Telesat’s earnings pressured by decline in legacy revenue

Telesat on Friday reported earnings that fell short of market expectations, citing a continued slide in legacy revenue as the satellite communications sector faces intensifying competition and shifting demand dynamics.

The company said traditional service lines, including government and enterprise contracts, weighed on financial performance, with revenue from these segments declining year-over-year. Telesat did not disclose specific figures in its preliminary earnings release but indicated that the drop in legacy revenue was a primary factor behind the underperformance.

Analysts had anticipated a more resilient performance, given Telesat’s ongoing investments in next-generation satellite networks. However, the company’s ability to offset the decline in older contracts with newer, high-margin services remains a key challenge. Telesat has been expanding its low-Earth orbit (LEO) satellite constellation, positioning itself for growth in data and connectivity services.

The earnings report comes as the satellite industry grapples with increased competition from terrestrial broadband providers and rival satellite operators. Telesat’s management is expected to address these pressures in a subsequent earnings call, where further details on revenue trends and operational outlook may be provided.

Shares of Telesat were indicated lower in pre-market trading, reflecting investor concerns over the sustainability of its revenue mix amid a competitive landscape.