Telesat Reports Results for the Quarter and Six Months Ended June 30, 2022

OTTAWA, CANADA - Telesat (NASDAQ and TSX: TSAT), one of the world's largest and most innovative satellite operators, announced its financial results for the three and six-month periods ended June 30, 2022. All amounts are in Canadian dollars and reported under International Financial Reporting Standards ('IFRS') unless otherwise noted. 'I am very pleased with our financial performance for the second quarter and first half of the year, as it positions us to exceed the revenue and Adjusted EBITDA1 guidance we gave at the outset of the year,' commented Dan Goldberg, Telesat's President and CEO. 'Our business continues to generate strong cash flows, ending the first half of the year with $1.5 billion in cash, while delivering industry-leading Adjusted EBITDA margins1 , high capacity utilization and a substantial contractual backlog.'

Goldberg added: 'In the second quarter we continued to purchase in the open market our senior unsecured notes. To date, we have repurchased notes with an aggregate face value of US$160 million, further underscoring our confidence in the future of our business and our view that the notes are trading below fair value. On Telesat Lightspeed, our revolutionary planned Low Earth Orbit satellite constellation, we worked closely with our prospective suppliers over the last quarter to refine key elements of the program. We remain highly confident in the promise of Telesat Lightspeed and expect to have greater clarity on our financing sources for the program toward the end of this year.' For the quarter ended June 30, 2022, Telesat reported consolidated revenue of $187 million, a decrease of 1% ($1 million) compared to the same period in 2021. When adjusted for changes in foreign exchange rates, revenue declined 3% ($6 million) compared to 2021. The revenue decrease was primarily due to a reduction on renewal of a long-term agreement with a North American direct-to-home customer, partially offset by an early termination payment received from a customer in Latin America and an increase in services provided to customers in the mobility market as it continues to recover from the impact of COVID-19.

Operating expenses for the second quarter were $59 million, a decrease of $6 million from the same period in 2021. The change in foreign exchange rates had a minimal impact. The decrease was primarily due to lower non-cash share-based compensation combined with higher professional fees incurred in 2021 relating to Telesat becoming a public company. Adjusted EBITDA1 for the second quarter was $146 million, a decrease of 1% ($2 million) or, when adjusted for foreign exchange rates, a decrease of 4% ($5 million). The Adjusted EBITDA margin1 was 78.4%, compared to 78.7% in the same period in 2021.

Telesat's net loss for the second quarter was $4 million, compared to net income of $53 million for the second quarter of 2021. The negative variation was principally due to a non-cash foreign exchange loss for the second quarter of 2022 compared to a non-cash foreign exchange gain for the same period in the prior year, primarily as a result of the U.S. dollar strengthening in the second quarter of 2022 as opposed to the weakening in the same period in the prior year. This loss was partially offset by a gain on extinguishment of repurchased debt.

For the six-month period ended June 30, 2022, Telesat reported consolidated revenue of $372 million, a decrease of 2% ($6 million) compared to the same period in 2021. When adjusted for changes in foreign exchange rates, revenue declined 3% ($10 million) compared to 2021. The revenue decrease was primarily due to lower revenue from North American direct-to-home services, combined with a decrease in revenues from terminations and reductions on contract renewal of certain services. This was partially offset by increased services provided to customers in the mobility market as it continues to recover from the impact of COVID-19, an early termination payment from a customer in Latin America, and higher revenue associated with the Defense Advanced Research Projects Agency program. Operating expenses for the six-month period ended June 30, 2022 were $123 million, an increase of $18 million from 2021. The change in foreign exchange rates had a minimal impact. The increase was primarily due to higher non-cash share-based compensation, the reversal of a bad debt provision in the first quarter of 2021, which had the impact of lowering operating expenses in the prior year period, and higher expenses (including insurance) in 2022 associated with being a public company. These increases were partially offset by higher professional fees incurred in 2021 relating to Telesat becoming a public company.

Adjusted EBITDA1 for the six-month period was $292 million, a decrease of 3% ($8 million) or, when adjusted for foreign exchange rates, a decrease of 4% ($12 million). The Adjusted EBITDA margin1 was 78.4%, compared to 79.3% in the same period in 2021. For the six months ended June 30, 2022, net income was $56 million, compared to $94 million for the 2021. The decrease was principally due to a non-cash foreign exchange loss compared to a non-cash foreign exchange gain for the same period in the prior year, primarily as a result of the U.S. dollar strengthening as opposed to the weakening in the same period in the prior year. This loss was partially offset by a gain on extinguishment of debt.

About Telesat

Backed by a legacy of engineering excellence, reliability and industry-leading customer service, Telesat (NASDAQ and TSX: TSAT) is one of the largest and most successful global satellite operators. Telesat works collaboratively with its customers to deliver critical connectivity solutions that tackle the world's most complex communications challenges, providing powerful advantages that improve their operations and drive profitable growth.

Continuously innovating to meet the connectivity demands of the future, Telesat Lightspeed, the company's Low Earth Orbit ('LEO') satellite network, will be the first and only LEO network optimized to meet the rigorous requirements of telecom, government, maritime and aeronautical customers. Telesat Lightspeed will redefine global satellite connectivity with ubiquitous, affordable, high-capacity links with fibre-like speeds.

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