continue to get better. The geopolitical environment is driving once-in-a-generation increases in defense investments by allied countries globally, with defense organizations increasingly focused on the need for mission-critical, resilient, reliable, high-throughput and low-latency satellite communication services from dependable providers. Indeed, the Government of Canada, in its recently released Defense Industrial Strategy, identified satellite communications as a critical sovereign capability, pledging in the first instance to procure these important services from Canadian companies like Telesat in order to meet its and Canada's allies' sovereignty and security requirements. with the Arctic a particularly important area of focus. And Canada certainly isn't alone in identifying the need for advanced LEO services for defense and sovereignty purposes. The US, the EU, Germany, Italy, South Korea are just a few of the governments that have plans to procure such capabilities. Given the fact that Lightspeed was designed from the very outset to meet the demanding requirements of defense users, Telesat is well positioned to meet those needs. To give you a few examples of those opportunities, Telesat Government Solutions, our U.S. subsidiary, has received an IDIQ contract under the U.S. SHIELD program, making us an approved supplier for the over $150 billion Golden Dome project, in which robust and resilient connectivity plays a key role. In Korea, we recently signed an MOU with Hanwha Systems, a leading provider of defense equipment and services to the Korean and other governments, to work together on leveraging the Telesat Lightspeed solution and Hanwha's defense offerings, as well as to develop user terminals compatible with Telesat Lightspeed. And of course, as we announced in December, TELOSAT and MDA have been selected by the Government of Canada to develop and deploy the Enhanced Satellite Communications Project Polar, known as ESCAPE, a next-generation satellite communications platform to provide connectivity for the Canadian Armed Forces in the far north. This is a significant opportunity for us, and we're working with our partners to get under contract for that as soon as possible. In light of the order of magnitude of the opportunity to serve allied defense users, and as you may have seen in our separate release this morning, we're further optimizing telesat light speed for defense requirements by adding military KA spectrum, or MIL-KA as it's called, to our initial 156 light speed satellites. And we fully expect additional satellites will add to the constellation in the future, will also have MIL-KA capability. Specifically, we're dedicating 500 megahertz of our light speed capacity to MIL-KA, which is 25% of the total spectrum that light speed will operate on. Because MIL-KA spectrum is adjacent to the commercial K-band spectrum used by light speed, the change in frequency plan is a straightforward one. resulting in no adverse schedule impact and only a modest cost impact. And when I say modest cost impact, the cost is around 25 million U.S. dollars, which is, I don't know, less than a half a percent of the total program cost for the first 156 satellites. The 500 megahertz of MIL-KA will replace the same amount of commercial KA band spectrum on the network's user link. That's the link between the satellites and the user terminals that our customers will have. With the gateway link, so that's the link between the satellites and our gateways located at various locations throughout the world, the gateway link is unaffected by the spectrum change. Allied defense users want MIL-K8 capability, and with this change to light speed, we'll be able to offer a very substantial increase to the total current global supply of MIL-K8 with performance capabilities that are vastly superior to the MIL-K8 platforms that allied governments have historically relied upon. Specifically, because we're offering it from LEO on a highly flexible, highly advanced constellation. It will be more resilient, more secure, more high throughput, and lower latency, and it'll cover the entire planet, including the poles, which means, of course, the Arctic. As you can probably tell, we're very excited about this change to light speed and about the opportunities we're seeing out there. We're very bullish on light speed's prospects, and I'd say now more than ever. Donald will take you through our financial expectations for 2026, but I wanted to say a few words about our key priorities for the year. In LEO, naturally, we're laser-focused on successfully and timely deploying Telesat Lightspeed while expanding our revenue backlog in advance of global commercial availability. given the various opportunities we're pursuing, we're very optimistic we'll be successful in meaningfully growing our light speed backlog this year. In our geo business, our focus remains on maximizing the revenue we can generate from our existing satellite fleet, while at the same time being highly disciplined on costs in order to mitigate as much as possible the EBITDA and cash flow impact of the ongoing revenue decline in that business. And of course, we remain very focused on refinancing the Telesat Canada debt, the debt that's tied to our legacy GEO business. We continue to work closely with our advisors who are engaged with the advisors representing some of the larger lenders with the aim of reaching a successful result prior to the initial debt maturities in December of this year. So I'll end my remarks there and hand over to Donald to go over the numbers. And while this is the first time you'll be hearing from Donald, he's already been on board since last October and has come up to speed as we knew he would very quickly. So Donald, that official welcome, over to you.