Thank you for joining us. I would like to welcome everyone to Telesat's Second Quarter 2025 Financial Results Call. I will now turn the conference over to James Ratcliffe, Vice President of Investor Relations. Please proceed.

Thank you, Jimmy. Good morning, everyone, and thank you for joining us today. Earlier this morning, we filed our quarterly report for the period ending June 30, 2025, on Form 6-K with the SEC and on SEDAR+. Our remarks today may contain forward-looking statements. There are risks that Telesat's 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 Telesat's annual report and updates filed with the SEC. Telesat assumes no responsibility to update or revise these forward-looking statements. I'd now like to turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer.

Okay. Thanks, James, and thank you all for joining us this morning. Q2 was 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. In GEO, our team continues to execute in a highly disciplined, focused manner with the Nimiq 5 renewal with DISH in Q4 last year, providing the biggest top line headwind as far as year-over-year comparisons are concerned. In LEO, we're moving forward rapidly on both the technical and commercial aspects of Telesat Lightspeed. We're making steady progress on the development of the satellites, ground infrastructure and the software for the network. I'm very pleased with the work that's taking place. On the commercial side, we're seeing strong interest in Telesat Lightspeed from customers across our target segments, particularly with respect to aero and government users at this time. 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, which for Telesat Lightspeed was above CAD 1 billion at the end of the second quarter and up slightly from the last time we spoke, adjusting for movements in FX. 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 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. And speaking of Andrew, I'll hand over to him now so he can speak to the numbers in more detail before opening the call up to questions.

Thank you, Dan. Good morning, everyone. I would now 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, thus ending the quarter with CAD 547 million in cash. For the second quarter of 2025, revenues decreased by $46 million to $106 million from the second quarter of 2024. 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%. I would also note that the margin in the 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 direct-to-home customer. 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 another North American direct-to-home customer. 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. As usual, we break out the performance of our LEO and GEO segment separately in Note 4 of our financial statements filed on Form 6-K. Interest expense decreased by $8 million during the second quarter when compared to the same period in 2025. The decrease in interest expense was primarily due to the impact of our debt repurchases. Speaking of which to note, the cumulative amount of debt repurchased is USD 857 million at a cost of USD 462 million, an average price of just under $0.53. This also results in interest savings of approximately USD 53 million annually, including previous repayments of approximately USD 356 million of our Term Loan B, our overall debt is reduced by approximately 36%. In the second quarter, we recorded a gain on foreign exchange of $115 million as compared to a loss of $34 million in the second quarter of 2024. 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. The variance was due to lower revenues, loss related to the change in the fair value of financial instruments, smaller gain on debt repurchases, partially offset by the foreign exchange gain I've mentioned a little bit earlier. 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. In terms of capital expenditures incurred, almost all were related to Telesat Lightspeed. During the first half of 2025, we completed the first 2 draws on our financing facilities with the government of Canada and government of Quebec, thus receiving CAD 340 million. Guidance: As you will also have noted in our earnings release this morning, we have reiterated our guidance for 2025. This guidance assumes a Canadian dollar to U.S. dollar exchange rate of CAD 1.42. For 2025, we continue to expect full year revenues to be between $405 million and $425 million. 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. In terms of 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 CAD 900 million to CAD 1.1 billion, which is nearly all related to Telesat Lightspeed. To meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures, we have approximately $550 million of cash and short-term investments at the end of June as well as $2.2 billion available under our funding agreements with the government of Canada and Quebec. At the end of the second quarter, the total leverage ratio as calculated under the terms of the amended senior secured credit facilities was 7.51x. 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. Our 6-K provides the unaudited interim condensed consolidated financial information in the MDA. The non-guarantor subsidiaries are essentially the unrestricted subsidiaries with some minor differences. So with this, I conclude our prepared remarks for the call. Very happy now to turn back to the operator and address any questions you may have. And thank you very much.

Our first question comes from David McFadgen with Cormark Securities.

I have a couple of questions. First, regarding the LEO backlog, when you reported in Q1, it was about $1.1 billion. However, this time, you mentioned it's over $1 billion. Dan, you indicated that it's slightly up compared to Q1, so is it just slightly above $1.1 billion?

It is. So the deal is we report our backlog in Canadian dollars, but for both GEO and LEO, it's a mix of different currencies. For LEO, it's a mix of U.S. and Canadian. Fundamentally, over the quarter, relative to where the U.S. dollar and the Canadian dollar were at the end of Q1, the Canadian dollar has gotten a little bit stronger. So when we take the U.S. 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. That's really what it was. Now we added 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. So anyway, that's what was going on there.

Yes, because you guys announced Arabsat and Vocus after you reported your Q1. So…

To clarify, Vocus was not significantly impactful, and with Arabsat, we have just signed a term sheet or letter of intent, which means it currently has no contribution to our backlog.

Okay. And because I think Space Norway as well as a term sheet, have you concluded them yet?

Same thing. No, not yet. Same thing. We don't count term sheets until we have a final definitive agreement, it doesn't go into backlog.

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 just wondering if you can give us any update there and whether you still think it's possible to conclude this in 2025?

I think we haven't started discussions with the restricted group of debt holders yet, but we expect to do so soon. As for the timeline to reach an agreement on refinancing, it's possible that it could be completed by the end of this year. However, until we engage with them and have a clearer understanding, it's difficult to provide a precise estimate.

Okay. I mean I'm just wondering why it's taking so long to start engaging with them. Can you provide any information on why it's taking so long?

Yes, there's no great mystery. I would say it's a process we need to navigate on our end, collaborating with our advisers and our Board. It is definitely a priority for us. However, we have many other activities happening within the company as well. So, it's a combination of all these factors. I believe we will be ready to engage in the near term.

Okay. Regarding the GEO business, you mentioned a few significant contracts that you renegotiated, which is contributing to the current decline in the business. When do you expect to move past those two deals? Do you anticipate that the decline will start to slow down?

Yes. The declines are evident in the numbers I reviewed earlier. We pointed out in the earnings release two North American DTH customers, DISH with the Nimiq 5 renewal and Shaw, now Rogers, which has ceased using Anik F2. Additionally, we noted a rural broadband program in Indonesia, where new domestic satellites are emerging and capturing some of that business, along with some refinancing questions surrounding that broadband program. On the LEO consulting front, we had some work with NASA, but that contract is somewhat inconsistent. These four factors—DISH, Shaw, the Indonesia Broadband program, and NASA—approximately account for three-quarters of the revenue decline. Regarding the timeline, we completed the DISH renewal, which has been our largest challenge this year, in October of last year. By Q4, we should start to see some improvement, though not completely. Furthermore, while I am not providing guidance for 2026, I do foresee that the upcoming North America DTH contract related to Nimiq 4 with Bell will present additional challenges. Nimiq 4 has more than a year of operational life left, but we do not expect Bell to renew this contract when it expires in October, as they will likely consolidate their activities on Nimiq 6. So, that will be the next contract issue. Overall, I believe that aside from the Nimiq 4 contract, the significant challenges for North America DTH will have been addressed, and we will proceed from there.

Okay. And then just lastly, on the Q1 call, you seemed pretty optimistic about the interest or demand for Lightspeed, considering the geopolitical situation and the market conditions. Do you still maintain that level of optimism?

Yes, 100%. 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. Obviously, we did the Viasat deal. It was technically in Q2, although we announced it when we did our Q1 numbers, and we see more opportunities there. And Viasat is, I'd say, principally about commercial aero connectivity, although I believe they'll leverage Lightspeed for some of their other verticals as well. And we see more opportunities out there on the commercial aero broadband front. And then government. I've said before, it's always a little bit harder to handicap exactly when these government opportunities will land. But we see very meaningful opportunities out there for government, including here in Canada. Canada, like the rest of the U.S. allies is looking to spend more money on defense in part to meet NATO contribution commitments. I think 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. And so yes, I think Telesat has a really meaningful opportunity there. But we've got work to do and nothing is done until it's done. But yes, we remain very bullish on our commercial prospects.

Next question comes from the line of Caleb Henry with Quilty Space.

Questions, 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?

In 2026, thanks for the question. Lightspeed expenses are increasing, primarily due to headcount. We have been a bit slow in the first half of the year. We have hired many people, but we anticipated hiring even more and we believe we will catch up on headcount as the year progresses. This trend will continue into 2026. While we are not providing specific guidance for 2026 numbers, our technical staff will keep expanding. We plan to significantly scale our commercial team starting in 2026. Most of our headcount growth has focused on technical staff to support the development of satellites, gateways, software, modems, user terminals, and similar projects. However, as we approach the service phase, it’s essential to also develop the commercial organization. We have been making efforts in this area, and we expect to accelerate that growth next year. We will provide further guidance as we get closer to that timeline.

All right. 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 user terminals will be available? I think we talked about ThinKom and QEST and some others. Are you expecting those to be ready like the day Lightspeed turns on? Or are they ready now? Kind of how is that pacing alongside the constellations development?

Yes. To discuss user terminals, we need to consider each type individually. There are flat panel antennas and dual parabolic antennas for specific aeronautical applications. Additionally, there are mechanically steered antennas currently available. The mechanically steered antennas are compatible with Lightspeed, provided they operate in Ka-band and have the required Lightspeed modem. These are accessible today. On the flat panel side for aeronautics, there are existing flat panel aero antennas, and I’m recalling what we have announced regarding our development with QEST.

The development with QEST?

Thank you, Michele. We have announced our development of flat panel antennas for the aerospace segment in collaboration with QEST, which has a promising antenna. Other companies are also developing flat panel antennas. We expect that all of our user terminals, including both flat panel antennas and some for community aggregator applications, will be ready before we start commercial services. We've already shared some developments, including our work with Intellian and the recent announcement with QEST. Stay tuned for more updates on this front. We're pleased with the progress in developing user terminals, especially regarding flat panel antennas, which is materializing as expected.

Okay. And then last question, just sort of an obligatory Golden Dome question. I know there's been some discussion about Canada being involved. Is there any opportunity for Telesat Lightspeed to be involved in that? Or is that kind of too far out or too speculative?

It's likely a combination of factors. It's still uncertain how Golden Dome will fully develop, but it appears to be headed towards becoming a network of networks, with space-based infrastructures at various orbits playing a significant role. Canada's involvement remains an open question, although from what I've read, the U.S. seems open to Canada participating. So, that aspect is still unresolved. However, I believe that Lightspeed, due to its capabilities and its orbit at approximately 1,300 kilometers, could provide valuable contributions to Golden Dome. We're monitoring this closely and ensuring that decision-makers are aware of what Lightspeed can offer. We are investing billions in Low Earth Orbit because we are confident that our industry and the world are shifting towards this area across various sectors like broadband connectivity for planes, ships, rural communities, and government vehicles. The overarching trends indicate a move toward LEO, which is challenging and not widely deployed. Specifically, projects like Golden Dome require multiple networks to maintain resiliency. Therefore, we are optimistic about the future role of Lightspeed. Thank you for your question.

Next question comes from the line of Edison Yu with Deutsche Bank.

I want to start off on Lightspeed. You highlighted aero and government. Could you shed some light on the discussions around pricing and usage dynamics going on? Obviously, you had put out some forecasts in the past about the kind of revenue you're going to generate. And I assume there was some pricing embedded in that. Are those kind of discussions implying pricing is where you think it is? Is it better or worse? And also in terms of the usage patterns, is it fixed versus variable? Just curious if you could shed more light on those elements.

Yes, I'll share what we see currently. We definitely have a model for Lightspeed that is tailored for each vertical. Our pricing is based primarily on a per megabit basis in each vertical, which also varies depending on the type of user terminal. Generally, the larger the antenna, the more efficient the link becomes, allowing for a lower rate per megabit. In contrast, a smaller antenna tends to introduce more inefficiencies, which affects the pricing. To give you an idea of how our model works, for the deals we've secured so far, the pricing has generally matched or exceeded our expectations. We've been realistic about our pricing strategy, aiming to execute effectively. We anticipate that pricing might decrease over time, but currently, the contracts we've finalized show prices consistent with or above our projections. This trend holds true for the discussions about pipeline opportunities as well. At this early stage of Lightspeed, particularly as we won't be operational until the end of 2027, we see the strongest opportunities in the aerospace sector, as partners need to prepare airlines well in advance for Lightspeed. Planning cycles in aerospace are among the longest, while maritime and terrestrial backhaul are shorter, and governments also tend to plan far ahead. These two sectors are currently where we are gaining significant traction. Additionally, I’ve been pleasantly surprised by the volume of engagement, even with Lightspeed not going live for another couple of years.

Understood. I appreciate the detailed information. I wanted to ask about the maritime sector. You mentioned that it has a shorter cycle time. Is that a market you plan to pursue fairly aggressively? I would assume that the pricing dynamics there are likely less favorable than in aerospace or government. To your point, is it primarily about the cycle time, or do you believe it involves more pricing competitiveness?

No. So we will absolutely be pursuing maritime. Today, maritime probably represents, I don't know, a little bit more than 5% of our total revenues, 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. 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 we'll be absolutely addressing that market with Lightspeed cruise, maritime transport, high-end yachts, the energy kind of offshore market. All of that, we think, is very promising.

Understood. Understood. And last one, I actually wanted to shift to the GEO side. I realize you're not providing kind of exact numbers going forward, but can we assume that GEO should at least be from a stand-alone basis, cash flow accretive or cash flow positive in the next few years? And if so, like when do you think that kind of becomes neutral or drag? Or 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 it sort of trickles down?

I'm not an expert in finance, but I believe the situation with GEO is quite clear. It is currently generating significant cash, and since we haven't invested in new GEO satellites, our capital expenditures are low. Maintenance capital expenditures for GEO are minimal, and we manage operating expenses effectively. We report our different segments separately, and GEO continues to show a strong EBITDA margin, indicating we operate this business efficiently. There is nearly $1 billion in backlog for GEO, and we frequently have renewals that help maintain it. Overall, GEO is free cash flow positive and contributes positively to our cash reserves for the foreseeable future. The dynamics might change in a couple of years if we decide to invest in new GEO satellites, which would lead to cash outflows to balance incoming cash flows. We are interested in building a new GEO satellite if the business case is solid. For the past ten years, we've struggled to establish a viable business case for either new or replacement GEO satellites due to market conditions, but we still see potential opportunities. We are actively working to develop a robust GEO business case, which defines our current outlook.

Yes absolutely, Dan. I agree.

And our next question comes from Walter Piecyk with LightShed Partners.

Dan, with Kuiper gaining some traction in launches, can you provide an update on your competitive analysis regarding their approach to a similar market and whether they are being considered for any of the business opportunities you are pursuing ahead of your LEO launch?

Walter, yes. We always knew that Kuiper was on its way. Occasionally, some people questioned Amazon's commitment to Kuiper, but I was confident that they were very serious about it, and I still believe that. I think it will be a capable constellation, much like Starlink. They are targeting the same markets as us, in addition to consumer broadband. As you know, we are not focusing on the direct-to-consumer market. We see Kuiper actively marketing themselves across the various areas we are interested in. So to sum it up, nothing has changed from my perspective. We were aware they were coming, and while they are launching a little later than we expected, they are now starting their rollout.

Do you see them in RFP processes though or no?

Yes, that's a good question. The airlines definitely engage more in formal RFPs, and we usually support our channel partners in those processes, which gives me less visibility. I assume they are targeting the aero segment, which has so far been successfully secured by the incumbent providers like Viasat, Gogo, Panasonic, and Hughes. Starlink is also active there, and I assume Kuiper is as well. Additionally, there are various government opportunities globally. Overall, I think they will have a strong offering and gain significant traction in the market, and I believe we will too. It's a large market, and we have differentiated capabilities.

Is there value proposition enhanced because of their ability to tie it into AWS?

I think they utilize a vast ecosystem, and this will benefit them. They have significant strengths in software development and device creation. Amazon is clearly one of the biggest companies globally, and they have Amazon Prime. I believe we will use all of these advantages effectively.

Regarding the tactical aspect, AST is currently sourcing some spectrum from Ligado, which I've previously inquired about on past calls. They seem to have identified additional S-band spectrum today. Additionally, Starlink appears to be pursuing more spectrum from EchoStar through an FCC process, showing some positive momentum there. I know I've asked this multiple times over the years, but I want to revisit it. Just because others are exploring this doesn't necessarily mean you have to as well. I'm curious about your interest or discussions regarding the development of your satellites that might allow for integrating more spectrum. Also, I'm interested in your thoughts on why this might not be essential for the future of connectivity, especially given that some competitors, including Starlink, are seeking to expand their spectrum capacity.

So we're still sticking to our knitting in terms of enterprise broadband connectivity. We're well aware what others are doing in the direct-to-device market, 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 is 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. We'd lose schedules. So that's not something that we're being distracted by. And so yes, I mean, to come back to it, Lightspeed is a significant undertaking from an engineering perspective, a commercial perspective, a regulatory perspective, a CapEx perspective. And so we've got to stay focused on that, and we are 1,000% focused on that, and I think making really good progress. I think the value creation opportunity for Telesat, if we execute well on our Lightspeed plan is massive. And so we have to stay focused to capture that. On the spectrum front, the FCC, it sounds like, is going to take another look at the portion of the C-band that they did not claw back an auction for 5G services. We continue to operate on C-band in North America. So maybe there's an opportunity there, but I don't think that's Telesat building a direct-to-device constellation. That's not on our radar.

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.

Okay. Well, operator, thank you, and thank you all for joining us this morning, and we look forward to chatting with you again when we release our third quarter numbers. So thank you.

Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.