Exhibit 99.1

TELESAT CANADA

Quarterly Report

For the Three Month Period Ended March 31, 2021

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Reserved	40
Item 5.	Other Information	40
Item 6.	Exhibits	40

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Telesat Canada
Unaudited Interim Condensed Consolidated Statements of Income (Loss)
For the three months ended March 31

(in thousands of Canadian dollars)	Notes	2021			2020
Revenue	5	$	190,492		$	208,673
Operating expenses	6		(39,954	)		(45,476	)
Depreciation			(50,367	)		(55,607	)
Amortization			(4,115	)		(4,311	)
Other operating losses, net			(673	)		(221	)
Operating income			95,383			103,058
Interest expense	7		(41,995	)		(54,734	)
Interest and other income			121			4,252
Loss on changes in fair value of financial instruments			(25,124	)		(43,772	)
Gain (loss) on foreign exchange			35,113			(290,692	)
Income (loss) before tax			63,498			(281,888	)
Tax (expense) recovery	8		(21,765	)		3,800
Net income (loss)		$	41,733		$	(278,088	)

See accompanying notes to the unaudited interim condensed consolidated financial statements

Telesat Canada
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
For the three months ended March 31

(in thousands of Canadian dollars)	2021			2020
Net income (loss)	$	41,733		$	(278,088	)
Other comprehensive (loss) income
Items that may be reclassified into profit or loss
Foreign currency translation adjustments		(14,102	)		99,248
Other comprehensive (loss) income		(14,102	)		99,248
Total comprehensive income (loss)	$	27,631		$	(178,840	)

See accompanying notes to the unaudited interim condensed consolidated financial statements

Telesat Canada
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity

(in thousands of Canadian dollars)	Common shares		Preferred shares		Total share capital		Accumulated earnings			Equity- settled employee benefits reserve			Foreign currency translation reserve			Total reserves			Total shareholders’ equity
Balance as at January 1, 2020	$	26,580	$	128,315	$	154,895	$	1,031,055		$	74,877		$	(15,502	)	$	59,375		$	1,245,325
Net loss		—		—		—		(278,088	)		—			—			—			(278,088	)
Other comprehensive income, net of tax of $nil		—		—		—		—			—			99,248			99,248			99,248
Share-based compensation		—		—		—		—			2,595			—			2,595			2,595
Balance as at March 31, 2020	$	26,580	$	128,315	$	154,895	$	752,967		$	77,472		$	83,746		$	161,218		$	1,069,080

Balance as at April 1, 2020	$	26,580	$	128,315	$	154,895	$	752,967		$	77,472		$	83,746		$	161,218		$	1,069,080
Net income		—		—		—		523,666			—			—			—			523,666
Issuance of share capital on settlement of restricted share units		—		803		803		—			(1,729	)		—			(1,729	)		(926	)
Other comprehensive loss, net of tax recovery of $3,584		—		—		—		(10,109	)		—			(131,670	)		(131,670	)		(141,779	)
Share-based compensation		—		—		—		—			9,905			—			9,905			9,905
Dividends declared on Director Voting Preferred Shares		—		—		—		(10	)		—			—			—			(10	)
Balance as at December 31, 2020	$	26,580	$	129,118	$	155,698	$	1,266,514		$	85,648		$	(47,924	)	$	37,724		$	1,459,936

Balance as at January 1, 2021	$	26,580	$	129,118	$	155,698	$	1,266,514		$	85,648		$	(47,924	)	$	37,724		$	1,459,936
Net income		—		—		—		41,733			—			—			—			41,733
Other comprehensive loss, net of tax of $nil		—		—		—		—			—			(14,102	)		(14,102	)		(14,102	)
Share-based compensation		—		—		—		—			1,711			—			1,711			1,711
Balance as at March 31, 2021	$	26,580	$	129,118	$	155,698	$	1,308,247		$	87,359		$	(62,026	)	$	25,333		$	1,489,278

See accompanying notes to the unaudited interim condensed consolidated financial statements

Telesat Canada
Unaudited Interim Condensed Consolidated Balance Sheets

(in thousands of Canadian dollars)	Notes	March 31, 2021		December 31, 2020
Assets
Cash and cash equivalents		$	883,091	$	818,378
Trade and other receivables			43,593		51,928
Other current financial assets			438		448
Prepaid expenses and other current assets			26,360		22,861
Total current assets			953,482		893,615
Satellites, property and other equipment	5, 9		1,300,287		1,318,526
Deferred tax assets			79,955		79,912
Other long-term financial assets			19,293		53,425
Other long-term assets	5		9,833		9,922
Intangible assets	5		772,381		779,190
Goodwill			2,446,603		2,446,603
Total assets		$	5,581,834	$	5,581,193

Liabilities
Trade and other payables		$	46,733	$	30,091
Other current financial liabilities			52,290		35,880
Other current liabilities			95,150		96,155
Total current liabilities			194,173		162,126
Long-term indebtedness	11		3,146,384		3,187,152
Deferred tax liabilities			319,757		325,893
Other long-term financial liabilities			31,430		35,499
Other long-term liabilities			400,812		410,587
Total liabilities			4,092,556		4,121,257

Shareholders’ Equity
Share capital	12		155,698		155,698
Accumulated earnings			1,308,247		1,266,514
Reserves			25,333		37,724
Total shareholders’ equity			1,489,278		1,459,936
Total liabilities and shareholders’ equity		$	5,581,834	$	5,581,193

See accompanying notes to the unaudited interim condensed consolidated financial statements

Telesat Canada
Unaudited Interim Condensed Consolidated Statements of Cash Flows
For the three months ended March 31

(in thousands of Canadian dollars)	Notes	2021			2020
Cash flows from operating activities
Net income (loss)		$	41,733		$	(278,088	)
Adjustments to reconcile net income (loss) to cash flows from operating activities
Depreciation			50,367			55,607
Amortization			4,115			4,311
Tax expense (recovery)			21,765			(3,800	)
Interest expense			41,995			54,734
Interest income			(433	)		(4,246	)
(Gain) loss on foreign exchange			(35,113	)		290,692
Loss on changes in fair value of financial instruments			25,124			43,772
Share-based compensation			1,711			2,595
Loss on disposal of assets			673			221
Other			(20,177	)		(15,147	)
Income taxes paid, net of income taxes received	17		(30,635	)		(10,906	)
Interest paid, net of interest received	17		(18,453	)		(33,759	)
Operating assets and liabilities	17		16,790			2,524
Net cash from operating activities			99,462			108,510

Cash flows used in investing activities
Purchases for satellite programs			(16,746	)		(888	)
Purchase of property and other equipment			(3,708	)		(647	)
Purchase of intangible assets			—			(5	)
Net cash used in investing activities			(20,454	)		(1,540	)

Cash flows used in financing activities
Repayment of indebtedness	17		—			(6,397	)
Payments of principal on lease liabilities	17		(605	)		(346	)
Satellite performance incentive payments	17		(1,733	)		(1,765	)
Government grant received			—			4,009
Net cash used in financing activities			(2,338	)		(4,499	)
Effect of changes in exchange rates on cash and cash equivalents			(11,957	)		74,977
Increase in cash and cash equivalents			64,713			177,448
Cash and cash equivalents, beginning of period			818,378			1,027,222
Cash and cash equivalents, end of period		$	883,091		$	1,204,670

See accompanying notes to the unaudited interim condensed consolidated financial statements

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

1. BACKGROUND OF THE COMPANY

Telesat Canada (the “Company” or “Telesat”) is a Canadian corporation. Telesat is a global satellite operator, providing mission-critical communications solutions to support the requirements of sophisticated satellite users throughout the world. Headquartered in Ottawa, Canada, the Company’s state-of-the-art fleet consists of 15 geostationary satellites and the Canadian payload on ViaSat-1.

The Company has commenced the development of a constellation of low earth orbit (“LEO”) satellites and integrated terrestrial infrastructure, called “Telesat Lightspeed”. In January 2018, the first LEO satellite was successfully launched into orbit. This Phase 1 LEO satellite has demonstrated certain key features of the Telesat Lightspeed system design, specifically the capability of the satellite and customer terminals to deliver a low latency broadband experience.

As at March 31, 2021, Loral Space and Communications Inc. (“Loral”) and Canada’s Public Sector Pension Investment Board (“PSP Investments”) indirectly held economic interests in Telesat of approximately 63% and 36%, respectively, with the remaining economic interest held by various individuals. Loral indirectly held a voting interest of 33% on all matters including the election of directors. PSP Investments indirectly held a voting interest of 67% on all matters except for the election of directors, and a 29% voting interest for the election of directors. The remaining voting interest of 38% for the election of directors is held by shareholders of the Company’s Director Voting Preferred Shares.

Unless the context states or requires otherwise, references herein to the “financial statements” or similar terms refer to the unaudited interim condensed consolidated financial statements of Telesat Canada.

On May 13, 2021, these financial statements were approved by the Audit Committee of the Board of Directors and authorized for issue.

2. BASIS OF PRESENTATION

Statement of Compliance

The financial statements represent the interim financial statements of the Company and its subsidiaries, on a consolidated basis, prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”).

The financial statements should be read in conjunction with the December 31, 2020 consolidated financial statements of Telesat Canada. The financial statements use the same basis of presentation and significant accounting policies as outlined in Notes 2 and 3 of the consolidated financial statements for the year ended December 31, 2020. The results of operations for the three months ended March 31, 2021 and 2020 are not necessarily indicative of the results that may be expected for a full fiscal year.

Basis of Consolidation

Subsidiaries

These consolidated financial statements include the results of the Company and subsidiaries controlled by the Company. Control is achieved when the Company has power over an entity, has exposure, or rights to variable returns from its involvement with an entity, and has the ability to use the power over an entity to affect the amount of its return.

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

2. BASIS OF PRESENTATION (cont.)

Joint arrangements

A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to their share of the assets and revenue, and obligations for the liabilities and expenses, relating to the arrangement.

The Company’s consolidated financial statements include the Company’s share of the assets, liabilities, revenue and expenses of its interest in joint operations.

3. CHANGES IN ACCOUNTING POLICIES

Interest rate benchmark reform — Phase 2

The Company has adopted Interest rate benchmark reform — Phase 2 (Amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments: Disclosure, IFRS 4 Insurance Contracts and IFRS 16 Lease). The amendments enable entities to reflect the effects of transitioning from benchmark interest rates, such as inter-bank offered rates (“IBOR”) to alternative benchmark interest rates. As a result of the Phase 2 amendments relief, changes to contractual cash flows as a direct consequence of IBOR reform will not result in an immediate gain or loss in the statement of income.

Interest rates on certain indebtedness of the Company are determined by reference to benchmark rates. Similarly, benchmark rates are used in the calculation of the fair value of certain financial assets and liabilities. As none of the benchmark interest rates used by the Company have yet been transitioned to an alternative benchmark rate, there is no impact on its financial statements.

The Company has determined that the largest impact of the alternative benchmark rates will be relating to the Term Loan B Facility and the interest rate swaps.

The risks identified are not expected to cause any major changes in the Company’s risk management strategy.

4. SIGNIFICANT ACCOUNTING POLICIES

Future Changes in Accounting Policies

Amendments to IAS 1 and IFRS Practice Statement 2

In February 2021, the International Accounting Standards Board (“IASB”) issued amendments to IAS 1, Presentation of Financial Statements in which it provides guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments require entities to disclose their material accounting policies rather than their significant accounting policies.

The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements and that accounting policy information may be material because of its nature, even if the related amounts are immaterial. On the other hand, although a transaction, other event or condition to which the accounting policy information relates may be material, it does not necessarily mean that the corresponding accounting policy information is material to the entity’s financial statements.

The amendments are applied prospectively and are effective for annual periods beginning on or after January 1, 2023 with earlier application permitted.

The changes will only impact the level of disclosures within the Company’s financial statements.

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

4. SIGNIFICANT ACCOUNTING POLICIES (cont.)

The Company is currently evaluating the impact of the amendment.

There are no other new and amended standards determined to be applicable to Telesat.

5. SEGMENT INFORMATION

Telesat operates in a single operating segment, in which it provides satellite-based services to its broadcast, enterprise and consulting customers around the world.

The Company derives revenue from the following services:

Broadcast — Direct-to-home television, video distribution and contribution, and occasional use services.

Enterprise — Telecommunication carrier and integrator, government, consumer broadband, resource, maritime and aeronautical, retail and satellite operator services.

Consulting and other — Consulting services related to space and earth segments, government studies, satellite control services, and research and development.

Revenue derived from the above services were as follows:

Three months ended March 31,	2021		2020
Broadcast	$	98,953	$	101,623
Enterprise		88,622		102,129
Consulting and other		2,917		4,921
Revenue	$	190,492	$	208,673

Equipment sales included within the various services were as follows:

Three months ended March 31,	2021		2020
Enterprise	$	5,540		6,044
Total equipment sales	$	5,540	$	6,044

Geographic Information

Revenue by geographic regions was based on the point of origin of the revenue, which was the destination of the billing invoice, and was allocated as follows:

Three months ended March 31,	2021		2020
Canada	$	87,771	$	92,685
United States		70,162		75,928
Europe, Middle East & Africa		9,447		12,561
Latin America & Caribbean		14,677		17,402
Asia & Australia		8,435		10,097
Revenue	$	190,492	$	208,673

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

5. SEGMENT INFORMATION (cont.)

For disclosure purposes, the satellites and the intangible assets have been classified based on ownership. Satellites, property and other equipment and intangible assets by geographic regions were allocated as follows:

As at,	March 31, 2021		December 31, 2020
Canada	$	633,694	$	624,303
Europe, Middle East & Africa		598,494		619,959
United States		65,773		71,659
All others		2,326		2,605
Satellites, property and other equipment	$	1,300,287	$	1,318,526

As at,	March 31, 2021		December 31, 2020
Canada	$	714,546	$	718,880
United States		37,920		38,448
Latin America & Caribbean		13,392		15,114
All others		6,523		6,748
Intangible assets	$	772,381	$	779,190

Other long-term assets by geographic regions were allocated as follows:

As at,	March 31, 2021		December 31, 2020
Canada	$	9,430	$	9,470
Europe, Middle East & Africa		403		452
Other long-term assets	$	9,833	$	9,922

Goodwill was not allocated to geographic regions.

Major Customers

For the three months ended March 31, 2021 and 2020, there were two significant customers each representing more than 10% of consolidated revenue.

6. OPERATING EXPENSES

Three months ended March 31,	2021		2020
Compensation and employee benefits(a)	$	22,206	$	21,083
Other operating expenses(b)		8,002		14,815
Cost of sales(c)		9,746		9,578
Operating expenses	$	39,954	$	45,476

(a) Compensation and employee benefits included salaries, bonuses, commissions, post-employment benefits and charges arising from share-based compensation.

(b) Other operating expenses included general and administrative expenses, marketing expenses, in-orbit insurance expenses, professional fees and facility costs. The balance for the three months ended March 31, 2021 included $0.5 million of leases not capitalized due to exemptions and variable lease payments not included in the measurement of the leases liabilities (Three months ended March 31, 2020 — $0.5 million).

(c) Cost of sales included the cost of third-party satellite capacity, the cost of equipment sales and other costs directly attributable to fulfilling the Company’s obligations under customer contracts.

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

7. INTEREST EXPENSE

Three months ended March 31,	2021		2020
Interest on indebtedness	$	32,191	$	47,574
Interest on derivative instruments		3,571		(3	)
Interest on satellite performance incentive payments		602		772
Interest on significant financing component		4,959		5,803
Interest on employee benefit plans		324		261
Interest on leases		348		327
Interest expense	$	41,995	$	54,734

8. INCOME TAXES

Three months ended March 31,	2021			2020
Current tax expense	$	24,119		$	5,290
Deferred tax recovery		(2,354	)		(9,090	)
Tax expense (recovery)	$	21,765		$	(3,800	)

A reconciliation of the statutory income tax rate, which is a composite of Canadian federal and provincial rates, to the effective income tax rate was as follows:

Three months ended March 31,	2021			2020
Income (loss) before tax	$	63,498		$	(281,888	)
Multiplied by the statutory income tax rates		26.46	%		26.56	%
		16,802			(74,870	)
Income tax recorded at rates different from the Canadian tax rate		(2,815	)		(3,231	)
Permanent differences		5,961			38,227
Effect of temporary differences not recognized as deferred tax assets		1,820			35,260
Other		(3	)		814
Tax expense (recovery)	$	21,765		$	(3,800	)
Effective income tax rate		34.28	%		1.35	%

9. SATELLITES, PROPERTY AND OTHER EQUIPMENT

For the three months ended March 31, 2021, the Company had additions of $43.0 million (March 31, 2020 — $7.5 million) related to acquisitions associated with the LEO program (March 31, 2020 — property and other equipment).

10. LEASE LIABILITIES

The expected undiscounted contractual cash flows of the lease liabilities as at March 31, 2021 were as follows:

Remainder 2021			2022			2023			2024			2025			Thereafter			Total
$	2,776		$	3,276		$	3,230		$	3,098		$	2,824		$	35,574		$	50,778

The undiscounted contractual cash flows included $16.1 million of interest payments.

In addition, there were certain leases which were signed but not capitalized as at March 31, 2021. Based upon the assessed lease term, the expected undiscounted cash flows totaled $0.1 million.

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

11. INDEBTEDNESS

	March 31, 2021		December 31, 2020
Senior Secured Credit Facilities
Revolving Credit Facility	$	—	$	—
Term Loan B – U.S. Facility (March 31, 2021 and December 31, 2020 – US$1,552,815)		1,950,646		1,975,957
Senior Notes (US$550,000)		690,910		699,875
4.875% Senior Secured Notes (US$400,000)		502,480		509,000
		3,144,036		3,184,832
Add: deferred financing costs, prepayment options and loss on repayment		2,348		2,320
		3,146,384		3,187,152
Less: current indebtedness		—		—
Long-term indebtedness	$	3,146,384	$	3,187,152

On April 27, 2021, Telesat Canada, as issuer, and Telesat LLC, as co-issuer (together with Telesat Canada, the “Co-Issuers”), issued US$500 million in aggregate principal amount of 5.625% Senior Secured Notes maturing on December 6, 2026 (the “5.625% Senior Secured Notes” and such offering, the “Debt Offering”).

The 5.625% Senior Secured Notes bear interest from the issue date, payable on June 1 and December 1 of each year, commencing on December 1, 2021, to holders of record on the immediately preceding May 15 or November 15, as the case may be.

The indenture governing the 5.625% Senior Secured Notes includes covenants and terms that restrict Telesat Canada’s ability to, among other things, incur additional indebtedness, incur liens, pay dividends or make certain other restricted payments, investments or acquisitions, enter into certain transactions with affiliates, modify or cancel its satellite insurance, effect mergers with another entity, and redeem the 5.625% Senior Secured Notes, without penalty, before December 6, 2022, in each case subject to exceptions provided in such indenture.

12. SHARE CAPITAL

The number of shares and stated value of the outstanding shares as at March 31, 2021 and December 31, 2020 were as follows:

	Number of shares	Stated value
Common Shares	74,252,460	$	26,580
Voting Participating Preferred Shares	7,034,444		48,246
Non-Voting Participating Preferred Shares	38,508,117		80,862
Director Voting Preferred Shares	1,000		10
Share capital		$	155,698

Stock Option Cancellation

In April 2021, 6,197,776 issued and outstanding, vested and unvested stock options were cancelled.

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

12. SHARE CAPITAL (cont.)

Restricted Share Unit Plan

In April 2021, the Company approved the adoption of a restricted share unit (“RSU”) plan. A total of 3,660,000 Non-Voting Participating Preferred Shares are reserved for issuance upon vesting of the RSUs awarded under the RSU Plan, provided that the aggregate number of Non-Voting Participating Preferred Shares issuable under the RSU Plan (and under all other share compensation arrangements) does not exceed 10% of the total number of Non-Voting Participating Preferred Shares outstanding from time to time (on a non-diluted basis).

As of the date of filing, 3,530,000 RSUs were granted under the RSU Plan with 130,000 remaining RSUs available for grant under the RSU Plan.

13. GOVERNMENT GRANT

In May 2019, Telesat entered into an agreement for a non-refundable government contribution of a value up to $85 million to July 31, 2023 relating to the Telesat Lightspeed Constellation.

For the three months ended March 31, 2021, the Company recorded $1.6 million relating to the agreement (Three months ended March 31, 2020 — $1.0 million).

Of the amount recorded in the three months ended March 31, 2021, $0.8 million was recorded as a reduction to satellites, property and other equipment and $0.8 million was recorded as a reduction to operating expenses (Three months ended March 31, 2020 — $0.7 million as a reduction to operating expenses and $0.3 million was recorded as a reduction in prepaid expenses and other current assets).

14. CAPITAL DISCLOSURES

The Senior Secured Credit Facilities and the 4.875% Senior Secured Notes are secured by substantially all of the Company’s assets, excluding the assets of unrestricted subsidiaries. If the Revolving Facility is drawn, the Senior Secured Credit Facilities require Telesat Canada to comply with a first lien net leverage ratio test. As at March 31, 2021, the first lien net leverage ratio was 3.42:1.00, which was less than the maximum test ratio of 5.75:1.00.

The Company’s operating results are tracked against budget on a monthly basis, and this analysis is reviewed by senior management. The Company partly manages its interest rate risk on variable interest rate debt through the use of interest rate swaps (Note 15).

15. FINANCIAL INSTRUMENTS

Measurement of Risks

The Company, through its financial assets and liabilities, is exposed to various risks. The following analysis provides a measurement of risks as at March 31, 2021.

Credit risk

Credit risk is the risk that a counterparty to a financial asset will default, resulting in the Company incurring a financial loss. As at March 31, 2021, the maximum exposure to credit risk is equal to the carrying value of the financial assets which totaled $946.4 million (December 31, 2020 — $924.2 million).

Cash and cash equivalents are invested with high quality investment grade financial institutions and are governed by the Company’s corporate investment policy, which aims to reduce credit risk by restricting investments to high-grade, mainly U.S. dollar and Canadian dollar denominated investments.

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

15. FINANCIAL INSTRUMENTS (cont.)

The Company has credit evaluation, approval and monitoring processes intended to mitigate potential credit risks related to trade accounts receivable. The Company’s standard payment terms are 30 days with interest typically charged on balances remaining unpaid at the end of standard payment terms. The Company’s historical experience with customer defaults has been minimal. As at March 31, 2021, North American and International customers made up 43% and 57% of the outstanding trade receivable balance, respectively (December 31, 2020 — 50% and 50%, respectively). Anticipated bad debt losses have been provided for in the allowance for doubtful accounts. The allowance for doubtful accounts as at March 31, 2021 was $2.9 million (December 31, 2020 — $7.3 million).

The Company mitigates the credit risk associated with derivative instruments by entering into them with only high quality financial institutions.

Foreign exchange risk

The Company’s operating results are subject to fluctuations as a result of exchange rate variations to the extent that transactions are made in currencies other than Canadian dollars. The Company’s main currency exposures lie in its U.S. dollar denominated cash and cash equivalents, trade and other receivables, trade and other payables and indebtedness with the most significant impact being on the U.S. dollar denominated indebtedness. As at March 31, 2021 and December 31, 2020, the entire indebtedness was denominated in U.S. dollars, with the Canadian dollar equivalent of the U.S. dollar denominated indebtedness equaling $3,144.0 million and $3,184.8 million, respectively, before netting of deferred financing costs, prepayment options and loss on repayment.

As at March 31, 2021, the impact of a 5 percent increase (decrease) in the value of the Canadian dollar against the U.S. dollar on financial assets and liabilities would have increased (decreased) net income by $153.9 million (December 31, 2020 — $158.5 million) and decreased (increased) other comprehensive income by $37.0 million (December 31, 2020 — $35.6 million). This analysis assumes that all other variables, in particular interest rates, remain constant.

Interest rate risk

The Company is exposed to interest rate risk on its cash and cash equivalents and its indebtedness. The interest rate risk on the indebtedness is from a portion of the indebtedness having a variable interest rate. Changes in the interest rates could impact the amount of interest that the Company is required to pay or receive.

In October 2017, the Company entered into four interest rate swaps to hedge the interest rate risk associated with the variable interest rate on $1,800.0 million of the U.S. denominated Term Loan B at fixed interest rates, excluding applicable margins, ranging from 1.72% to 2.04%. As at March 31, 2021, two interest rate swaps of US$450 million each, with expiration terms of September 2021 and September 2022, were outstanding to hedge the interest rate risk associated with the variable interest rate on the U.S. denominated Term Loan B at fixed interest rates, excluding applicable margins, of 1.95% and 2.04%.

If the interest rates on the variable rate indebtedness change by 0.25%, the result would be an increase or decrease to net income of $1.2 million for the three months ended March 31, 2021.

Liquidity risk

The Company maintains credit facilities to ensure it has sufficient funds available to meet current and foreseeable financial requirements.

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

15. FINANCIAL INSTRUMENTS (cont.)

The contractual maturities of financial liabilities as at March 31, 2021 were as follows:

	Carrying amount		Contractual cash flows (undiscounted)		Remaining 2021		2022		2023		2024		2025		Thereafter
Trade and other payables	$	46,733	$	46,733	$	46,733	$	—	$	—	$	—	$	—	$	—
Customer and other deposits		1,765		1,765		1,347		17		81		96		82		142
Satellite performance incentive payments		35,756		44,390		6,897		8,253		7,421		5,843		3,093		12,883
Other financial liabilities		3,034		3,034		3,034		—		—		—		—		—
Interest rate swaps		14,293		14,576		9,027		5,549		—		—		—		—
Indebtedness(1)		3,172,909		3,942,525		112,447		126,911		126,911		127,001		125,968		3,323,287
	$	3,274,490	$	4,053,023	$	179,485	$	140,730	$	134,413	$	132,940	$	129,143	$	3,336,312

(1) Indebtedness excludes deferred financing costs, prepayment options and loss on repayment.

The interest payable and interest payments included in the carrying value and contractual cash flows, respectively, in the above table, were as follows:

	Interest payable		Interest payments
Satellite performance incentive payments	$	344	$	8,841
Indebtedness	$	28,873	$	798,489

Financial assets and liabilities recorded on the balance sheets and the fair value hierarchy levels used to calculate those values were as follows:

As at March 31, 2021	FVTPL			Amortized cost			Total			Fair value			Fair value hierarchy
Cash and cash equivalents	$	—		$	883,091		$	883,091		$	883,091		Level 1
Trade and other receivables		—			43,593			43,593			43,593		(3)
Other current financial assets		—			438			438			438		Level 1
Other long-term financial assets(1)		1,652			17,641			19,293			19,293		Level 1, Level 2
Trade and other payables		—			(46,733	)		(46,733	)		(46,733	)	(3)
Other current financial liabilities		(10,723	)		(41,567	)		(52,290	)		(54,184	)	Level 2
Other long-term financial liabilities		(3,570	)		(27,860	)		(31,430	)		(31,989	)	Level 2
Indebtedness(2)		—			(3,144,036	)		(3,144,036	)		(3,065,373	)	Level 2
	$	(12,641	)	$	(2,315,433	)	$	(2,328,074	)	$	(2,251,864	)

Telesat Canada
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
March 31, 2021
(all amounts in thousands of Canadian dollars, except where otherwise noted)

15. FINANCIAL INSTRUMENTS (cont.)

As at December 31, 2020	FVTPL			Amortized cost			Total			Fair value			Fair value hierarchy
Cash and cash equivalents	$	—		$	818,378		$	818,378		$	818,378		Level 1
Trade and other receivables		—			51,928			51,928			51,928		(3)
Other current financial assets		—			448			448			448		Level 1
Other long-term financial assets(1)		30,266			23,159			53,425			53,425		Level 1, Level 2
Trade and other payables		—			(30,091	)		(30,091	)		(30,091	)	(3)
Other current financial liabilities		(12,581	)		(23,299	)		(35,880	)		(37,921	)	Level 2
Other long-term financial liabilities		(5,448	)		(30,051	)		(35,499	)		(36,357	)	Level 2
Indebtedness(2)		—			(3,184,832	)		(3,184,832	)		(3,214,543	)	Level 2
	$	12,237		$	(2,374,360	)	$	(2,362,123	)	$	(2,394,733	)

Telesat Canada 6-K