Participants

James Ratcliffe; Vice President of Investor Relations; Telesat Corp

Daniel Goldberg; President, Chief Executive Officer, Director; Telesat Corp

Andrew Browne; Chief Financial Officer; Telesat Corp

Edison Yu; Analyst; Deutsche Bank

David McFadgen; Analyst; Cormark Securities

Christopher Quilty; Analyst; Quilty Space

Walter Piecyk; Analyst; LightShed

Caleb Henry; Analyst; Quilty Space

Presentation

Operator

Good morning, ladies and gentlemen. Welcome to the conference call to report the fourth quarter 2024 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. James Ratcliffe, Vice President of Investor Relations. Please go ahead, Mr. Ratcliffe.

James Ratcliffe

Thank you, Giselle, and good morning, everyone. This morning, we filed our annual report for the period ending December 31, 2024, on Form 20-F with the SEC and on SEDAR plus. 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 filed with the SEC.
Telesat assumes no responsibility to update or revise these forward-looking statements. I'll now turn the call over to Dan Goldberg, Telesat's President, and Chief Executive Officer.

Daniel Goldberg

Okay. Thanks, James, and thank you all for joining us this morning. I'll say a few words about our performance in 2024 and then talk about our key objectives and expectations for 2025. I'll then hand over to Andrew to speak to the numbers in more detail, and then we'll open the call up to questions.
2024 was a pivotal and productive year for Telesat, and I'm very pleased with what we accomplished. We delivered focused, disciplined execution in our GEO business resulting in revenue and adjusted EBITDA that were above our guidance. And we deployed a portion of the healthy cash flows the GEO business generates to make some additional debt repurchases, which we believe strengthen our financial position and are accretive for stakeholders.
In addition, we made major strides forward with Telesat Lightspeed. In September, we closed our financing arrangements with the governments of Canada and Quebec, securing the funding we need for full global service.
We also made strong progress on the development and deployment of Lightspeed, investing more than $1 billion over the course of last year in completing some important development milestones. We continue to build out the LEO team on both the engineering and commercial fronts and importantly, got strong traction with prospective customers.
Turning to this year, 2025, we expect the difficult operating environment in our GEO business to continue, which is reflected in our guidance for the year. We anticipate revenue to be down approximately CAD155 million at the midpoint of our guidance, with pressure on both the video and enterprise portions of our business.
Half the anticipated decline comes from our DTH business, primarily from the full run rate impact of the lower rates associated with the renewal last year of the Nimiq 5 agreement with DISH. We also marked the end of service with [Shaw] last year on our Anik F2 satellite, and early this year, will reach the expiration of our Anik F3 contract with DISH. Anik F3 has come to the end of its station-kept life and so is being put into inclined orbit and will be used for customer requirements that can be supported on an inclined orbit satellite.
The other half of our forecasted revenue decline is expected to come from our enterprise and consulting activities. Roughly 20% of that is coming from customers serving the maritime and, to a lesser extent, the aero markets, principally owing to competition from Starlink.
Other meaningful contributors are reduced revenues from an Indonesian government-funded broadband program where a new Indonesia owned satellite is replacing some of the services we provided, lower revenues from LEO related consulting and demonstration projects with US government agencies NASA and DARPA as well as reduced consulting revenues in our GEO business too and lower revenues owing to the sale of our wholly-owned subsidiary, [Intelsat] that we announced last year.
On the OpEx front, we're expecting Lightspeed OpEx to increase by approximately CAD40 million at the midpoint of guidance, with increased investments in engineering, operations and commercial resources, mostly headcount-driven as we continue to ramp up and execute the program.
We'll run our GEO business in a very focused, disciplined way. We'll continue to do that in an effort to mitigate as much as possible the pressures we're seeing in the market. On a consolidated basis, with the forecast top line declines and the incremental OpEx for Lightspeed, we're expecting consolidated adjusted EBITDA to be down approximately CAD200 million at the midpoint of guidance.
For my colleagues and I, 2025 will be all about focused execution on both GEO and LEO mitigating as best we can, the headwinds we're facing in GEO and building out and commercializing Lightspeed on the LEO front. We're making strong progress across all aspects of developing the Lightspeed constellation, the satellites, the landing stations, user terminals, software development and expect to launch our first batch of satellites late next year.
On the commercial front for Lightspeed, I'd say we're more bullish than ever given what we're hearing from customers and seeing in the market. We've announced a handful of customer contracts over the past few weeks and are optimistic that we'll have more material contract announcements over the course of this year. Announcements that will translate in the more significant Lightspeed contractual backlog, which in turn will provide greater revenue and cash flow visibility for the project.
We've spoken for some time about the huge opportunity we see in the market for commercial services, something that's becoming much more concrete as we get closer to launch. And as the markets embrace the LEO value proposition accelerates across all verticals.
We'd also note that the recent fairly tectonic shifts in the geopolitical environment are making us even more bullish on sovereign national security requirements. Requirements, we always believe were significant, but now expect will provide an even stronger tailwind as countries increase their defense spending and look to diversify the allied governments and service providers they work with to protect and advance their national security interest.
Lastly, I'd note that refinancing our restricted group debt remains an important priority for the company this year. In sum, we made an enormous amount of progress in 2024, and we have a clear plan and huge opportunity as we go forward. Given the progress we've made and the opportunities we see in the market at this time, we're more bullish than ever on our ability to deliver the services and solutions the market is demanding while delivering highly attractive returns to our shareholders.
As I hand over to Andrew, you may have seen in our release this morning that after more than five years at Telesat and well over 40 years in the computer chip and satellite communications industries, Andrew has decided to retire. We'll be instituting a search for his successor shortly, and Andrew will ensure a smooth transition and handover.
I've known and worked with Andrew for over 1/4 century and while we'll still be working together for the next little while, I can't thank him enough for his exemplary work and contributions and for his warm collegiality and friendship over the years. I wish him a heartfelt congratulations and all the very best as he gets ready to take this very well-deserved next step. So with that, over to you, Andrew.

Andrew Browne

Good morning, everyone. Firstly, thank you, Dan, for those really kind and generous words. And so very much appreciate it. It's been a great privilege to know and have worked with you for many years and especially here at Telesat. As you move ahead with Telesat Lightspeed, I'm really very excited about the future created for Telesat and indeed Canada and the world.
As we all know, there are times in life when certain decisions have to be made and the last believe this is the right time to use that word retirement, especially given where we are now at Telesat and also, I think, for the -- my good wife and family. I will naturally do all I can to ensure a smooth and seamless handover to my successor, and sincere thank you again Dan and also to my colleagues, a very good friends around the table with me this morning and here at Telesat and to our Board.
So with that said, I would now like to focus on highlights from this morning's press release and filings. Telesat ended the year 2024 with reported revenues of $571 million. Adjusted EBITDA of $384 million and cash from operations of $62 million with $552 million of cash on the balance sheet at year-end.
As Dan has mentioned, we outperformed the revenue and EBITDA guidance for 2024. In the fourth quarter of 2024, Telesat reported revenues of $128 million and adjusted EBITDA of $73 million, down $38 million, and $50 million, respectively, from the same period in 2023.
When adjusted for changes in foreign exchange rates, total revenues decreased by $40 million, and adjusted EBITDA decreased by $53 million. Our adjusted EBITDA margin was 67.4% as compared to 74.3% in the fourth quarter of 2023.
The GEO segment adjusted EBITDA margin, which includes our ongoing investment in Telesat Lightspeed was 78%, versus 82.2% in the fourth quarter of 2023. The revenue decrease for the quarter was primarily due to a rate reduction on the renewal of a long-term agreement with a North American DTH customer, lower enterprise revenues and the sale of the company's Intelsat business, as Dan mentioned. The decline in our consolidated adjusted EBITDA reflects the revenue decline along with higher costs associated with the Telesat Lightspeed deployment.
Interest expense decreased by $7 million during the fourth quarter when compared to the same period in 2023. The decrease in interest expense was primarily due to the repurchase of Term Loan B in 2024. This was partially offset by an increase in interest rates in the US term loan facility. In the fourth quarter, we recorded a foreign exchange loss of $177 million, as compared to a gain of $78 million in the fourth quarter of '23.
The loss for the three months ended December 31, '24 was mainly the result of the stronger US dollar to Canadian dollar spot rate as of December 31 compared to the spot rate as of September 30 and the resulting impact on the translation of our US dollar-denominated debt.
We recorded a $447 million net loss in the fourth quarter of 2024 compared to net income of $39 million for the same period in the prior year. For the full 2024, we recorded a net loss of $302 million, compared to a gain of $583 million for the prior year. The variance primarily due to previously mentioned foreign exchange impact the recognition of C-band proceeds in 2023, higher impairment charges on our orbital slots and satellites on the reduction in revenues.
For the year ended December 31, cash inflows from operating activities were $62 million, with total cash capital expenditures of $1.11 billion or $1.21 billion on an accrual basis, of that $1.21 billion, virtually all was related to our investments in Telesat Lightpeed.
In terms of debt repurchases, we repurchased USD262 million during 2024 at the cost of USD119 million, including accrued interest. Combined with debt repurchases completed the '22 and '23, we have now repurchased a cumulative principal amount of USD849 million at a cost of USD459 million, an average price of just under $0.53.
This also results in interest savings of approximately USD54 million annually. Combined with our 2020 repayments of $365 a return loan, we've retired 36% of our total debt outstanding and lowering overall annualized interest expense by USD78 million at current rates.
Turning to guidance, as Dan discussed. And as you also have noted in our earnings release this morning, we provided guidance for 2025. The guidance assumes a Canadian to US dollar exchange rate of CAD1.42 million. In 2025, Telesat expects its full year revenues to be between $405 million to $425 million.
In terms of adjusted EBITDA, Telesat expects to be between $170 million to $190 million on a consolidated basis. From a segment perspective, we expect LEO operating expenses to be in the range of $110 million to $120 million, a $38 million to $48 million increase in 2024.
The drivers of the increased operating expenditures include higher compensation expense as we continue to build out the Telesat teams, LightSpeed team, IT services and consulting costs. We expect capital expenditures in 2025 to be in the range of $900 million to $1.1 billion, virtually all of which is related to Telesat Lightspeed.
Turning to our cash and liquidity position. In the restricted group, we had approximately $211 million cash on hand at the end of 2024, and the business continues to generate healthy cash flows.
In the LEO Group, we ended the year with $317 million cash on hand and also with the full CAD2.54 billion in lending capacity from the governments of Canada and Quebec available to draw. As you noted in our release, we received the first tranche of funds from the loan facilities in January of this year.
At the fourth quarter, the total leverage ratio as calculated under the terms of the amended senior secured facilities of 6.68 times. Telesat is in compliance 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 or 20-F provides unaudited interim condensed consolidated financial information in the MD&A. The nonguarantor subsidiary shown are essentially the unrestricted subsidiaries with minor differences.
So with this, it concludes our prepared remarks for the call, and I'm very happy to turn back to the operator and address any questions you may have, and thank you very much.

Question and Answer Session

Operator

(Operator Instructions) Edison Yu, Deutsche Bank.

Edison Yu

First off, I know you mentioned tectonic shifts happening in part due to the geopolitics. Can you give us a sense on how those discussions have changed? Was it one of those things where couple of months ago, literally, your phone just kind of blew up? Or how do you think have been going on in the background and then it just accelerated -- some color there would be great.

Daniel Goldberg

Okay. Thanks, Edison. It's Dan. Yes, I think that's probably a fair characterization. The -- where they going on in the background. And then did they accelerate, I think that's kind of probably best captures and maybe less accelerate, but maybe it's the same thing, but it just seems to be more concrete now.
There's just a much greater focus it feels like with, yes, kind of sovereign customers in thinking about their need to have access to an advanced LEO network, their focus on making sure that they've got options in terms of who they work with.
Certainly, for the government, of Canada, we've been here -- and I should say we're in an election up here right now. So we're hearing a lot from political leaders from all parties right now and whether it's the conservative party of Canada, whether it's the liberal party of Canada.
They've been articulating in connection with this election. Their views around the need to have greater defense spending, number one; to accelerate that spending, so to achieve NATO spending targets much sooner than what was earlier envisioned. Doing it in a way that sort of supports Canadian industry.
I'd say most countries do this. When they increase their defense spending, they usually in the first instance, look to do that with their domestic suppliers. And certainly, doing all that with a greater focus on here in Canada, at least Arctic sovereignty is an area of great focus and working with all of their allies to make sure that the defense spending is done in a way that doesn't just lift the -- or meet the kind of more parochial domestic objectives, but that is kind of a win-win in terms of what the allies are thinking about as well.
So anyway, so that's what we're seeing, and I've talked a little bit about what's happening here in Canada, but we're seeing it all over when I read the press about what the Europeans are doing, and I see how that's impacting some of our European peers out there.
I think they're probably experiencing the same thing. And when we have conversations around the world with other governments. Here again, whether it's sovereign requirements or just making sure that they've got good broadband infrastructure to bridge the digital divide in their countries, there just seems to be a greater focus on ensuring that there are a diversity of suppliers that can bring these kind of architectures to market. So I'll stop there, Edison, but that's what it's like.
And maybe just one more thing. As I said in my remarks, we were always optimistic about how Telesat Lightspeed can deliver on all those sorts of objectives, but it just seems so much more concrete now, so much more tangible and the nature of the discussions we're having just there's just a greater immediacy.
I would say -- and I think a lot of that has to do just with the fact that our program is getting closer to launch, number one. But number two, some of these geopolitical shifts that I talked about have just really focused the minds of government users and that just gives us greater confidence that the things that we believe were going to happen are going to happen and maybe sooner rather than later.

Edison Yu

Understood. I appreciate the color. On the comment you made about the backlog for Lightspeed, do you have -- can you give us a sense of magnitude? I think that the last disclosure made was $600 million or something. Could we see that double, triple in the next year or two? Any kind of color around the -- maybe the pipeline to getting that number much larger?

Daniel Goldberg

Yes. I'll say something about that. And I'll say a couple of things. One, we had promised to start disclosing LEO backlog and to break that out in our financial statements, and we are going to do that. It's not in our 20-F, but we'll start doing that looking around the table.
My colleagues will start doing that in Q1, which isn't that far off at this point. So you'll see that. We disclosed GEO backlog at year-end this time around, which was CAD1.1 billion.
But here's what I'd say. We've talked about LEO backlog before, and we'll do that more formally in our public filings. But your recollection is correct. We've talked about LEO backlog being in order of magnitude about CAD600 million. I would note that, that includes that $600 million agreement that we have with the government of Canada.
So we include that. And obviously, that's a big part. Now we have been announcing some smaller Lightspeed customer contracts. I mentioned in the last few weeks; there's something with Orange that we mentioned. A lot of that was where they're going to be hosting a landing station for us.
They made a smallish commitment for Lightspeed. What's more fundamental about that is Orange is obviously a big player in the mobile and broadband connectivity space in Europe throughout Africa and elsewhere and having them as a partner and getting them set up to integrate
Lightspeed into their network, which isn't that hard, given the way we've architected Lightspeed. I think there's more strategic significance in that than there is actual kind of meaningful contributions to backlog. At this time, we announced just yesterday, I think, maybe the day before, Bangladesh satellite services integrator has made a commitment to Lightspeed, more meaningful than Orange, but still not what I would consider rather a big material level.
But there are things in the pipeline that we have that are giving us confidence that we will see some more meaningful contributions to backlog even by the end of this year. I'd note we're not going to get in the habit of giving guidance for backlog, but I'll give maybe just some high-level thoughts.
Given what we're seen, what I'm seeing in our pipeline right now and the nature and the quality of the discussions that we're having with different folks out there. My own expectation is that by the end of this year that light speed backlog could very likely eclipse what our GEO backlog was at the end of last year, that CAD1.1 billion. And look, it ain't over until it's over.
We're having some advanced discussions with customers about Lightspeed commitments, which I think is great, right? I mean we're still about 1.5 years out from our first launch. But the market just feels like it's moving in our direction.
And so that's kind of some feeling for how we think backlog is going to shape up. But we got to close these deals. And as we do, hopefully, we'll be making some announcements about that throughout the course of this year.

Operator

David McFadgen, Cormark Securities.

David McFadgen

A couple of questions. Well, first of all, sorry to see Andrew go. Anyway, I'll just start off first with -- you talked about the debt restructuring and you said it's a priority. So, what's the update on that? And do you think you could get that resolved in 2025?

Daniel Goldberg

That's going to be our focus, David. It is a priority for us. And look, I got to say, I mean, the maturities don't come up until the end of next year. So it's not like these are things that are coming up at the end of next quarter. But we want to tackle this sooner than later.
And so yes, that's going to be our focus. We obviously have a lot going on at Telesat right now. I'm happy to say it's good stuff, but we've got a lot going on. But no engaging with the restricted group lenders and seeking to refinance that restricted group debt is a priority for us this year, and I believe it's realistic that we'll be able to get that done, but we'll see. So it is a priority.

David McFadgen

Okay. Then just on the GEO business, obviously, we've seen a decent decline in '24 and then your guidance of '25 is another decent decline. Do you think the decline in the GEO revenue would ease up in 2026 because you've factored in a couple of big contract renewals?

Daniel Goldberg

Gosh, I haven't quite looked out that far, I mean, we've got a long-term plan, obviously, but just getting ready for this call is more focused on last year and this year than 2026. Fortunately, I've got colleagues here that. But in any event, what would I say? I mean, the good thing about our GEO business is fairly predictable. Half of it's the DTH business that we provide, I think, a huge amount of visibility on in terms of when these big contracts come up for renewal.
And so I certainly think folks out there, that's a pretty easy part of our business to model. We've said a lot about the Nimiq 5 renewal we had with DISH. We've said a lot about the end of life on our Anik F2 and Anik F3 satellites and whatnot.
So that's been, I think, reasonably easy to model the enterprise a little bit more challenging looking from the outside in. But yes, what can I say? We expected these shifts to be taking place in our industry. It's why we're working as hard and as fast as we can on Lightspeed. And that business still generates a lot of cash.
We are fighting in the trenches on every new opportunity on every renewal to support that business as best as possible. We continue to manage the cost structure in a very disciplined way. And we can't -- it is a largely fixed cost business, but we will be reducing some costs over the course of this year in the GEO business.
So anyway, so I don't want to project all the way out to 2026, maybe as we get a little bit deeper into this year, we'll try to start to foreshadow how we think that's going to shape up.

David McFadgen

Okay. And then you said you have $211 million in cash and restricted subs. So I was just wondering why you haven't purchased any debt, you didn't purchase in Q4. I don't think you purchased any in Q3 as well. Just wondering what your thoughts are there?

Daniel Goldberg

Look, we -- that's another area. We just try to be pretty transparent about. We think those debt repurchases that we've made to date totally sensible. We think it strengthens our financial position. We think it's accretive to shareholders, but candidly, to all stakeholders.
We do have some available cash if we want to do more of those. And I'd say there are a lot of variables that we have to take into account when we go into the market, whether that's liquidity or just where things are trading. So anyway, I'll say if we make additional repurchases, as always, we'll disclose them. And so I'll probably leave it there, David.

David McFadgen

Okay. Just one last one, if I may. So when you look at your CapEx, you spent $1 billion on say, Lightspeed in '24, the guidance this year is about another $1 billion. So it seemed to me that given the total CapEx of this program, '26 CapEx is going to be probably something like $1 billion as well, right?

Andrew Browne

So for the next couple of years, so '26, '27 it would be in that sort of range, absolutely.

Operator

Chris Quilty, Quilty Space.

Christopher Quilty

Dan, not to go back to the enterprise business, but it declined $24 million two years ago, it was down $93 million this year just in terms of revenue contribution. Does it slow from there? Or does it accelerate? And I guess what I'm asking is, what is the nature of the enterprise customers that remain on the network? And how much of the customers who were subject to loss have already left from the (technical difficulty) ?

Daniel Goldberg

Thanks for the question, Chris. So would I say about that. I mean our Enterprise business is a mix of different things. It's rural broadband connectivity and broadband connectivity in the maritime and the Aero segments. We include government services in there. There are kind of some services in the energy market, kind of point-of-sale networks and whatnot. So it's a bunch of different things.
And we've talked before where we've already seen big impacts in the Enterprise business from Starlink and Starlink has been ramping up, and there have been some -- it certainly impacts to the GEO operators tell us that included where we've seen the most of it to date has been in the maritime segment.
I'd say that maritime and aero combined are, I don't know, in order of magnitude, 10% of our total revenue, roughly. And it's right -- it was split pretty evenly between the two. My instinct is, given that we've seen more hits to aero -- I'm sorry, to maritime over the past 12, 24 months, it wouldn't surprise me if aero is now in our mix a little bit bigger than maritime at this point.
Is that leveling out? I don't know. We're actually doing okay in aero right now, notwithstanding the inroads that Starlink has been making. There's been some pressure there, but it feels like we're seeing a good number of renewals and some new business opportunities there. That market continues to grow quickly. The question is who's going to capture it. But we're kind of holding our own there.
I think one of the issues that we're going to have to watch is just beyond kind of the macro dynamics out there, just our own fleet, right? So we've got Anik F3 going to new inclined operations. We've got Anik F2 going to inclined operations.
I've said before, we haven't ordered a new GEO satellite in nine years, and that means that some of our satellites are starting to come to their end of life. So even away from kind of the LEO, GEO dynamics out there in the market and what that means, there are some issues that are more Telesat specific because we haven't been able to close a compelling business case for a new GEO satellite in quite some time.
We saw where this market was going. So as you all know, we've been taking that cash flow and thinking about our LEO investments, repurchasing debt, and the like. I'm not totally -- I still think there might be another opportunity or two for a new GEO satellite in the future, but we'll see.
So we're not totally by any measure, abandoning that. Anyway, Chris, it's a long answer. I think net-net, there will continue to be headwinds in the Enterprise space. This particular year, '25 relative to '24, we had the restructuring and exploring that we talked about that's provided some headwinds.
We sold our Intelsat business, which has some headwinds. We were providing some consulting services to the US government around LEO. Some of those projects are still ongoing, but we expect less revenue this year versus 2024. But overall, I think that there is going to be a shift from GEO to LEO that will continue to act as a headwind to our Enterprise GEO revenues as well some of the -- reaching the end of life of some of our satellites.
And then I think we're going to see massive acceleration once Lightspeed gets into service as those enterprise applications are just really well served by Lightspeed.

Christopher Quilty

Andrew, real quickly, I mean, I will miss your distinguished way of reading through the earnings report, but I do have one final question for you. For the equity guy here, can you remind us of how the debt -- government debt draws down over time?

Andrew Browne

It will be drawn down pretty well in line, I think, with our CapEx that we just referred to. It's clearly matched up with that, Chris. So that would be the expectation. Our CapEx like for this year, it will be around the same as the CapEx itself. It will be pretty kind of linear. I appreciate your comments on my (technical difficulty), by the way. I appreciate that as well.

Christopher Quilty

One of my favorites over the years.

Operator

Walter Piecyk, LightShed.

Walter Piecyk

Dan, thanks for the -- I know it's not an official target, but at least kind of sizing where you think the backlog can go. But now you basically enable us all to keep asking questions and kind of how you're tracking to hit that. So I would suggest maybe providing that every quarter kind of where you are in pacing on the backlog for LEO.
The press releases have also been helpful, even if they don't include that data. So to the extent you sign up additional customers for LEO capacity, I would just encourage you guys to continue to issue those releases, so we can get some sense of the pace.
One of the potentials that I think should be out there in terms of a customer for LEO capacity would be Viasat. And I'm just curious kind of what the state of the relationship you have with the company and what might be taking so long?
And presumably, if you did come to some agreement with them, it would be an announce able event. Would you anticipate something more strategic like that being like kind of a take-or-pay cash type of deal or maybe equity in Lightspeed, -- like how would you imagine a relationship like that taking place?

Daniel Goldberg

Okay. Walter, thanks for the question. So I'll say a few words about Viasat, but I'll say at the start. Look, as a rule, we tend not to talk about deal discussions with prospective customers, we'll make an exception for Viasat largely because Viasat has been talking about the discussions that they've been having with us. And I should note, we gave them a green light to do that.
And I know they had their earnings call a couple of weeks ago and Mark Dankberg made some comments about his discussions with Lightspeed. And I'll affirm what Mark said, I believe Mark said that they are -- Viasat is in advanced negotiations with Telesat, that we are converging in terms of the nature of those discussions, that they're thinking about their use of the Lightspeed network kind of to support them across a couple of verticals, but probably with a heavy emphasis on the commercial aero market and in-flight connectivity.
And so yes, I mean I think Mark's characterization of where we are is, yes, very fair. We know Viasat well. We've worked with them for a long time. They're a customer of Telesat today. We've been a customer of theirs over the years for their VSAT product and whatnot.
And we have a high regard for Viasat. They're definitely a leading, pretty well vertically integrated service provider. It's -- just to say a little bit, it's less about kind of an equity kind of deal and more about them being a Lightspeed customer. And so -- and whether it's taking long or not, I don't know, these -- there are pretty complex arrangements to negotiate. But as Mark said, yes, the discussions are advanced, the parties are converging. If we ultimately get there with them, for sure, we'll announce that.
And yes, maybe I'd just add, I think they'd be a great customer of Lightspeed given the verticals that they're focused on, given kind of the way the market is developing, we'd welcome the opportunity to work with them. We welcome the opportunity as we've always done in the past to work with a lot of the other service providers out there across all the different verticals. That's our business model.
It's a B2B business model. We need good channels, whether it's into the aeronautical market, the maritime market, government, the deal with Orange and ADN, that's much more about rural broadband connectivity and extension of terrestrial and wireless networks on the ground.
Space Norway, that we announced that we signed the term sheet with Space Norway. We've worked with them for years. They're owned by the government now. They used to be owned by Telenor, but Space Norway is now owned by the government of Norway. They've got a mix of different requirements, commercial requirements, government requirements.
Like Viasat, they kind of have a multi-orbit strategy, Lightspeed is Dynamite, advanced LEO network. So anyway, so I'll stop there.

Walter Piecyk

Would a contract with them substantially get you to that end of year target? And I guess, similarly, any of these announcements ever merit you putting sizing them in there? Or is it always going to be something you kind of hold back and only aggregate up in terms of overall backlog for LEO?

Daniel Goldberg

Yes, you tend not to disclose exact contract sizes that tends to be pretty commercial and proprietary. So when we talk about it, we'll probably talk about it more in the aggregate. And I don't know, maybe try to put some markers down distinguishing a very large contract from a contract that might be strategic, but it might be smaller in terms of guaranteed dollar contribution.
So anyway, no, but I mean when we think about the pipeline of opportunities, Viasat's obviously in that pipeline, there are others. And yes, when we kind of think about them in the aggregate that gets us into the ZIP code of sort of what I was suggesting, where we could land in terms of LEO backlog by the end of this year.

Walter Piecyk

May I prefer it take-or-pay or cash, as you indicated as opposed to equity. So that's obviously good to hear. Can you.

Daniel Goldberg

You know what, Walter. You'll be happy to know that we're pretty aligned there. We like take-or-pay contracts too. We like the backlog creation. We like the revenue and the cash flow visibility that it offers to investors. And yes, that's our focus. We're pretty simple guys. We're building a great network, and we're focused on being out there selling it in a pretty clear straightforward way.

Walter Piecyk

Can you give us a sense of -- when we look at 2025, I know there's a lot of intermingled expenses, but if we want to get a sense of kind of what the GEO world looks like versus LEO, just what the OpEx is that's associated with the LEO. Because obviously, you're ramping up this year. We see it in CapEx, I assume there's OpEx that you can't capitalize, maybe I'm wrong, (technical difficulty) ?

Daniel Goldberg

Look at our guidance, we've literally broken out what our LEO OpEx, we gave a range of LEO OpEx of between CAD110 million and CAD120 million, that's OpEx. There's other expenditures for LEO that we expect will get capitalized.
And most of that CAD110 million, CAD120 million, I mean, a huge part of that is head count and compensation-related expenses. We continue to ramp up the team. A lot of that is technical people, but there's some commercial people and then we just kind of have to scale the rest of the organization to keep up with that. And then there are other expenses, obviously, that are above and beyond comp.
But yes, no, we'll be real transparent about trying to help folks understand LEO versus GEO so that you can see how those different activities are shaping up.

Andrew Browne

Well, you can see the 20-F, we break out the segmentation, we make that very clear. So going forward that will continue for sure.

Walter Piecyk

Okay. And just one last one. Just I think in our earlier answer, you said something to the extent of enterprise is more challenging from the outside looking in. And I'm just -- I want to get a little bit more color. I think you were relating to the GEO business, but I guess, in general, in terms of satellite connectivity, has the enterprise market changed at all?
And then similarly, like it looks like (technical difficulty) is finally starting to move forward on their own, getting satellites up. Does their entrance or finalizing some of their launch stuff change kind of your perception of them?
I know you said you were super bullish in the prepared comments, but then I just caught that more challenging from the outside looking. Maybe I was misunderstanding what you were saying there. But just kind of go back on the enterprise there and say, what exactly is going on? And what you think maybe (technical difficulty)does to that market in '26 and '27 when you launch?

Daniel Goldberg

So I'll clarify the remarks I made. What I was trying to say is if you look at our GEO business, it's easier to model the video side of that, it's three customers. It's a handful of satellites. It's easier to model the video side of our GEO business from the outside looking in than it is to model the GEO enterprise side of our business from the outside looking in. They're just more moving parts there. So that's all -- that's all we were saying.
And then as far as Kuiper, we've known Kuiper has been coming for quite some time. They are a little bit later than they had originally planned on coming to market. But we still fully believe that they will be coming to market, and that they'll have a very capable constellation.
And so our confidence around our ability to be successful with Lightspeed has always taken into account not just Starlink being there and continuing to improve their constellation, but the entry of Kuiper as well. And they're out there in the market right now, engaging with commercial and government users.
So we're already seeing them out there.

Operator

(Operator Instructions) Caleb Henry, Quilty Space.

Caleb Henry

Most of my questions have been answered. I just wanted to do one follow-up on the sovereignty discussion. I was looking -- there's a couple of Canadian programs like the enhanced satellite communications project. It's listed as a [$5 billion Canadian] program, and then there's the recent Northern Operational Support hub Canadian Forces program that's supposed to have around $2.7 billion across 20 years.
I guess my question there is, are there programs that we should watch that could be needle moving for Lightspeed or what Canadian programs on the government side, should we be paying attention to that might have an impact in terms of kind of putting some more structure around the software discussion?

Daniel Goldberg

Yes. Caleb, thanks for the question. So certainly, Escape has been kind of a long-standing program of record for the Department of National Defense here. It's all about, kind of Arctic sovereignty, Arctic communications, it's envisioned to be a program that would provide in the upper latitudes, broadband connectivity, more narrowband, tactical communications. So that is a program and a set of requirements we understand very well.
So that's one to watch. And then -- but I would also say that is a long-standing program of record. And I do think that with these geopolitical shifts that we spoke about, that there will be greater focus still on kind of that underlying mission that Escape was all about.
Maybe other things, I point folks to is just some of these recent announcements that we've heard from, I'd say, the two leading political parties here in Canada, the conservatives announced their Arctic strategy, probably a month or so ago.
And if you have a look at that and then kind of think about the things that Lightspeed can do in terms of connecting forward operating bases, connecting ships, icebreaker ships and other ships in terms of just having greater presence in connectivity and you think about fighter jets and you think about UAVs and drones. So -- and then here, again, you think about Lightspeed's capabilities. So that's one thing on the one hand.
The liberals earlier this week announced kind of a refreshed defense policy and there's kind of lots of points in there. But one of the points that they make in there is about the ability that Canada has to accelerate its defense spending with Canadian suppliers.
And one of those ways is to roll forward with dual-use investments, so investments that can support not only sovereign, defense, national security requirements, but also other requirements that can be -- I'll make it up, bridging the digital divide, providing infrastructure for first responders and territorial and provincial and municipal governments and in that refresh liberal policy, they explicitly mentioned satellite technologies.
So those are other things maybe I'd point folks to think about and to track. And those are the sorts of things that give us even greater confidence that the capabilities that we're investing in are really well suited to help the government of Canada and their allies out as they, yes, kind of engaged in this new environment.

Operator

There are no more further questions registered at this time. I would now like to turn the meeting over to Mr. Dan Goldberg.

Daniel Goldberg

Good. Okay. Well, thank you, operator. Thank you all for joining us this morning, and we'll be speaking in the not-too-distant future because in the not-too-distant future, we'll be releasing our Q1 numbers. So we look forward to speaking with you again then. Thank you.

Andrew Browne

Thank you.

Operator

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.