Telesat Corporation · NASDAQ:TSAT
Telesat — Investor Presentation (December 2021)
38 slides from Telesat's investor presentation, Dec 6, 2021
Slide 1: Investor Presentation
Investor Presentation December 2021
Slide 2: Disclosures
Disclosures Note: unless otherwise stated, all values included are in Canadian dollars. This Presentation (together with the information contained herein and the materials accompanying it collectively, this “Presentation”) constitutes confidential information and is provided to you on the condition
Slide 3: Disclosures: Forward-Looking Information
Disclosures Forward-Looking Information This presentation may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, and
Slide 4: Investment highlights
Investment highlights 7 \ Ba
Slide 5: Investment highlights
Investment highlights Telesat (NASDAQ: TSAT) (TSX: TSAT) is a leading global satellite operator with an established, high cash flow generative business and compelling growth opportunities Revenue well-diversified across services and geographic regions with industry leading operating margins As of Se
Slide 6: Management team
Management team Strong track record of operational execution and value creation Michèle Beck Tom Eaton SVP, North President, Telesat American Sales Government Solutions 34 Years of Experience 43 Years of Experience John Flaherty Daniel Goldberg Andrew Browne VP, Business Erwin Hudson Chief Executive
Slide 7: Telesat is a leading global satellite operator
Telesat is a leading global satellite operator 7
Slide 8: Strong global position
Strong global position With highly strategic spectrum and orbital rights and young global fleet with high utilization ~7 years average expected remaining commercial life of satellite fleet Mix of satellites optimized for broadband connectivity and video distribution Certain rights for expansion orbi
Slide 9: High quality, diversified revenue with blue chip customers
High quality, diversified revenue with blue chip customers By Service Type Broadcast 51% Consulting ▲ Leading Direct to Home distributor in North & Other America serving 10M+ subs 2% ▲ Provide full-time and short-term video distribution Broadcast and contribution services for broadcasters, cable 51%
Slide 10: High revenue visibility and predictability
High revenue visibility and predictability ($ mm) Revenue Backlog of $2.3B (9-30-21)/ 2.9x LTM Revenue Beginning of Year Backlog as % of Revenue $ 551 $ 557 80% 83% 86% $ 903 $ 911 $ 448 $ 820 $ 310 $ 218 $ 168 $ 759 $ 722 $ 706 2021 2022 2023 2024 2025 Thereafter 2018 2019 2020 Revenue in Backlog B
Slide 11: Global demand for broadband is growing rapidly
Global demand for broadband is growing rapidly 11
Slide 12: Exponential growth in global broadband demand
Exponential growth in global broadband demand IP traffic forecasted to continue to roughly double every three years Global data traffic (Exabyte per month) 838 716 CAGR 24% 560 416 360 301 255 219 174 137 95 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Source: Ericsson, 2021 12
Slide 13: Low latency critical for quality broadband
Low latency critical for quality broadband Internet, 5G and Cloud Market demands low latency, applications need low latency which GEO and MEO satellite networks cannot deliver Cloud and 5G FCC stipulated low latency (100 ms) as key application criterion for US$20.4B Rural Digital Opportunities perfo
Slide 14: Key market verticals lack quality broadband
Key market verticals lack quality broadband Terrestrial Maritime Aviation Government ~50% of world’s population 400,000+ ships 4B+ aero passengers ~30M users lacks broadband ▲ Providing high throughput ▲ Cruise & Yacht: High quality ▲ Commercial aircraft and ▲ Ships, aircraft (manned and backhaul fo
Slide 15: ~US$430 billion addressable market
~US$430 billion addressable market Growing Telesat’s TAM by 20x FSS TAM today LEO TAM 20251 ~US$430B ~US$430B Terrestrial Maritime Aviation ~US$18B Government Source: ITU, International Civil Aviation Organization, UNCTAD, NSR, International Defense Budgets, US Department of Defense Budgets, Managem
Slide 16: Telesat Lightspeed: world's most advanced LEO network
Telesat Lightspeed is designed to be the world’s most advanced Low Earth Orbit satellite network 16
Slide 17: Telesat Lightspeed
Telesat Lightspeed Design guided by over 50 years of serving best-in-class enterprise customers worldwide Guiding principles Enterprise customer value proposition High Speed Leveraging Telesat’s 50+ Gbps links years of innovations and Low Latency industry firsts 30 to 50 msec High Capacity Multiple
Slide 18: Telesat Lightspeed: most advanced LEO satellite network
Telesat Lightspeed Building the world’s most advanced Low Earth Orbit satellite network 298 advanced satellites will operate in both polar and inclined orbits Designed for true global coverage with more concentrated capacity in high demand areas Expected to have more network capacity than all GEO sa
Slide 19: Telesat Lightspeed: enterprise customer-driven design
Telesat Lightspeed Enterprise customer-driven design, leveraging next generation technologies The only constellation that has all of the following key features, creating an unparalleled enterprise connectivity solution: • ≈4 GHz global priority Ka-band spectrum • On-board processing for dynamic rout
Slide 20: Lightspeed to be manufactured by Thales Alenia Space
Telesat Lightspeed to be manufactured by Thales Alenia Space, The world’s leader in manufacturing and implementing cutting edge global satellite constellations Thales Alenia Space selected as MDA selected to the prime manufacturer and will be provide the responsible for the end-to-end critical direc
Slide 21: Strong market engagement and interest
Strong market engagement and interest Numerous technology demonstrations successfully completed with prospective customers Telcos and service providers recognize Funded development programs with opportunity of enterprise grade Telesat Government and Defense forces Lightspeed ▲ Application ▲ Telesat
Slide 22: Strong Canadian government support
Gov. of Canada Telesat Lightspeed has received strong Canadian government support Gov. of Canada investment1 $1.44 B Low cost, long dated (11.5-20 years), up to approximately 18% is forgivable subject to the satisfaction of certain conditions Gov. of Canada capacity commitment Take or pay agreement,
Slide 23: Telesat has a tremendous growth opportunity
Telesat has a tremendous growth opportunity Driven by explosive global broadband demand In year 5 of Telesat Lightspeed operations, Telesat expects annual Lightspeed revenue to approach 1% of the US$430 billion1 TAM, with adjusted EBITDA margins in line with current performance 1. Excludes broadcast
Slide 24: Telesat strongly positioned for success with Lightspeed
Telesat is strongly positioned for success with Telesat Lightspeed The only constellation designed from the ground up to serve the unique needs of enterprises 50+ years of innovation, industry firsts and engineering excellence Deep operational experience coupled with longstanding blue chip enterpris
Slide 25: Financial highlights
Financial highlights TELESAT. a
Slide 26: Financial highlights
Financial highlights $2.3B Strong Client Retention Drives Recurring Demand and Visibility Revenue Backlog1 $560M Capital Efficient FSS Model with High Asset Utilization and Young Fleet Simple Free Cash Flow2 Demonstrated Operating Leverage and Discipline Enables High Adj. EBITDA ~80%+ Margins Margin
Slide 27: Consistent and stable historical financial performance
Consistent and stable historical financial performance – high operating margins and strong free cash flow Revenue Adj. EBITDA1 80% 83% 86% $ 903 $ 911 $ 820 $ 752 $ 763 $ 653 2018 2019 2020 2018 2019 2020 Beginning of Year Backlog as % of Revenue Adj. EBITDA Margins Simple Free Cash Flow2 3 83 % 84
Slide 28: Strong financial performance and value creation
Strong financial performance and value creation Adjusted EBITDA ($M) Adjusted EBITDA Adjusted EBITDA Margin 80% $618 $331 58% 2007 2021 Q3 LTM Cash Generation and Uses Net Debt/Adjusted EBITDA Ratio 8.3 Between 2007 and Q3 2021, Telesat: • Generated $5.9B in operating cash flow 3.6 • Invested $2.8B
Slide 29: Telesat Lightspeed sources of funds
Telesat Lightspeed sources of funds Telesat Lightspeed estimated CAPEX investment of ~$6.5 billion Sources of funding $1.4B Telesat Investments and Cash Held for Telesat Lightspeed (to 6/30/21) Actual $1.44B Government of Canada Investment Term sheet in place1 Memorandum of $0.4B Government of Quebe
Slide 30: Conclusion
Conclusion 30
Slide 31: Telesat positioned for significant growth and value creation
Telesat is positioned for significant growth and value creation One of the largest and most innovative satellite operators Existing high cash flow generative business underpinned by significant contractual backlog with blue chip customer base, industry-leading operating margins, and young fleet with
Slide 32: Appendix
Appendix 32
Slide 33: Telesat Share Structure
Telesat Share Structure Telesat Share Structure Percent Ownership (combined Description and Class Designation Listing (Ticker) Securities Outstanding basis) Class A Common Shares and Class B Variable Nasdaq (TSAT) 11,907,246 24% Voting Shares of Telesat Corporation TSX (TSAT) Class A and Class B Uni
Slide 34: Telesat's current corporate structure
Telesat’s current corporate structure Voting Trust Public Management ~36% ~26% <1% ~37% Golden Share Telesat Corporation Telesat Partnership Telesat Loral CanHoldco ~63% ~37% Telesat Canada 100% Telesat LEO Holdings Inc. 100% Telesat LEO Inc. 34
Slide 35: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation FY2018 FY2019 FY2020 Revenue 902,932 910,893 820,468 Net (loss) income (90,936) 187,198 245,578 Tax expense (recovery) 61,056 15,122 (4,353) Loss (gain) loss on changes in fair value of financial instruments 18,205 49,672 13,115 Loss (gain) on foreign exchange 259,079
Slide 36: Adjusted EBITDA Reconciliation 2007
Adjusted EBITDA Reconciliation 2007 Successor Entity Predecessor Entity Combined year ended For the period October 31 For the period January 1 to December 31, 2007 to December 31, 2007 October 30, 2007 Operating revenues $ 569,203 $ 111,416 $ 457,787 Net (loss) earnings $ 77,691 $ (4,051) $ 81,742 I
Slide 37: Simple Free Cash Flow Reconciliation
Simple Free Cash Flow Reconciliation FY2018 FY2019 FY2020 Adjusted EBITDA $ 751,894 $ 762,689 $ 653,355 (-) Satellite programs (67,387) (3,668) (75,902) (-) Purchase of property and other equipment (15,997) (8,345) (17,060) (-) Purchase of intangible assets (19,923) (27,597) (30) Simple Free Cash Fl
Slide 38: Investor contacts
Investor contacts: Hugh Harley +1 613 748 8424 Michael Bolitho +1 613 748 8828 [email protected] www.Telesat.com vimeo.com/telesat