Thank you, Michael. Good morning, everyone. This morning I'll share some thoughts on the quarter, and I'll give an update on the business. I'll then hand over to Andrew, who will speak to the numbers in detail, and then we'll open the call up to questions. In the past, I think there's probably been too much overlap in what Andrew and I have each shared in terms of financial performance. I'm really going to try to focus my comments on the key developments in the quarter and the key objectives we're working on. As noted in the earnings release, we're off to a good start for the year. As you know, we had a key contract with the Dish Network on our Anik F3 satellite that came up for renewal at the end of last month.
As I suggested would likely be the case on our Q4 earnings call in March, we ended up getting a partial renewal. Dish renewed a little more than half the capacity they had previously been taking, although at a rate that's lower than what they had been paying. The renewal is for two years with an option to extend for an additional year beyond that. Separately, we entered into a contract with another long-time customer for almost all of the capacity that Dish didn't renew, capacity that will be used for broadband connectivity for the cruise market. With the Dish renewal and the separate agreement for cruise services, we're well positioned to deliver on our guidance for the year.
Taking a step back and looking at the market for satellite services more broadly, it appears to us that the level of activity and the demand for services is somewhat stronger than what we saw at this time last year, with a pricing environment that we describe as broadly stable. With COVID restrictions easing, we've seen more demand in the aero and maritime markets, and it appears also that higher energy prices may be leading to a bit of an uptick in activity in that market as well. With an 84% capacity utilization rate at the end of last quarter, however, one of our challenges tends to be finding available capacity on the fleet to satisfy some of the opportunities we're seeing out there.
Shifting gears, in March and April, we purchased Telesat unsecured notes with an aggregate face value of $60 million, something we believe will be accretive to the company and signals our confidence in our future prospects. Consistent with our covenants, the notes that we purchase will be canceled. We've been authorized by our board to purchase up to an incremental $100 million face value of additional Telesat debt. Finally, turning to Telesat Lightspeed. Last month, we shared the current Lightspeed business plan with the export credit agencies, and now we're fully reengaged with them to secure their commitments for the program. The plan is for 188 satellites plus 10 in-orbit spares, which keeps us within the same CapEx envelope we were working with previously, notwithstanding the cost increases we've seen from supply chain shortages and other inflationary pressures.
On our last call, I said we expected to have a much better sense of where things sit with the ECAs by the end of June, and we're still focused on that time frame. We remain enthusiastic about the prospects for Telesat Lightspeed and remain heavily focused on completing the financing and commencing the full-scale construction of the program. With that, I'll hand over to Andrew and then look forward to addressing any questions.
Thank you, Dan, and good morning, everyone. I would now like to focus on highlights from this morning's press release and filings. In the first quarter of 2022, Telesat reported revenues of CAD 186 million, adjusted EBITDA of CAD 146 million, and generated cash from operations of CAD 43 million, with over CAD 1.5 billion of cash on the balance sheet at quarter end. For the quarter of 2022 compared to the same period in 2021, revenues decreased by CAD 5 million to CAD 186 million. Operating expenses increased by CAD 24 million to CAD 64 million, and adjusted EBITDA decreased by CAD 6 million to CAD 146 million. The adjusted EBITDA margin was 78.4% compared to 79.8% in 2021. Between 2021 and 2022, changes in US dollar exchange rate had a minimal impact on revenue, operating expenses, and adjusted EBITDA.
The revenue decrease was primarily due to a reduction of service from one of Telesat's North American direct-to-home customers, some reductions, terminations on contract renewal of certain services, and a decrease in equipment sales to Canadian government customers. 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. The increase in operating expenses was principally due to higher non-cash share-based compensation expense and to a lesser extent, the reversal of a bad debt provision in the fourth quarter of 2021, which had the impact of lowering operating expenses in the prior period and also including some higher expenses in respect to being a public company. These are partially offset by higher capitalized engineering costs associated with the increased activity in Telesat Lightspeed program.
Interest expense increased by CAD 7 million in the fourth quarter when compared to the same period in 2021. The increase in interest expense was primarily due to interest on the 2026 Senior Secured Notes, which were issued in April 2021, partially offset by the impact of the maturity of one of our interest rate swaps in September 2021. As Dan had mentioned, in March and April, we repurchased our senior secured notes with a face amount of $60 million by way of open market purchases. These repurchases resulted in a gain in the fourth quarter of CAD 21 million. We will also show a quarter gain in the second quarter of approximately CAD 17.5 million. All of the notes we purchased will be canceled. As Dan has also mentioned, we have authorization to purchase up to a further $100 million face value of debt.
The gain on changes in fair value of financial instruments for the fourth quarter of 2022 reflects primarily changes in the fair values of our interest rate swaps and prepayment options on our notes. The loss on changes in fair value of financial instruments for the fourth quarter of 2021 primarily reflects the changes in the fair values of our interest rate swaps and prepayment options. For the fourth quarter of 2022, the cash inflows from operating activities were CAD 43 million, and the cash flows generated from investing activities were CAD 47 million, including about CAD 65 million by way of receipt of the remaining phase one US C-band clearing process and with virtually all of the capital expenditures relating to a low-Earth orbit constellation. Guidance. As you will also have noted in our earnings release this morning, we are reiterating our previously stated 2022 guidance.
Our guidance reflects a Canadian dollar to US dollar exchange rate of 1.3 for 2022. Telesat expects its full year revenues to be between CAD 720 million-CAD 740 million. Telesat expects adjusted EBITDA to be between CAD 520 million-CAD 545 million in 2022. With respect to expected capital expenditures, and as Dan has also noted, we are continuing to work at this time to finalize our financing and contracts with our key suppliers. For now, we expect our 2022 cash flows used in investing activities to be in the range of $100 million-$120 million, including capital expenditures to further advance our Lightspeed program.
Once we have greater visibility around the construction and financing of our Telesat Lightspeed program, we will provide a further update on our anticipated capital expenditures for the year, which could increase substantially. To meet our expected cash requirements for the next twelve months, including interest payments and capital expenditures, we have approximately CAD 1.5 billion of cash and short-term investments at the end of December, as well as approximately $200 million of borrowings available on the revolving credit facility. Approximately CAD 1 billion in cash was held in our unrestricted subsidiaries. In addition, we continue to generate a significant amount of cash from our ongoing operating activities. At the end of the first quarter, leverage as calculated under the terms of our amended senior secured facilities was 5.67x.
Telesat has complied with all the covenants in our credit agreements and indentures. A reconciliation between our financial statements and financial covenant calculations is also provided in the report we filed this morning. Our 6-K provides the unaudited interim condensed consolidated financial information in the MD&A. The non-parental subsidiaries shown are essentially the unrestricted subsidiaries with some minor differences. That concludes our overall prepared remarks for the call. Now we'll be very happy to answer any questions we may have, and we will turn back to the operator.
Thank you. We will now take questions from the telephone lines. If you have a question and you're using a speakerphone, please mute your handset before making your selection. If you have a question, please press star one on your device's keypad. To cancel the question, please press star two. Please press star one at this time if you have a question. There will be a brief pause while participants register. Thank you for your patience. The first question is from Jason Kim from Goldman Sachs. Please go ahead.
Hi, this is Julia in for Jason. On Lightspeed funding, what are the additional steps that need to happen in order to complete the financing? We continue to hear about the supply chain and inflation issues across all markets. How are you thinking about your early investment needs, now versus your initial plan?
Hey, Julia, it's Dan Goldberg. Let's see, a couple of things. Lightspeed financing. You know, fundamentally, we've been saying this for a while, you know, the missing piece right now that we need to close on are the discussions that we're having with the export credit agencies. I think we've said that, you know, we've already sort of, you know, lined up. I don't know, these are Canadian dollars. There's like CAD 4.2 billion of financing between the cash that we have, the contributions that we've made already, the commitments we have from the government of Canada, the government of Quebec, and things like that. We've talked about a CapEx envelope for the program of about $5 billion.
In any event, the heavy focus is concluding those discussions with the export credit agencies. The history here is we were I think making good progress with the ECAs in Q4. Early in Q4, we got bitten by these supply chain issues which caused delays and some inflationary pressures on the program. If you've followed the history here, we spent a lot of Q4 and a good chunk of the early months of this year working with Thales to update the schedule, reformulate the program, and our other suppliers too.
Having now kind of updated the program and worked through those issues, we're now back re-engaged with the Export Credit Agencies. What I think I said on our last call and what I said earlier this morning is that we're hoping that by the end of June, we're gonna have a pretty good sense of where we're sitting with the ECAs. That's kind of the timeline that we're trying to drive towards right now.
You know, on the inflationary pressures, you know, we've been dealing with those. I think that what we've done is we're moving forward with a constellation, and this is the plan that we're speaking to the export credit agencies about. It's 188 satellites in orbit, plus 10 other in-orbit spares to provide some redundancy and resiliency. Obviously all the ground facilities that are integrated with the network and all the launch vehicles and the software platforms that we need, all of that is kind of covered in that kind of $5 billion number. That's how we're addressing it. It's a hugely capable kind of enterprise-grade focused constellation. We feel good about it. That's where we are right now.
Awesome. Thank you. Two more questions. On Anik F3, it's good to see the partial renewal with Dish and also leasing out the rest of the capacity. I think in the past, you said that DTH contracts generally generate around, like CAD 70 million of annualized revenue and EBITDA. In the current construct, how much is Anik F3 satellite generating in revenue and EBITDA now? And how should we be thinking about that run rate for the next few years?
Yeah, no. You're right. We have said that, you know, our, I don't know, just kind of typical DTH contract, you know, sort of generates that sort of revenue profile, about CAD 70 million. Yeah, we're very pleased with the renewal that we got with Dish, and probably even more pleased still how quickly we were able to, you know, get the rest of that capacity under contract and generating revenue. We're not going to, though, provide kind of a new run rate on Anik F3. You know, we've given guidance for the year. Certainly closing the Dish renewal and entering into that other big contract for all those cruise services makes us feel, you know, quite comfortable about the guidance that we've given. Andrew reiterated it just a few moments ago.
Beyond that, we're not gonna give kind of more granular information about what F3 is gonna be throwing off going forward.
Got it. Makes sense. Thank you. On Nimiq 5, that's coming up to renewal in 2024. I know that's a few years out, but in your view, are there any differences between Nimiq 5 and Anik F3 in terms of the importance to your customers?
Yeah, we think there are real qualitative differences. We talked about some of those with Anik when we were talking to the market about the Anik F3 renewal. You know, Anik F3 was used to support services for Dish that and we talked about this a lot before, that really weren't kind of core to their central multi-channel offering. It was used for kind of a more niche market. It was used for you know ethnic broadcast services, so mostly you know not English and really served kind of a niche market.
That's not true really for any of our other DTH satellites, Nimiq 5, with Dish, which is very much, you know, kind of supporting their more core, DIRECTV, you know, services that are kind of made widely available for their subscribers. That would also be true for the other DTH contracts that we have with Bell, that we have with Shaw. F3 was, yeah, it was kind of different in that regard. It was providing important services, but services that really weren't core to the main DTH offering of Dish.
Thank you. My last question is regarding the bond buyback program. Is there any reason for the size of $100 million face value program that was authorized? Your initial bond buyback focused on the unsecured bonds, and are they gonna be your focus going forward, I guess, given where they're trading now?
As far as the amount, yeah, I don't know. We just sort of felt that was appropriate. I mean, you know, we look at the amount of cash that we have available for all the different things that we wanna do. I don't know, there wasn't really any exact science to it. It just, you know, felt like the right amount. I mean, obviously, in the future, if we change our minds and wanna do something different, then we can do something different. As far as kind of, I don't know, the tranches, I'd say we're sort of being open-minded about that and we'll also, I should say, we're not committing to buy back any debt.
We've been authorized to buy back debt. We made the purchases that we made in March and April. I think it's good for the company to have the flexibility to do it, and we're just being pretty transparent with everyone that we have that authorization. You know, the fact that we have the authorization doesn't necessarily commit us to doing anything.
Great. Thank you so much.
Thank you.
Thank you. The next question is from Arun Seshadri from Credit Suisse. Please go ahead.
Hello, everyone. Thanks for taking my questions. First, I wanted to ask, in terms of the, I guess, reduction in scope of Lightspeed, can you talk about whether there are any, you know, do you expect to use the full $5 billion, you know, for a one-third reduction in scope? Obviously, you're dealing with increased costs of the overall program. Is there any scope for a reduction in the required funding?
I doubt it. I mean, I think we've. Look, we're well advanced in the development of this program, so it doesn't feel like it, Arun. I mean, we're not people that like to spend more than we need to. But I don't think so. I think, frankly, I think what we're doing is very capital efficient when you just look at the amount of capacity that we're going to deploy and the amount of capital that's required to deploy that much capacity. I mean, this constellation will have, you know, something like 10 Tb of capacity. It's more capacity than exists if you aggregate all the in-orbit GEO satellites. So I mean, it's completely disruptive in terms of the capability that we're bringing.
I'd note, just in terms of capital efficiency, I think unlike some of the other low Earth orbit satellite you know programs that are moving forward, these satellites are real you know large, complex, capable satellites that have a you know service life of 10 years plus another year just you know for launching, getting them into their final orbit, and for in-orbit testing and the like. We actually feel. I mean, we didn't love, obviously, the inflationary pressures that we're seeing out there.
Even with them, we think that, you know, what we're bringing to market is going to be disruptive in terms of the quality of service that it'll deliver and the price at which we can deliver it, still achieving the kinds of returns that we need to achieve. Anyway, that's a long-winded answer. The short answer is, I don't think there's really a lot of scope to bring that number in.
Got it. Thank you for that, Dan. It's just a broader question. Obviously, with the moving to the right of Lightspeed timing, you're obviously also seeing Kuiper come in at a similar time now. I think you had probably a 1-2-year lead over them, which is sort of gone by the wayside somewhat. Just first, your thoughts on that. Second, given that Lightspeed has moved to the right, what are your current thoughts on the GEO satellite fleet and sort of a longer term CapEx envelope that you would need to sort of deploy in order to keep that business in good shape?
I'll start with your first question about Kuiper. Look, we always believed that Amazon was serious about building out Kuiper and, you know, frankly, you know, a 1-year head start or, you know, whatever, I don't think that's, you know, really that material in terms of our competitive positioning. We're building a constellation that's very much focused on and built for this kind of, you know, enterprise and government market that Telesat's been serving for the last 50 years. For sure, Kuiper's gonna be providing services to some of those verticals as well, but I think their constellation's really more optimized for the primary market that they're focused on serving, which is more the consumer broadband market.
You know, it looks like right now they're not gonna be having polar coverage. There's some limitations there. You know, our business case is intact, you know, fundamentally. It's a big market. We know this market well. We know the customers well. You know, we've engineered our constellation to give us, and I think our customers, certain competitive advantages in the verticals that we're focused on. Backhaul, you know, for ISPs and mobile network operators, the aero market, the maritime market, the government market. We're really happy. I didn't talk about it in my comments, but we landed that, you know, really interesting contract with NASA, that took place in Q2. You know, we announced it in connection, we mentioned it in this earnings release as well.
You know, with the delay that we've had, and I would note, everyone's getting delayed. I mean, I haven't heard from a single satellite operator in the last, I don't know, 12 months, whether they're, you know, a new entrant, whether they're a long-standing operator, just everyone's kind of getting moved to the right a little bit, mostly for the same reasons that we've been moved to the right, these, you know, supply chain issues and whatnot. That's how we think about Kuiper. Then on GEO and replacement CapEx and whatnot, you know, we're just kind of taking them one at a time. We're never gonna replace a satellite, unless we feel like we've got a sound business case to do it, right?
I mean, when we invest money, you know, it's always with a view towards achieving the kinds of returns that our shareholders have come to expect, and that you know, we've been able to generate over our you know, fairly long history in this market. That's what we're gonna do going forward. We'd never say, you know, it's gonna be all LEO going forward or you know, we're gonna replace every single one of our GEO satellites. We're really gonna take them one at a time as these satellites come up for renewal. We look at the existing book of business, we're engaged with the customers, and we make a judgment about whether or not it makes sense to do it.
On the DTH side, you know, that's gonna be mostly about where we end up in conversations with, you know, Dish, Shaw, and Bell with respect to each of the satellites that we're using to support their services. As we said before, there's some new technologies out there that might mean that we can extend the life of some of these satellites, without having to do a full-scale replacement. Intelsat, you know, was a bit of a pioneer, extending the life of one of their GEO satellites. We've looked at that technology too. We've also said in the past that, you know, particularly for some of these DTH satellites, the current contract term for our customer, comes up long before the end-of-life of the satellite comes up, and I'm thinking of satellites like Nimiq 6 and Anik G1.
In any event, but that's how we're thinking about it. We've also said in the past, look, we're still going to pursue if there are attractive opportunities to build new GEO satellites, never mind replacement. That's something that, you know, we're gonna continue to think about too, provided that, you know, there's a good compelling business case that underpins it.
Got it. Thank you. That's all I have.
Thank you. The next question is from Raghav Garg from DoubleLine. Please go ahead.
Yeah. Thank you for taking the question. Can you just talk about the utilization? I saw it picked up from 80%-84%, but, you know, can you tell us whether there's some reduction in supply, or can you just walk us through that pickup in utilization?
The last bit of what you said trailed off for me, but I think Chris got it.
I think he was talking with the increase in utilization. Is it a factor of increased usage or reduction in capacity?
No, that's a great question. We probably should have called this out. We took our Anik F1R satellite at the beginning of this year and put it in what we call inclined operations. You're kind of backing off on your station-keeping a little bit to preserve fuel. It's something that satellite operators routinely do to extend the life of their satellites that are nearing the end of their lives. We have another satellite like that, Anik F1, that's been in inclined operations for quite some time. When we report utilization, we're reporting utilization on station-kept capacity. It's a great question. I'm glad you asked it. What happened was we ended last year with an 80% utilization rate.
We put Anik F1 into F1R into inclined operations in January probably of this year. When we did that, we then removed that satellite from our utilization calculation for station-kept capacity. Anik F1R on average had lower utilization than on average the rest of the fleet, and it had the effect when we removed it from the utilization calculation, it brought up the fleet-wide utilization to 84%. If we corrected it and did an apples for apples comparison, it would've been flat. Utilization would've been 80% for Q1. Thanks for asking it. In the future, if something like that happens, we'll do a better job of calling it out so that people don't have to wonder.
Got it. Thank you. Just a follow-up, just trying to triangulate on Dish. I know you probably can't talk about the specifics, but just looking at the 2023 backlog, it seems like it's only picked up an incremental CAD 10 million between year-end and today. Am I missing anything just to get a sense of how big that contract and the maritime contract is? Or is that the right way to think about it, if you can help me there? Thanks.
Yeah, no. You know, it's another good question. We signed the Dish contract in Q2, in April, and so it didn't get picked up in the Q1 backlog number.
Got it.
You can ask me again in Q2 when we report our Q2 numbers. But it's just not there right now because that backlog calculation gets done for, you know, contracts that are in place before the end of March thirty-first.
Yeah.
That contract got signed in April.
Very helpful. Just last question. The CAD 750 million on the LEO backlog, you know, how quickly do you expect that to ramp? You know, is getting the ECA deal a big piece of, you know, selling that capacity in the future? Or, you know, what kind of timing can we think about the ramp of the LEO capacity? Thank you.
Just on the question, in terms of increasing the backlog, you mean? Or as opposed, yeah, increasing the backlog. Yeah, for sure. You know, I think our customers, you know, we've already got a material amount of backlog on LEO, with the CAD 750 million that we've reported to date. But it's certainly the case that once our financing is in place, we started the full-scale production of the constellation, we'll be signing more contracts with customers pre-launch. You know, we're gonna be very focused before, you know, any satellite is launched to have that backlog number meaningfully higher than the CAD 750 million where it sits today. And we'll be reporting that along the way. Great. Thank you very much. Thank you.
Thank you. The next question is from Amer Tiwana from Imperial Capital. Please go ahead.
Hi, guys. I have two questions. The first one is regarding guidance. I just wanted to unscramble it a little bit. You obviously got the partial renewal from Dish, and you were able to put some of the excess capacity or all of it from that satellite into a newer contract as well. You know, does it mean that we could be looking towards the higher end of guidance as you move through the year? You know, are you confident that you can hit that given that you've had these two positive things? Because I believe you said on the last call that if you didn't get the Dish contract, you'd be towards the low end of guidance. Just some comments around that would be helpful.
I'll take it. Andrew will probably kill me. Yeah, your recollection is right. What we had said was that the guidance range that we gave kind of embraced the full range of outcomes with Dish and having gotten that renewal and having you know entered into that other contract. Yeah, we feel quite comfortable that you know we're within the range, and here's the part where Andrew will kill me. Yeah, you know probably more gives us a better feeling that we're trending more towards the upper end of the range. Still, you know, only the end of, I mean, what are we today? You know, May 6, so still have a whole lot ways you know to go through the year.
when we said in our earnings release, we feel like we're off to a good start and can reaffirm the guidance. Yeah, we feel good about where we sit, and it probably gives us a little bit more confidence that on balance, you know, we're, yeah, we're kind of more on the upper side than the lower side. Sounds good then.
Okay. Maybe if you can talk about broadly, you know, there's obviously delays all over the place on the LEO constellation. You know, is it right to assume that this is actually good for the GEO business? In that sense, is it possible that we could potentially see some more business come to the GEO side over the next coming years? You know, just trying to understand the trajectory of the business. Obviously, it was declining at you know, higher single-digit rates. Now you're you know, starting to see some stabilization on the revenue and EBITDA front. Just maybe talk about the opportunity that's out there for the GEO business in the near term.
Okay. Yeah, I'd say, you know, I'll do the macro thing first, maybe. For the legacy satellite operators as a whole, and just, yeah, I think, you know, the longer these new disruptive constellations are kind of pushed to the right, it creates more opportunity for the GEO assets to remain full, and hopefully they'll, you know, we'll start to see some better pricing dynamics as asset utilization rates across the industry get tighter. With respect to Telesat, we'll have to see. You know, I had said in my opening comments that we're actually seeing an uptick in activity, but we can't always capture it given that, you know, our utilization rate is pretty high.
I think certainly the fact that we resold all of that Anik F3 capacity that came back to us so quickly is certainly a sign that there are, particularly in certain markets, getting to be some capacity shortages. You would think that if you believe in the laws of supply and demand, that those shortages should translate over time to some improved pricing dynamics. We haven't really seen it yet. We've seen it, I'd say, a little bit on the margins in a good way in some markets. Again, all these markets are not uniform, so you can have, for instance, it feels right now like there's some capacity shortages building up on some of the key cruise markets, the Caribbean, maybe the Med, we don't have a ton of capacity there.
Whereas there are other markets still that, you know, like Africa, for instance, there still seems to be, you know, more supply than we as providers would want right now. I don't know. I mean, on balance, it can't be a bad thing for the GEO operators, including Telesat, but we're not prepared to sit here right now and say, "Yeah, we're, you know, materially changing our outlook." Yeah, on balance, I think it's supportive. We'll put it that way.
I think that's all I have. Thank you very much for your time.
Thank you.
Thank you. The next question is from Brandon Karsch from Kennedy Lewis. Please go ahead.
Hi. Thanks for taking the questions. You've mentioned a couple times that you're seeing a lot of demand, but you're actually having a hard time supplying it based on your utilization. If you're only at 84% utilization. Can you help me understand what the delta is there and what's preventing you from selling that other 16%? Is it just the location of your satellites, or is it meeting some redundancy in orbit?
Yeah. No, it's exactly what I was just referring to. You know, we provide. We have capacity that serves all sorts of different markets. Some of those markets, there's greater demand right now. I think, you know, where we probably have, you know, more excess capacity is in some of those areas that have been a little bit more challenging. I mentioned Africa a moment ago. We've got some outstanding capacity over Africa, where, you know, there are opportunities there. But if that capacity were available over some other markets, we'd be able to sell it a whole lot more quickly. That's what it is.
I think, candidly, if you look at our, you know, utilization rate, it's pretty favorable, I think, relative to probably the industry as a whole right now. If you look at probably, you know, just kind of utilization rates across the industry, you know, I gotta believe it's lower than 80% right now. That's what our challenge is. It's not like, you know, you throw in the towel. We're always trying to get to 110%, but that's the reality of the situation. I think if you go back and look at our utilization rates that we've been reporting, we report them every quarter and half for decades, I think we've done a good job.
I think it's trended up a little bit, even through the pandemic and all of that. That's what explains it. I also, I don't wanna overstate it. It's not like we're, you know, besieged with demand right now that we can't satisfy. I was just noting a trend, which is we are seeing an improvement in certain verticals and in certain geographies, which is good, but we can't always satisfy. You know, case in point, you know, with Ukraine right now, there's been heightened demand for some government services. There have been some users that have had to come off of Russian satellites that need to be accommodated on other satellites.
Some of those requirements, you know, folks have reached out to us on, and we just simply don't have the available capacity to meet those requirements. That's an example of what I'm talking about.
Okay. That's helpful. I know you don't wanna give specific numbers on new contracts on F3, but, I mean, could you give me a sense generally of, you know, if you're trading from broadcast to enterprise on a given satellite for the same amount of capacity? How does pricing typically compare between those two use cases?
You know, it's so kind of sui generis, this, you know, the thing that we did with Dish, right? I mean, it's not. You can't extrapolate really from one to the other. I'm not trying to avoid the question. It's just they're. Yeah, I mean, the Dish renewal, you know, that's got its own dynamic around that. Anyway, I'm looking at a colleague of mine for some help here, but I'm sorry. It's hard to say. If there were just some other, you know, we had a transponder come up that was for kind of more generic, you know, broadcast services.
I'll pick a market, Latin America or something like that. I don't think it's terribly dissimilar to what we would see if we were selling in the broadcast or video market kind of writ large. We put the, you know, the dynamics around the Dish renewal in a different category.
Okay. Understood. Just the last one from me. It seems like you're seeing some benefit from aero and maritime coming back as the world continues to reopen. If we just look at where we are now for that vertical compared to where we were pre-COVID, you know, how far back do you think we are at this point?
You know what? That's a great question, and I wish our Chief Commercial Officer was here because, and I'm hoping that someone else in the room can help me here. I saw a stat that said something like, while only
I think it was like 70% of the crews.
While only 70% of the crews are kind of back in the water, you know, going out with passengers and whatnot, that the bandwidth requirement that they have was like-
More than 100%.
Oh, it was well over 100% of where they were pre-pandemic. I mean, it doesn't take a rocket scientist to figure out why. Everyone just wants a whole lot more bandwidth. It was the bandwidth requirement was meaningfully higher, like, you know, at the end of Q1 than it was pre-pandemic, even though there are only about 70% of the cruise ships out there. So here again, not a surprise. Everyone wants more bandwidth. That's kind of the inexorable trend. And then, yeah, and the pandemic certainly accelerated that, right? If you're out on a ship, you need to, you know, have access to Zoom. You know, I mean, just all of that. You're, you know, using cloud services. So that's kind of what it looks like.
We believe that's kind of the future of broadband connectivity demand. It's why we're building Telesat Lightspeed, and that's why we're so bullish about it.
Okay. Great. Just sounds like some room to run there still on the cruise side, though. What about the aero side?
I'd say I haven't seen kind of direct numbers like that, but certainly it's way back up. I mean, it's way back up, the you know, both obviously, you know, passengers and planes, and demand. I don't know if bandwidth demand has eclipsed where we were pre-pandemic. My gut is we probably have, but I'm not sure. We're probably kind of back, but we'll have a look at that, and we'll try to be prepared to talk about that on our next call. Clearly the dynamics are improving, which is why I called it out in my opening remarks. We've definitely been a beneficiary for some of that so far this year.
Great. That's all for me. Thank you.
Thank you.
Thank you. The next question is from Walt Piecyk from LightShed. Please go ahead.
Thanks. Dan, you mentioned things being back on track with the ECAs. Can you just provide a little bit more color on what that means, and whether we should infer anything in terms of timing?
Well, what it means is that, you know, as we said before, back in October when we, you know, were informed by Thales that they couldn't support the schedule that they had previously shared with us, and when they also, you know, sort of warned us that there were also these, you know, pricing pressures, we had already been in very advanced discussions with the export credit agencies, and we had to pause those discussions because the business case that they were being asked to underwrite needed to get updated as a result of the news that we heard from Thales. When I say that we're re-engaged with them, what I mean by that is we have a new schedule. We have a new, you know, I should say a current plan.
We shared that with them probably right before Easter, which allowed us to unpause. You know, we're back at it with them. We've had, you know, multi-hour sessions with them on technical updates, commercial updates, you know, financing updates, regulatory, I mean, everything. That's what I mean when, you know, I said that we're fully re-engaged with them. I said from a timing perspective, you know, they've got work to do. They've got technical advisors, commercial advisors, and they've got, you know, processes that we need to respect. They're, you know, absorbing, you know, all the information that we've shared with them.
What you know, we've said from a timing perspective is that we hope to have you know a good sense for where we're standing with them you know kind of around the end of Q2. You know, our Q2 is you know June thirtieth kind of thing. That's where we are. We've shared a lot of information. You know and they're doing their work, and we've told them that you know we wanna get moving quickly. We think there's an awesome market here and we wanna get at it. That's where things are.
Got it. You also announced, I think recently something with NASA on the I believe it's related to the LEO project. Just in general, like, as things develop going forward with ECAs, tell us as things kind of progress, where do you expect to have pre-launch success in terms of signing up contracts? You know, and how would that pace look, you know, over the next, whatever, 6-12 months?
You know, verticals where we think that there's some good opportunities for pre-launch opportunities, it'll be, you know, on the terrestrial side. You know, broadband connectivity, that can be big. Rural broadband programs that Telesat Lightspeed's gonna be really well positioned to serve. It'll be working with mobile network operators, some of that. You know, and again, it's all rural. It'll be network extension for ISPs and mobile network operators, we think, in both developed and developing countries. We think that the maritime market is gonna be another promising market for, you know, pre-launch deals.
Aero, you know, it's probably a longer sales cycle, just given all the regulatory complexity around serving the aero market with all the certifications you need and how long it takes to deploy terminals on planes and all the requirements around that. I still think there are opportunities there to do pre-launch stuff, and I think that Lightspeed's gonna be revolutionary for the aero market, just given the flexibility of the network, the optical inter-satellite links that we have, our ability, like, I think no other system, to concentrate gigabits of capacity around airports and high-density flight corridors. Then on the government side, it'll be interesting. I mean, you know, governments have their own very Byzantine kind of procurement rules and cycles.
I'm still cautiously optimistic there. Obviously, you know, with allied nations, certainly, you know, the activities in Ukraine right now have underscored the importance of resilient, ubiquitous, I think low latency resilient satellite connectivity. I think that allied governments are showing a renewed interest in spending and in understanding how integral space is to, I hate to say it, but, you know, kind of modern warfare and whatnot. It'll be interesting. I think that Lightspeed can be transformative for government users. How much of that we can do pre-launch? I think some. I mean, obviously, we're doing some really interesting work with DARPA right now.
We're supposed to be launching 2 satellites sort of, like, toward the end of this year to demonstrate the efficacy of these optical inter-satellite links. We announced that deal with NASA. That's more kind of, you know, inter-satellite communications, this time not with optical links, but with RF. Yeah, you know. As far as the pace and whatnot, I don't wanna say right now. We're not gonna throw out any backlog targets right now for Lightspeed. You know, look, I think it's amazing that we already have seven like three-quarters of a billion of backlog, and we haven't really started in earnest the full build-out of the constellation.
I mean, that's a very detailed.
Yeah
just to a certain extent, targeted view of the market. When you came up with your in the presentation from several months ago, I suppose, that you know you think that the constellation can address 1% of a $430 billion market. Is that when you were contemplating that, was that kind of a thoughtful exercise built up from these you know again this list of different opportunities that you had? Or was it just like, "Look, if we launch this much capacity up there, we're gonna capture 1%"? Like, can you give us a little bit more insight into that?
Yeah. No, we don't roll like that, you know. We have built up, I gotta think-
Yeah
you know, the most granular business case and demand model. We have divided the world into, like, I don't know, like 100,000 little micro quadrants, and in every single one of those quadrants, we look at all the different verticals that we plan to serve and make a judgment about whether, you know, in that little micro quadrant.
Okay. My bad.
In that little micro quadrant, we make a judgment. Is fiber the best transmission medium to meet the requirement? Is it microwave? Is it some other satellite, you know, connectivity? I mean, that's how we've built our model up, and you know, soon we'll be engaging with all of you guys to help you understand what we've done. No, this is not a, "Yeah, we'll you know, invest $5 billion in Lightspeed. We'll have, you know, I don't know, 10 Tb globally. Yeah, we'll build it," and you know.
Maybe you should've said 1.1%, and people might have taken it as a little bit more to heart.
Well, I mean, you know.
The CAD 4 billion.
Well, I mean. Well, whatever.
CAD 4 million.
No, I mean, I cannot believe that there's anyone who's been more anal and forensic and rigorous.
Correct
in building up a demand model for every vertical. Again, you know, that's backhaul connectivity in you know, again, every little micro quadrant, you know, around the earth, that's aero, that's maritime, that's government. Within aero, it's commercial, it's private jets. It's sizing every different jet. In maritime, it's cruise, it's maritime transport, it's you know, high-end yachts and smaller yachts. I mean, that's how we've done it.
You know, it's just amazing that there's focus on like small dish renewals when there's a CAD 4 billion target revenue.
Well, we understand.
re-accumulation.
I mean, look, you know, I think. Look, we look at kind of where the stock's trading right now in our market cap and just shake our heads. You know, shame on us, we need to go out there. I understand why people care about the Dish renewal, and we care about it too, and I think we got a really good outcome there. We've got to get out there and share a whole lot more information on Lightspeed. We're presenting at two investor conferences this month. You'll be hearing a whole lot more from us. It's why we're again so bullish on this opportunity. We need to work with these export credit agencies that we've been working with for some time.
I can tell you the support that we've had from the Government of Canada and the Government of Quebec has been phenomenal. It's, you know, they've been great partners for us, and they're four square behind what we're doing. Now we gotta finish this work with the export credit agencies, get going and then go out and kind of proselytize, not just with the customer community who we've mostly been focusing our time and energy on, but obviously with the investor community too.
Okay. Thank you.
Okay. Thank you everyone. We've run out of our allotted time. Operator?
Yes, thank you.
Dan, yeah, no.
We've run out of our time. I think my answers were, you know, I'm a long-winded fellow, some say. But, but in any event, yeah, we appreciate everyone's time this morning. We will be, you know, presenting at Goldman Sachs Leveraged Finance Conference later this month, a J.P. Morgan equity conference in Boston later this month. We're looking forward to speaking with, uh, everyone about what's been happening in the business and our plans. We feel like we're off to a great start, uh, for the year. We had a really, I think, you know, uh, positive Q1 and laid some good foundations for the rest of the year. With that, uh, we appreciate everyone's time, and we'll talk to you when we put out our second quarter numbers. Thank you. Cheerio.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.