It’s probably not the last deal of certainly there will be there are fewer players as more consolidation takes place, but I suspect that there could be more consolidation still in the future. So anyway, that’s how we think about it. And again, I mean, where, you know, actions speak louder than words, you know, our vision is that I don’t think it’s vision anymore. I think we’re all watching it real time. There is a transition that’s taking place in the industry right now as particularly what we think of as enterprise users, which is to say, non-video it’s in the process of transitioning off of GEO and down to LEO and for good reason, something that, you know, we saw coming something that we think that we’re well organized for with our friends for Lightspeed.
So anyway, that’s where our focus is right now, just making sure that we execute well on Lightspeed and bring to the market. We’re convinced our addressable market is focused on. So our enterprise customers, government customers and the aero and maritime customers there, they’re wanting, affordable, high throughput, low latency, distributed, resilient kind of seamlessly connected connectivity, and we’ll be able to deliver that in Lightspeed.
Operator: The next question is from Marcello Chermisqui from Ares Management.
Marcello Chermisqui: Hey, guys, thanks for taking the question. You said earlier in response to a question that you will be making a CAD120 million restricted payment in the coming days, given that you already have such a significant amount of cash at the LEO entity and are waiting to spend the money until once you finalize terms later this summer, what is the rush to make the cash transfer so soon?
Daniel Goldberg: So hey, Marshall, thanks for the question. First off, I think the I mean —
Michael Bolitho: It’s USD150 million — it’s USD120 million.
Daniel Goldberg: And then as far as urgency on look, we’re moving forward with Lightspeed in advance and by moving forward Lightspeed, I mean, we are going to be spending meaningful amounts of money this year. You’ve heard the CapEx guidance that we’ve given up in advance of completing these definitive agreements. We have a sufficiently high level of confidence on the one hand that will conclude those definitive agreements. And on the other hand kind of a strategic urgency to get going with the Lightspeed program. So we’re moving out and when we talk about the CapEx spending that we’ve guided to this year that like we’re opening the spigots now and MDA is going to be and our other vendors are contracting with the supply chain, ordering parts, hiring people, we’re moving out here. So that’s that some that’s the plan. That’s what we’ll be doing.
Marcello Chermisqui: That makes sense. And in terms of discussions, regarding an extension on your revolving line of credit. I know it’s due later this year. I know today you’re in compliance with the revolver covenants, but if I roll forward your leverage ratio at year end based on the guidance and I understand the guidance — and I understand you’re not tested today since there’s no revolver usage, but I think the company may not be in compliance by year end, but do you think that could impact it like the revolver? Do you think it’s fine without having a revolver? How are you thinking about discussions.
Michael Bolitho: Yes, Marcello. It’s certainly something that we look at that we review, we have a business that generates our GEO businesses, which I talked about earlier a few minutes ago is still generating cash, in terms of a revolver in 17 years, I believe we have drawn our revolver once.
Marcello Chermisqui: Yes, totally makes sense. And then just one last question on utilization that have declined so much sequentially. I know there’s an interplay between utilization and then just like what your pricing per transponder and can you talk about just linked to how we think about utilization? Like are you targeting a certain utilization? Or how do you think about where utilization is worth versus where you want to be?
Daniel Goldberg: Yes, I will take it. We target a 110% utilization, to be honest with you. I mean, that’s that’s where we’d like to be probably everyone does, but barely anyone really gets there. I still think even with the decline in utilization that we’ve had, we still probably have one of the highest asset utilization numbers in the sector right now, it concluded this quarter at 77%, but it is down meaningfully from where we ended Q4, which was up at around own 85% and — what’s driven that the biggest culprit has been the business we’ve lost in the maritime space. Fundamentally, we talked about that on our last call that there was some renewals that we did not secure, particularly in the maritime space that has moved that have moved mostly as far as we can tell you over to StarLink.
And so we’re — I’m not going to guide right now on what we think utilization will be in the future. But we’re focused on remarketing that capacity. From a pricing perspective, there’s been downward rate pressure in the industry for years now. And the kind of the slope of that decline has varied throughout those years. So we were — we’ve seen significant downward pricing pressure. I’m looking at one of my colleagues probably 5 or 6 years ago, it moderated. There’s still downward price pressure, but the extent of it had moderated some and again, I’m speaking as if we’re living in a margin as world. It really varies by region on. And we had noted before that probably where we were seeing the steepest declines were in Africa, in Latin America.
But again, things started to moderate a little bit right, I’d say on is the slope of the downward pressure is probably picking up a little bit again, but not dramatically. So anyway, so but look, I mean, the laws of supply and demand are alive and well in our industry, like in others, and so on. So yes, but that that’s what has accounted for the decline in utilization. It’s mostly been in the maritime space. There is some downward pricing pressure, but I’m not what I would describe as sort of extreme at this at this point.
Operator: The next question is from Matt Lapides from ABRY Partners.
Matt Lapides: Hey, guys. Thanks for all the color here. I wanted to follow up on the maritime comments. Can you talk about what type of maritime customers you’ve been diesel or the cruise lines are the large global shipping companies and both for the personal in our large yacht segment, any color you can provide on the type of maritime customers producing the most defection mentioned?
Daniel Goldberg: Yes, the biggest has been in the crude space and in particular probably for us in the Caribbean, we just had a meaningful amount of capacity there. So I’d say that it accounts for the lion’s share of the losses on crews in Caribbean. And then there’s probably on the margins. There’s been some erosion. I don’t know, maybe maritime transport and stuff like that, but the driver has been crews.
Matt Lapides: Okay. And then can you talk about how much of that business. And if you look back three years ago, how much of that is now gone? And it is it more of it to come really well on trying to get at?
Daniel Goldberg: Yes, we’ve been staring at that, I’ll ask my colleague, John. We’ve swapped a lot of the head. John, do you want to offer any thoughts around that?
John Flaherty: If you go back three years. That’s probably not the right time to go back to because in the past two years, we had some pretty significant increases in maritime but closed. But from the past two years to this year, we’re expecting roughly half revenue revenue declined by roughly half from where we were from where we were over the past couple of years.
Matt Lapides: That’s helpful. And then just one follow-up to the earlier question about the yield on government of Canada as our equity position in video. I just wanted to make sure I understand the flow of funds, if 5, 6 years from now might speed up whatever the hotel would be in terms of generating lots of cash and in the LEO subsidiary business, if there’s excess cash flow after servicing the debt, we have $1 of excess cash flow. Thers’s a dollar of excess cash flow JVs that we export the first dollar due to does it go to the equity holder that would go to the equity holders of the India subsidiary or is it shared ratably amongst on up into the ultimate holding company? Is such that all stakeholders would get their pro rata share of that?
Daniel Goldberg: There something in the contemplated definitive documents that we’re talking about that would radically share that between the equity holders at Telesat Corporation and Telesat. LEO? No.
Operator: The next question is from Evan McFadden from Cormark Securities.
Evan McFadgen: Okay. Thank you. And now a couple of questions on. So if I understand right, I think you said that you expect to conclude a definitive agreements with the government and it could take as long as till the end of the summer. Is that correct?
Daniel Goldberg: Yes. Again, I mean, we’re dealing with the government of Canada here. So I can’t be too precise about the timing on when exactly it will come to a close, but that’s our expectation given the momentum that we have and what an extensive blueprint we have in terms of what the terms are. And yes, we think that having this done by the end of the summer is a realistic timeline.
Evan McFadgen: Okay. And so even though you may not have those agreements concluded until the end of the summer, you’re still going to spend one to $1.5 billion. I guess you can do that because you have all that cash and nonrestricted says, is that is that what gives you the confidence to just spend where you are?
Daniel Goldberg: It gives us what I mean what gives us the confidence to spend that money before having the definitive agreements concluded is just a lot of conviction that we’ll get those definitive agreements done, given all the good work that we’ve done with these funding sources and how much these funding sources wanted to see this project move forward. And then as I said on the other hand, we had to get go and we’ve got pricing locked in with our suppliers, and we’ve got a great opportunity out there in the market. Our customers are wanting us to have this service available to them as quickly as we can if they had their way, we’d have it available like now. So we’ve got to move and waiting around for another three or four months knowing as we do and we believe that again a high degree of confidence that we’re going to get all this funding that we need.
