Good morning, ladies and gentlemen. Welcome to the conference call to report the third quarter 2020 financial results for Telesat. Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat, and Andrew Browne, Chief Financial Officer of Telesat. I would now like to turn the meeting over to Mr. Michael Bolitho, Director of Treasury and Risk Management. Please go ahead, Mr. Bolitho.
Thank you, and good morning. Earlier today, we issued a news release containing Telesat's consolidated financial results for the three-month and nine-month periods ending September 30, 2020. This news release is available on Telesat's website at www.telesat.com under the tab Investors. We also filed our quarterly report on Form 6-K with the SEC this morning. 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 additional information about known risks, we refer you to the Risk Factors section of our annual report on Form 20-F for the 2019 fiscal year, filed with the SEC on February 27th, 2020, and our quarterly reports filed with the SEC on April 30th, 2020, July 30th, 2020, and earlier today.
The information that we are discussing today reflects our expectations as of today and is subject to change. Except as required by securities laws, Telesat disclaims any obligation or undertaking to update or revise this information, whether as a result of new information, future events, or otherwise. I will now turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer.
Thanks, Michael. Good morning, everyone. This morning, I'll discuss our third quarter and year-to-date financial results and give an update on the business. I'll then hand over to Andrew, who will speak to the numbers in more detail, and we'll open the call up to questions. For the third quarter and adjusting for FX, revenue was down 14% relative to Q3 last year. Adjusted EBITDA was down 19.5%, and our adjusted EBITDA margin was 80%, which is lower than the roughly 86% we had in the prior period. The revenue decline was driven by two contracts we've discussed on prior calls. First, the non-ren ewal by Shaw at the end of Q3 last year of one of its DTH contracts.
Second, the end of the revenue amortization period of a large prepayment we received years ago from WildBlue on our Anik F2 satellite, each of which has a roughly 3% top-line impact, with the WildBlue one being non-cash. In addition, in Q3 last year, we recognized revenue from a short-term satellite services agreement with another satellite operator, something that didn't recur in Q3 this year. Lastly, and of less consequence than these other factors, we had some revenue headwinds owing to COVID. OpEx was up by approximately CAD 4 million in the quarter versus Q3 last year, principally from increased compensation driven by our LEO program, as well as higher fees for professional services. In turning to our results for the first nine months of the year, again, adjusting for FX, revenue decreased 10% versus the prior period.
OpEx was up 16%, adjusted EBITDA was down 16%, and the adjusted EBITDA margin was nearly 80%, which was down from nearly 85% last year. The revenue and expense variances were, in the main, driven by the same factors accounting for the changes Q3 over Q3, but with the addition of some COVID related bad debt expense we recognized in the first half of this year. Turning to some key metrics, backlog at the end of last quarter was CAD 2.8 billion, and fleet utilization was 81%. In looking at how our revenues broke down on an application basis for the quarter, broadcast was 51% of total revenue, enterprise services 46%, and consulting and other 3%. On a geographic basis for Q3, North America accounted for 82% of revenue, Latin America 8%, EMEA 5%, and Asia 5%.
Looking ahead, we remain strongly focused on commercializing our available in-orbit satellite capacity, maintaining our operating discipline, further developing our advanced LEO constellation, and leveraging our valuable spectrum rights, all while we're doing everything we need to do to keep our employees safe and support our customers through the pandemic. With that, I'll hand over to Andrew.
Thank you, Dan. Good morning, everyone. I wou ld now like to focus on highlights from this morning's press release and filings. Overall, as Dan has noted, in quarter three, we achieved revenues of CAD 202 million, adjusted EBITDA of CAD 162 million, with over CAD 1.2 billion of cash on the balance sheet at quarter end. This is an increase of approximately CAD 215 million since December 2019. Our adjusted EBITDA was driven by lower revenues and higher operating expenses. The revenue decline was partly driven by two contracts we anticipated and discussed on our prior call. Firstly, the non-renewal by Shaw at the end of Q3 last year of one of its DTH contracts, and secondly, the end of the revenue amortization period of a large prepayment that we had received several years ago from WildBlue, now Viasat, on our Anik F2 satellite and is non-cash. We note the two factors unanticipated at the beginning of the year have an impact on our revenues.
Lack of opportunities to provide short-term services to other satellite operators, and the impact of COVID-19 pandemic. In the third quarter of 2019, we provided short-term service to other satellite operators, and that revenue we did not see in 2020. Operating expenses were up CAD 4 million in the quarter versus the same quarter last year. The increase is mainly attributable to higher compensation and professional fees incurred in support of our LEO program. We made no further bad debt provisions during the quarter. Our adjusted EBITDA margin was 80.4%, as compared to 85.7% in the third quarter of 2019. Comparing the third quarter of 2020 with the same period in 2019, changes in the U.S. dollar exchange rate had a negative impact of CAD 1 million on revenue, no impact on operating expenses, and a negative impact of CAD 1 million on adjusted EBITDA.
Depreciation and amortization decreased by CAD 9 million during quarter three compared to the same period in 2019. The decrease is mainly due to the useful life for accounting purposes of Telesat's Anik F2 satellite in the fourth quarter of 2019. Interest expense decreased by CAD 14 million in the third quarter of 2020. This decrease was mainly due to the refinancing of Telesat's debt at lower interest rates in the fourth quarter of 2019. In the third quarter, we recognized a gain of CAD 6 million on financial instruments, reflecting changes in interest rates during the quarter and consequent changes in the fair value of our interest rate swaps and prepayment options on our senior and senior secured loans.
In 2020, as the value of the US dollar decreased by about 1.9% from the end of the third quarter of 2020, we also recorded a gain on foreign exchange of CAD 66 million during the third quarter, which arose from the translation of Telesat's US dollar denominated debt into Canadian dollars. Tax expense for the quarter was CAD 16 million. For the nine months ended September 3 0th, 2020, cash inflows from operating activities were CAD 300 million, and cash outflows used in investing activities were CAD 78 million. As noted on our March 1st, 2020 call, we continue to expect our cash outflows used in investing activities to be in the range of CAD 60 million-CAD 80 million during 2020, including capital expenditures we may make in connection with our LEO constellation prior to making a full commitment with our prospective suppliers.
There may be meaningful additional CapEx this year in connection with LEO if we enter into definitive contractual commitments to build the constellation. If we make such commitments, we would expect to update our CapEx guidance accordingly as we go forward. To meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures, we had approximately CAD 1.2 billion of cash and short-term investments at the end of the second quarter, as well as approximately CAD 200 million of borrowings available under our revolving credit facility. Approximately CAD 444 million 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 quarter, Telesat has complied with all covenants in our credit agreement and indentures.
A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning. With that concludes our prepared remarks for this call, and I'm happy to answer any questions you may have. I will now turn it 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 lift your handset prior to making your selection. If you have a question, please press star one on your device's keypad. If at any time you wish to cancel your question, please press the pound sign. Please press star one at this time if you have a question. There will be a brief pause while the participants register. Thank you for your patience. The first question is from Mike Pace with JP Morgan. Please go ahead.
Hi, good morning, everyone. Dan, in the past, this is going back a few years ago, you talked about a percentage of your business that you thought was susceptible to HTS capacity. I'm wondering if you guys have thought about that same question for LEO capacity. Obviously, some of it would be from you, how you think about how those existing customers might, could, would transition to a LEO constellation. Does that make sense economically for them with switching costs, et cetera? If you could start there, I have a few follow-ups as well.
Yeah. Thanks, Mike. Good morning. We've done a lot of work on that, actually, evaluating our existing customers and looking at how their networks are configured and making judgments about which of those would be logical candidates to transition to LEO over time. Obviously, it's not our DTH business. Got to say, there's a bunch of background noise. I don't know if the operator can help out. The DTH is a little bit less than half of our total revenues. That wouldn't go. In our non-DTH business, there are some set of requirements that look like they'd be a really good fit for LEO. Networks that are just very much focused on big broadband links, which is what LEO's really well optimized for.
I would say, probably true for a significant part of maritime activities, particularly cruise, and we think aero as well. We think those are our customer segments that would be natural. Beyond that I wouldn't want to make any, I don't know, projections just at the moment on kind of what portions of our current enterprise business would move over to LEO. At a high level, that's what it looks like. I would say, transitioning customers doesn't happen overnight. It's a lot of work to go into the field. Certainly, even for the customers that would, maybe excluding the mobility customers, aero and maritime, whose antennas already can track. It wouldn't happen without a meaningful amount of work, even with those customers to track.
At a minimum, they're going to need a new modem that's compatible with our new LEO system. Over time, look, we think that LEO is going to be just a phenomenally compelling value proposition. It's going to be super high throughput, super low latency, extraordinarily reliable, extraordinarily secure, and we can achieve a price point that is lower than what can be achieved with GEO. Anyway, Mike, those are some high-level thoughts.
I guess then to follow up on that, another question I had was, I think it was at the last call, but you said that you're not really going after the consumer broadband marketplace, and I do realize your business model is more of a wholesaler. I guess, does that Telesat personally that it isn't going to go after a consumer broadband vertical, or could resellers might come in, buy your capacity, and take on that segment, or does the business case not make sense for consumer broadband for your LEO constellation?
You're right. We're focused on more of a B2B orientation. There are four verticals we're focused on. Backhaul connectivity for mobile network operators and telcos and ISPs, aero, maritime, and government services. For that first category, it's absolutely the case that telcos, ISPs, others, are going to be taking our capacity and then providing a service to their customers, many of whom are consumers. That's how it works today with that vertical that we serve, and it's absolutely going to be the case with LEO. That'll be 5G, it'll be LTE, it'll be WiMAX, Wi-Fi, it'll be all that. I guess what you're driving at, though, is will those enterprise customers do kind of a direct-to-home business? Will they take a Telesat LEO terminal and install it on somebody's house?
That's not really our focus, and I don't think that those aren't the conversations that we're having today with our telco ISP customers. The reason is we're still skeptical that the antenna that would go on a consumer's home is going to be low cost enough and high performing enough for that to make sense. I do believe in the fullness of time, whatever the hell that means, that that antenna will be available, and that our constellation can support going to the consumer market when that antenna is cheap enough and capable enough. That's not on our kind of near term, even medium term roadmap. What do I know? If that antenna comes a little bit sooner than we would expect, and it should come.
The great thing about being in Ka-band is it leverages the whole millimeter wave 5G ecosystem, all the antennas and chipsets that are going to be built for that. In any event, it's not on our kind of near term, medium term roadmap. If it comes sooner, that'll be great. That'll be upside for our business case, but it's not how we're thinking about it right now.
Okay, fair enough. As it relates to Canadian C-band, I know this has been brought up before, can you give us a quick refresh, if there is, on any regulatory deadlines or milestones or any updates that you've had with regulators since the last time we spoke?
No, it's timely. Let's see. The government of Canada issued what is called a consultation. It's like a rulemaking proceeding in the U.S. Issued a consultation document in August proposing to reallocate some C-band spectrum for mobile terrestrial use. Principally 5G, not unlike is the plan south of the border to free up C-band spectrum and make it available for mobile network operators for 5G. They appended to their consultation Telesat's own proposal that we made to the government of Canada. That, as far as I know, was unprecedented, that the government would append a private party's proposal to a consultation like that. Comments were actually due on Monday, earlier this week. We believe there's going to be strong support for the proposal that we've made.
At a high level, our proposal is that we would meaningfully accelerate the clearing of C-band spectrum so that it can be made available to Canadian mobile network operators at the same time that other mid-band spectrum is planned to be made available. The government of Canada right now plans to auction 3,500 MHz spectrum in June of next year, and under the Telesat plan, we would double the amount of mid-band spectrum that's available for mobile network operators in that timeframe. In any event, comments went in on Monday. Again, we don't have access to all of those comments at this point. They haven't been published yet. We think there's going to be some strong support for our proposal.
We believe it is really the only path where lots of mid-band spectrum can be made available in the near term for 5G, and being able to make that spectrum available without prejudicing the important services that are currently being provided with that spectrum. In some ways it's like in the U.S., it's broadcast. Here in Canada, in addition to broadcast, it's rural broadband services, it's public safety services, it's national security services. You've got to find a way to seamlessly transition those users if that spectrum's going to be made available for 5G, and Telesat's come forward really with the only plan to do that. Anyway, comments came in on Monday. Reply comments will be due in a couple of weeks. The record should be ripe for consideration by the end of this year. We'll see. I'd say that's the update.
I'm cautiously optimistic that our plan will be the one that is adopted just because we think it, more than anything else, advances all the key policy objectives. Getting 5G out there, not prejudicing the existing important services, and giving Telesat some proceeds that we've committed to invest in our LEO project, which the government's been a strong supporter of because it is a great way to bridge the digital divide here in Canada and create a lot of jobs in an export-driven sector, which is to say, the new space economy. Anyway, that's what it looks like to us right now, Mike.
Great. I'll leave it at there. Thank you.
Thank you.
Thank you. The next question is from Robert Strougo with RIS Investments. Please go ahead.
The LEO pretty expensive. I mean, you mentioned you have CAD 1 billion.
Hey, Robert, I'm afraid you're breaking up and that we can't hear you very well.
The LEO program is going to be expensive to build out. Am I right about that? Do you hear me?
Just barely, Robert. If there's anything you can do to have a better connection, that'd be helpful.
I put you on speaker. Do you hear me better now?
Not really, but anyway, go ahead and ask your question if we can make it out.
The LEO program is going to be quite expensive to build out. There's talk that you're going to be going public. Could you tell us what is the status of that? What you'll be getting on the C-band, because you have very valuable C-band also. Could you tell us about the financial situation? You're indicating you have CAD 1 billion in cash.
Yeah. Okay.
Loral and the pension company, the Canadian pension fund, owns all your stock. Could you tell us what's going on there? Loral stock is going down, and the talk is that you're trying to go public.
Yeah, I was able to hear that. It sounded like there were a couple of questions there. On what we refer to as the roll-up, which Loral has made some disclosure about before, I think the last disclosure that Loral and Telesat made on the roll-up was back when we released Q2 numbers, and at the time, both Telesat and Loral said that Telesat shareholders were in advanced discussions arou nd the roll-up. We don't have an update to that right now. That remains the status. When there's been a material development there, we'll update the disclosure. On LEO, what we've said before is that project, we expect, would be sort of multiple billions of dollars of CapEx. We haven't said anything further than that at this time. We've said that we expect it would be financed roughly a third equity, 2/3 debt.
We've said, in terms of the debt, that we would be looking to project finance it and to work with export credit agencies in North America and Europe, where most of the content for the LEO program would be produced, that we would be looking to the export credit agencies to provide the debt financing for that. On the equity, yeah, we pointed to the cash that we have on the balance sheet. We pointed to a C-band proceeds that we expect to receive from the U.S. C-band clearing process there. Telesat was allocated, I think it was $344 million to clear our C-band spectrum down there. We're making good progress in terms of our ability to clear that spectrum by the FCC's deadlines. Canada, I just gave the status on where the C-band process is in Canada. We don't know what the government of Canada will do.
I said, we think we've put a great proposal forward. We've committed to take any proceeds that we receive from that process, and invest them in Telesat LEO. It's a bit early to speculate as to where that process will land and what the magnitude of those proceeds will be. Certainly, if Telesat were to go public, and if Telesat were to issue equity as part of that process, certainly, the proceeds of an offering could be used to invest in LEO. Anyway, that's where all of that stands right now.
All right. Let me ask you a question about Loral. Loral owns quite a bit of your stock, and a Canadian pension company owns quite a bit of your stock. You have a lot of cash. What about buying back some of that stock or taking the company public? As far as I know, you're in the process of going public. I don't know if that's revealed to the world, but I believe you have to go public in order to do LEO. You just indicated you're doing one-third stock, and 2/3 debt on the LEO. I hate to think about a company like Intelsat that got itself with so much debt that they filed for bankruptcy even though they got most of the C-band. The question I have is, where are we at this process?
I think you've got the greatest thing going. Musk loves it, too, the LEO. The uses are boundless, for companies that would want to utilize it. I don't know about an Apple or something like that, or whatever. They talk about consumer, certainly Apple would like to have its own way of doing things, through the internet, versus going through everybody else, and every other company that I could think of. You're not getting financing from them. It seems like you're going to do your own financing. Could you just give us an idea what your plans are for the future?
Well, Robert, I agree with you. We're super bullish about the opportunity and the prospects for Telesat LEO. We've been in this industry for over 50 years. I think we're extraordinarily good at what we do. I'm totally persuaded that we've designed the most capable, advanced, compelling low Earth orbit satellite constellation that will be extraordinarily well-received in the market and should be a great investment for us. That we've been working on this project for some years now. Yes, we're very bullish about its prospects. I've described our plans in terms of how we're going to go about financing the project. Yeah, no, I think, I'm in violent agreement with you. It's a great opportunity. The returns on that investment should be very compelling.
We think it's a great use of our capital in terms of growing the business and creating a lot of equity value going forward. With that, Robert, I think I got to cut you off here. We appreciate your questions and look forward to catching up later, maybe.
Thank you.
Thank you.
Thank you. The next question is from Joe Ghergurovich with Pretium Partners. Please go ahead.
Hi. Thanks for taking the question. Sorry if I missed this, for the non-recurring items that impacted your top line, like the customer non-renewal and then the end of the amortization benefit that you got, when do those lap?
This should be the last quarter that they're really showing up. I'm looking around the table, the Shaw contract, my recollection, came to an end in October of last year. If there's an impact on Q4, it won't be the full impact that we experienced in the first three quarters of this year. That same with the end of the amortization period of that other contract. My recollection was we ended amortizing that revenue also in about October of last year. Q4 shouldn't have much, if any, impact from those.
Okay, great. Thanks. That's helpful. Also, the part that was impacted by COVID, can you still quantify what that impact was to the top line?
Give me a second, Joe. I don't know. I think it was around roughly about 10% of the decline in the quarter. Order of magnitude. We were down, like, CAD 35 million. Order of magnitude, about 10% of that came from COVID impact.
Okay, roughly CAD 3 million of it.
Yeah.
Okay. Just one more question. Can you just remind us what your exposure is to cord cutting that we're seeing going on with your customers, how you're kind of working with them through the issues and challenges they're having, and then how you might mitigate this through your contracts with them?
The cord cutting, that affects the subscribers of our direct-to-home satellite customers. For us, that's Bell and Shaw in Canada, and it's the Dish Network in the U.S. They have take or pay contracts with Telesat, our revenues with them aren't directly tied to their subscriber counts at any point in time. Obviously, when those contracts come up for renewal, if their businesses aren't healthy, then that impacts the likelihood of whether or not they're going to renew those services with us. We said that we didn't renew the Shaw contract last year. Part of that was because of the impacts that Shaw is experiencing with their business. In any event, what we do is we know those three customers well. We've worked with them for a very long time.
On average, I think we still have about four years left on average of those direct-to-home satellite contracts with those three customers. Some of them come up earlier, some of them come up later. Yeah, we are engaged with them and look for ways to. I think all of us have a vested interest in making sure that that business remains viable. That business generates a significant amount of cash flow for those three customers today. Yeah, we work with them, and we look for creative ways to keep those services going in a way that where everyone continues to generate a sensible return. Beyond that's kind of how it works.
Thanks. That's really helpful. If I can squeeze in just one more, just following up on the LEO satellite. What is your timeline or what should we expect for the build-out plans over the coming years?
Right now we're engaged with our prospective vendors, so the companies that would build the satellites and launch the satellites. I'd say we're in very advanced discussions with them right now, and my expectation is that we'd be in a position to make some announcements about who those vendors are by the end of this year.
Great. Thanks, guys. That's all I got.
Okay. Thank you.
Thank you. The next question is from Arun Seshadri with Credit Suisse. Please go ahead.
Yes. Hi. Thanks for taking my question. Just a couple from me. Dan, as sort of a senior statesman in the satellite industry, you've seen a lot of cycles. We're now at what looks like, at least for the near term, somewhat low-end valuations in the cycle. A lot of satellite providers trying different tactics or strategies to sort of expand multiples. We have sort of vertical integration with suppliers. We've got LEO, we've got MEO, we've got all sorts of different strategies. Would love to hear your thoughts on, is this time different? Are there significantly more challenges today for the industry that are depressing multiples in terms of competitive substitution, fiber substitution, cord-cutting, et cetera, that change the dynamics and make this look more secular? Do you feel like we're just in another predictable down trough level, and eventually we come back?
Maybe your thoughts there would be very helpful. Thanks.
Yeah. Okay, thanks. For sure, the industry has had all sorts of evolution and all sorts of ups and downs over the last three decades or so. There was analog to digital. There was fiber coming in. There have been all sorts of threats to the industry over the last few decades, and equally, there have been all sorts of promising opportunities for the industry. Yeah, there was analog to digital. Yeah, there was fiber coming in, but there was DTH. There was the move from SD to HD, and so, yeah. Today, it remains the case that the industry faces some threats. Today's threats are cord-cutting, for sure, on the video side, and some capacity excess focused more on the enterprise markets. Those are the threats.
I'd say the opportunities are all around what really does just look like an insatiable demand for broadband connectivity and a need to have that ubiquitous. There, satellite's really good at that. I think that the underlying factors are a little bit different. The threats have evolved. The opportunities have evolved. Just like in the past, all of us are working really hard to figure out how do you navigate that. If you look at how everyone's navigating it, and yes, the plans are a little bit different, but everyone's trying to orient themselves towards being able to capture that explosive growth in broadband demand. Actions speak louder than words. You can look at each one of these companies and look at how they're trying to position themselves to capture that growth, where we think the answer's LEO, and not just any LEO.
We think the answer is building a LEO constellation that leverages the most advanced technologies and is oriented towards the enterprise segment. We think that's going to give us a really strong value proposition that we'll be bringing to the market that I think is going to be really compelling. I think it's going to give us a long-term sustainable competitive advantage in that market. Anyway, that's what we're doing. Then maybe the last thing I'd say, and we've seen this in the industry as well, we've seen times when a lot of new entrants have come into the industry. We've seen other times when the industry's been consolidating. I think over the next 24 months, we're going to see a little of both as SpaceX is, in some ways, a new entrant in the satellite services market.
Amazon would be a new entrant in the satellite services market. I expect that there will be some consolidation of other players, some of that horizontal, some of that vertical, as the existing players reposition themselves to be successful in the market. I feel really good about where we are. We've worked really hard laying the foundations for our growth plans and positioning ourselves to be, I think, really effective to capture what is just undeniably strong demand for global broadband connectivity in those verticals that we're focused on. We feel good about that. Anyway, that's a view.
Appreciate those thoughts, Dan. At a high level, if you could also talk about Telesat in terms of leverage and for the debt markets through this investment period in LEO. Sounds like you're taking a relatively conservative approach in terms of Telesat's own balance sheet. But can you talk about an upper bound for leverage through this investment period that you feel comfortable with, given the recent multiple contraction and your view on where the growth is coming from over the next few years?
What would I say? Maybe Andrew will have some thoughts about this too. The way our industry works is you have these lumpy CapEx cycles, and you've seen what Telesat's done. I think we've been very disciplined and very conservative in terms of how we've operated the business. I think we've been appropriately restrained when it's come to making new investments over a period where there has been some excess capacity. We've continued to operate our business with extraordinarily high operating margins and have been very disciplined in terms of what we've done with our cash. Equally, though, when there are opportunities for the business to put a lot of capital to work where you think that you're going to achieve very attractive returns on that capital, well, then you move.
Obviously when you're in one of those cycles, when you're making more substantial capital investments, well, then obviously that's going to have some impacts on your balance sheet. As you see in the sector, companies go through periods of time where they're making meaningful capital investments. Maybe leverage trends up over that period of time and then the assets are brought online. Telesat also, we like to pre-sell a lot of our capacity so that when those assets are brought into service, you have a lot of revenue generation and a substantial amount of EBITDA and cash flow contribution given the way we run our business. That's sort of my expectation. I'm not prepared to say right now that there's some particular leverage number that where we're comfortable, where we're not comfortable. I think it's more involved than that.
I would say, we're only ever going to make investments and move forward with our balance sheet in a way that we think, obviously, is smart, is responsible, is protective of the equity. Once we're in a position to say more about our investment plans about LEO, we'll be able to share a lot more around that. For me, God knows I've been doing this for a long time, including at Telesat, but I think that's how we're thinking about it. That's how the management team's thinking about it, and certainly how our shareholders will think about it. I hope that's responsive.
Okay, helpful. Thank you very much.
Okay. Thank you.
Okay. We just have time for one more question.
Certainly. Thank you. The last question will be from Harry Wu with RS. Please go ahead.
Hey, good morning, thank you for taking the q uestion. I had a couple if it's okay. The first one is just on the DTH broadcast side. Obviously we're lapping the Shaw renewal. Can you just give us a sense over the next 12 to 24 months what the renewal pipeline sort of looks like in that business?
We never, just because it's sensitive, competitive information. We'll talk about kind of the average duration of the contract, but we don't talk about specific contracts. What I could suggest is, if you look at our SEC filings, we tend to note when the satellite was launched, what its operational life is. You can kind of get a sense for which of those contracts should be coming up in the more near term. I'd sort of point you to that.
Got it. Okay. We've spoken a lot about the LEO business, or the LEO constellation today. Can you just give us a sense of what the opportunities are with respect to the, I guess, more traditional legacy GEO business? Related to that, are there any CapEx plans to sort of build out additional LEO satellites over the next couple of years?
Yeah, listen, it is a difficult operating environment right now. Look, we've got an 81% overall fleet utilization. That's been pretty stable over, gosh, I don't know, the last bunch of quarters. The environment's, again, I've seen environments that are more robust, but I think we're all doing a pretty good job maintaining asset utilization. Pricing pressures are, I'd say not as bad as they were a couple of years ago. There are absolutely opportunities that we're still seeing in the market. Demand for broadband connectivity, particularly with COVID, it's hurt the mobility sector, aero and maritime. There've been some countervailing benefits providing broadband connectivity into rural communities, for instance, which Telesat does a lot of. That's kind of what the environment looks like right now.
As far as opportunities to build more GEO satellites, certainly, when a satellite comes up for replacement, we're pretty hard-headed folks. We look very hard to see, is there a good business case to build a replacement satellite? Those are always opportunities. Beyond that, we've spoken before about a very large opportunity that Telesat's been engaged with for a very long time, with the government of Canada. It's not quite a GEO, it's actually a highly elliptical polar constellation, but they're kind of GEO class satellites. They're kind of big satellites that would be in a highly elliptical orbit. That's certainly an opportunity that we continue to engage on a nd remain bullish about. That's a big opportunity for Telesat. Those are some of the things that we're eyeing right now.
Great. Thank you so much.
Okay. Well, thank you very much. Operator, thank you for managing the call. With that, we thank everybody for joining us this morning, and look forward to speaking with you again when we release our fourth quarter and full year numbers. Thank you very much.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.