Specialist
Former divisional leader at Telesat
Agenda
- Telesat’s (TSE: TSAT) operating environment – industry consolidation and LEO (low Earth orbit) and GEO (geostationary Earth orbit) satellite market growth
- Competition from Eutelsat (PAR: ETL), Viasat (NASDAQ: VSAT), SpaceX and others
- Satellite network health and technological developments
- Outlook for Q4 2022 and beyond, highlighting Lightspeed opportunities and challenges
Questions
1.
What’s your overview of Telesat’s operating environment? What 2-3 trends or drivers are impacting the business?
2.
How has Telesat evolved over time and can you contextualise where it is right now?
3.
You mentioned Telesat becoming more nimble over the years as it looks towards its LEO [low Earth orbit] offering. What changes occurred to allow the company to become a bit more agile?
4.
What are Telesat’s primary offerings and main revenue drivers?
5.
What do the bridge to LEO programmes look like right now? What progress has been made?
6.
How healthy would you say Telesat’s business is right now, especially considering the contractual backlog? Management alluded to about 1.9 billion committed contracts currently.
7.
Can you elaborate on the potential decline over the next couple of years or so, until LEO is up and running? How significant could the decline be? Do you expect a similar 1% or low-single digit? How do you think about the magnitude of that change?
8.
What are your thoughts on Telesat’s capacity utilisation? The most recent numbers indicate 86% or so. Is this a good spot or could it be driven up?
9.
How would you describe Telesat’s sales strategy? You mentioned the company wanting to increase its utilisation number, but this would mean sacrificing some margin. What might be the company’s approach to sales and pricing?
10.
You highlighted Telesat’s Lightspeed network and how important it is for the company’s future success. Could you walk us through this project and what progress has been made? Can you elaborate on any delays and your reaction to Lightspeed so far?
11.
Are there any hurdles to launching more satellites later? Naturally, we’re looking initially at the cost changes, how supply chains were affected overall given the semiconductor issue, meaning pricing could be an issue. Is that a potential factor down the road?
12.
Is there much of a change in terms of Telesat and other players launching different generations of satellites? If we’re looking at a constellation, what is the impact of having a variety of different generations of satellites? Is there notable impact to service? Does it remove or add any extra challenges from an operational standpoint? As different companies look to upgrade craft, how exactly might that impact the overall constellation and associated costs and service?
13.
What’s your overview of today’s competitive dynamics and the positioning of the main players? You already mentioned a couple of the major competitors, as well as the mergers.
14.
As we’re looking at LEO satellites, you mentioned competitors aren’t necessarily what might be seen in the media, in the case of Telesat going after wholesale partner business clients, whereas SpaceX and Starlink will be focusing on consumer. What is the general strategy or logic behind focusing on one client segment? You noted how SpaceX might consider branching out beyond the D2C offering, which has been the most publicised so far.
15.
Do you have any comments about Iridium’s positioning? The company is still around despite its 2019 bankruptcy issues and still has some presence across maritime, aviation and government work as well. Is it relevant again, after coming out of bankruptcy, or somewhat brushed to the side? Would it be on Telesat’s radar?
16.
You mentioned Telesat’s current offering and the impacts of the 2021 Viasat-Inmarsat merger. Could you expand on the effects this merger has on the industry? Are there still some challenges to resolve to realise the merger’s potential? What have the ramifications been across the GEO [geostationary Earth orbit] space?
17.
What did you make of the August 2022 news about Intelsat and SES being in merger talks? What impact might that have? Do you have any other thoughts about Intelsat’s competitive positioning?
18.
How does Telesat differentiate itself? What are the primary drivers when it wins in the marketplace? How does the company try to pull itself out from the field?
19.
How do you think about industry switching costs? Obviously Lightspeed is an offering which hasn’t taken effect yet, so that is one consideration, but typically, what does switching look like? How much of a challenge is it and what’s it like to switch providers for some of the key services?
20.
Looking at Telesat’s approach to pricing in the context of switching costs, do you think there’s much room to raise prices and drive growth, or are there other pressures at play as we look at different offerings and the broader industry?
21.
The bulk of Telesat’s revenue is derived from Canada and the US, which together account for about 80%, with Canada being a slightly larger contributor. That leaves about 20% from the rest of the world – looking across LATAM, EMEA and APAC. What do you make of the company’s international presence, its performance in these other markets and which ones might be important in the future?
22.
How challenging is it to establish partnerships and relationships with VARs [value-added resellers]? Are there many players to consider in terms of those partners, or are there only a select few in each of the markets where there’s not necessarily quite as much choice?
23.
What needs to be done and what challenges can be encountered in terms of building out the channel? You mentioned a 6-9-month timeframe. Is it just a case of committing the time or are there hurdles along the way?
24.
What’s your outlook for industry consolidation and M&A? There have been several large mergers recently, but do you think Telesat would ever be an acquisition target of another company and if so, which players make sense?
25.
You mentioned the impacts concerning the relationship with governments and how that will then influence the regulatory environment. Could you expand on the general regulations in the industry and how that environment impacts Telesat?
26.
What are your thoughts about Telesat’s leadership and CEO Dan Goldberg’s management approach? Are there any other executives to highlight?
27.
What challenges or hurdles are important to highlight for Telesat? Obviously the launch of Lightspeed is very important and you mentioned the impact that a delay could have. What other indicators are worth keeping an eye on in assessing the company’s progress and direction?
