UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 20-F/A

(Amendment No. 1)



|(Mark One) |  |                                                                                              
|---------- |  | ---------------------------------------------------------------------------------------------
|o          |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)OF THE SECURITIES EXCHANGE ACT OF 1934



OR



|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | -----------------------------------------------------------------------------------



For the fiscal year ended
December 31, 2012



OR



|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------



OR



|o |  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------------



Date of Event Requiring This
Shell Company Report



For the transition period
from    to



Commission File Number 333-159793-01



TELESAT HOLDINGS INC.

(Exact Name of Registrant as
Specified in Its Charter)



Not Applicable

(Translation of Registrant’s
Name into English)



Canada

(Jurisdiction of Incorporation
or Organization)



1601 Telesat Court, Ottawa,
Ontario, Canada K1B 5P4

(Address of Principal Executive
Offices)





Christopher S. DiFrancesco
Vice-President, General Counsel and Secretary
Telesat Holdings Inc.
1601 Telesat Court
Ottawa, Ontario, Canada K1B 5P4
Tel.: (613) 748-8700 ext. 2268
Fax: (613) 748-8712

(Name, Telephone, E-mail and/or
Facsimile Number and Address of Company Contact Person)



Securities registered or to be
registered pursuant to Section 12(b) of the Act.



|Title of Each Class |  | Name of Each Exchange on Which Registered
|------------------- |  | -----------------------------------------
|None                |  | None                                     

Securities registered or to be
registered pursuant to Section 12(g) of the Act.



None

(Title of Class)

Securities for which there is
a reporting obligation pursuant to Section 15(d) of the Act.



None

(Title of Class)



Indicate the number of outstanding
shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Common Shares — 74,252,460; Director Voting Preferred Shares — 1,000; Non-Voting Participating
Preferred Shares — 38,203,571; and Voting Participating Preferred Shares — 7,034,444.



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YesoNox



If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934.YesxNoo



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.YesxNoo



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). YesoNoo



Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):





|Large accelerated filero |  | Accelerated filero |  | Non-accelerated filerx
|------------------------ |  | ------------------ |  | ----------------------



Indicate by check mark which basis
of accounting the registrant has used to prepare the financial statements included in this filing:





|U.S. GAAPo |  | International Financial Reporting Standards as issued bythe International Accounting Standards Boardx |  | Othero
|---------- |  | ----------------------------------------------------------------------------------------------------- |  | ------



If
“Other” has been checked in response to the previous question, indicate by check mark which financial statement item
the registrant has elected to follow.oItem 17oItem 18



If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).YesoNox











Explanatory Note



This Amendment No. 1 to the
Annual Report of Telesat Holdings Inc. (“Telesat” or “the Company”) on Form 20-F for the fiscal year ended December 31, 2012
(“2012 Form 20-F”) is being filed solely to amend the estimate of cash requirements to fund commitments for
capital expenditures and operating leases  in fiscal 2013 as set out in “Item 5 –
Operating and Financial Review and Prospects – Liquidity and Capital Resources – Cash and Available Credit”
on page 56 of the 2012 Form 20-F.



Item 5	Operating and Financial Review
and Prospects is being refiled in its entirety.



This Amendment No. 1 does not reflect events
occurring after February 21, 2013, the original filing date of the 2012 Form 20-F. Other than the items listed above, there are
no other changes to the 2012 Form 20-F.















TABLE OF CONTENTS



|         |                                                                      | Page
|-------- | -------------------------------------------------------------------- | ----
|         | PART I                                                               |     
|         |                                                                      |     
|Item 5.  | Operating and Financial Review and Prospects                         | 1   
|         |                                                                      |     
|         | PART III                                                             |     
|         |                                                                      |     
|Item 19. | Exhibits                                                             |     
|         |                                                                      |     
|         | EXHIBIT 12.1    Section 302 Certification of Chief Executive Officer |     
|         | EXHIBIT 12.2    Section 302 Certification of Chief Financial Officer |     
|         | EXHIBIT 13.1    Section 906 Certification of Chief Executive Officer |     
|         | EXHIBIT 13.2    Section 906 Certification of Chief Financial Officer |     





i









Item 5. Operating and Financial Review and Prospects



A. Operating results



MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion and
analysis should be read in conjunction with Telesat Holdings Inc.’s consolidated financial statements beginning at Page F-1
of this Annual Report. As used in this management’s discussion and analysis of financial condition and results of operations
(“MD&A”), unless the context states or requires otherwise, references to “Telesat”, “Company”,
“we”, “our” and “us” refer to Telesat Holdings Inc. and its subsidiaries. Unless the context
states or requires otherwise, reference herein to “the consolidated financial statements” or “the financial statements”
or similar terms refer to the consolidated financial statements of Telesat Holdings Inc. included herein.



The dollar amounts presented
in this Annual Report are in Canadian dollars unless otherwise specified. On December 31, 2012, the Bloomberg exchange rate was
USD $1 = CAD $0.9921. The average exchange rate for the twelve months ended December 31, 2012, was USD $1 = CAD $1.0013.



As of January 1, 2010, Telesat
adopted International Financial Reporting Standards as issued by the International Accounting Standards Board in accordance with
IFRS 1, First-time Adoption of International Financial Reporting Standards (“IFRS 1”). IFRS differs in certain respects
from United States GAAP; however, the Securities and Exchange Commission (“SEC”) adopted Release No. 33-8879 to accept
foreign private issuers financial statements prepared in accordance with IFRS as issued by the International Accounting Standards
Board (“IASB”) without reconciliation to United States GAAP in their filings with the SEC. As a result, we are not
presenting a reconciliation to United States GAAP for the years ended December 31, 2010, 2011 and 2012 in this Annual Report.



Except for the historical information
contained in the following MD&A, the matters discussed below are not historical facts, but are “forward-looking statements”
as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition, we or our representatives have made
and may continue to make forward-looking statements, orally or in writing, in other contexts. These forward-looking statements
can be identified by the use of words such as “believes”, “expects”, “plans”, “may”,
“would”, “could”, “should”, “anticipates”, “estimates”, “project”,
“intend”, “pursue” or “outlook” or other variations of these words. These statements, including
without limitation those relating to Telesat and Telesat Canada, are not guarantees of future performance and involve risks and
uncertainties that are difficult to predict or quantify. Actual events or results may differ materially as a result of a wide variety
of factors and conditions, many of which are beyond our control. For a detailed discussion of these and other factors and conditions,
please refer to “Item 3.D — Risk Factors”. We undertake no obligation to update any forward-looking
statements



The information contained in
this MD&A takes into account information available up to February 19, 2013, unless otherwise noted.



OVERVIEW OF THE BUSINESS



We are a leading global fixed
satellite services operator, with offices and facilities around the world. We provide our satellite and communication services
from a fleet of satellites that occupy Canadian and other orbital locations. We are organized into one operating segment, the satellite
services business; however, we provide our services through three business categories: Broadcast, Enterprise and Consulting and
Other.



The satellite services business
is capital intensive and the build-out of a satellite fleet requires substantial time and investment. Once the investment in a
satellite is made, the incremental costs to maintain and operate the satellite are relatively low over the life of the satellite,
with the exception of in-orbit insurance. We have been able to generate a large contracted revenue backlog by entering into long-term
contracts with some of our customers for all or substantially all of a satellite’s life. Historically, this has resulted
in revenue from the satellite services business being fairly predictable.



At December 31, 2012, we provided
satellite services to customers from our fleet of 13 in-orbit satellites. In addition, we own the Canadian payload on the ViaSat-1
satellite and we also have one satellite, Anik G1, which we anticipate will be launched in the first half of 2013.



Telesat Canada and its affiliates
operate satellites pursuant to authorizations granted by governments, including those of Canada, the United States, Brazil, the
Kingdom of Tonga and the United Kingdom, to access and use certain geostationary orbital locations and associated spectrum resources.
The use of these orbital locations, as well as our other operations, is subject to a variety of Canadian and international regulations.



Revenue



We earn most of our revenue by
providing video and data services using satellite transponder capacity. We also earn revenue by providing ground-based transmit
and receive services, selling equipment, managing satellite networks, and providing consulting services in the field of satellite
communications.



1







We recognize revenue when earned,
as services are rendered or as products are delivered to customers. For us to recognize revenue, there must be evidence that an
arrangement exists, the amount of revenue must be fixed or determinable and our ability to collect must be reasonably assured.
In particular, broadcast and some enterprise revenue are generally billed in advance to the customers and recognized in the month
for which the service is rendered. Consulting revenue for “cost plus” contracts is recognized after the work has been
completed and accepted by the customer. The percentage of completion method is used for “fixed price” contracts.





Expenses



Our operating expenses consist
mainly of labour, the cost of which is relatively stable. As we take advantage of growth opportunities through the addition of
satellites to our fleet, we believe we can increase revenue with relatively smaller increases in operating expenses. Variable operating
expenses include in-orbit insurance and direct-billed expenses, such as third-party contractor services.



Interest expense continues to
be significant and arises principally from our Senior Secured Credit Facilities, as well as our Senior Notes and Senior Subordinated
Notes. Non-cash foreign exchange gains or losses incurred on the translation of the U.S. dollar denominated debt and the gains
or losses on financial instruments resulting from variations in the fair value of the cross-currency basis swaps, interest rate
swaps, prepayment options on the Senior Notes and Senior Subordinated Notes and embedded derivatives related to the interest rate
floors included on our Canadian and U.S. Term Loan B remain significant components of our net earnings.



Other significant operating expenses
include the straight-line depreciation of the cost of each of our satellites over their useful lives and amortization expense of
various finite life intangible assets.



OPERATING HIGHLIGHTS OF 2012



Refinancing and Distributions to Shareholders
of the Company



On March 28, 2012, Telesat Canada
entered into a new credit agreement (the “Credit Agreement”) with a syndicate of banks which provided for the extension
of credit in the principal amount of up to approximately USD $2,550 million under the following credit facilities (together, the
“Senior Secured Credit Facilities”): (i) a Revolving Credit Facility in the amount of up to CAD/USD $140 million, available
in either Canadian or U.S. dollars, maturing on March 28, 2017; (ii) a Term Loan A facility denominated in Canadian dollars, in
the amount of $500 million, maturing on March 28, 2017; (iii) a Term Loan B facility denominated in Canadian dollars, in the amount
of $175 million, maturing on March 28, 2019; and (iv) a Term Loan B facility denominated in U.S. dollars, in the amount of USD
$1,725 million, maturing on March 28, 2019. Simultaneously with entering into the Credit Agreement, Telesat Canada terminated and
paid all outstanding amounts under its previously existing credit facilities, which were evidenced by a credit agreement dated
as of October 31, 2007.



On March 28, 2012, we redeemed
all of our outstanding senior preferred shares, previously held by an affiliate of the Public Sector Pension Investment Board (“PSP
Investments”), for approximately $146 million in cash, equal to the principal and accrued dividends on the senior preferred
shares. Following the redemption of the senior preferred shares, an affiliate of PSP Investments provided a loan in the amount
of approximately $146 million to Telesat Canada, in the form of a subordinated promissory note (the “PSP Note”).



In connection with the closing
of the Credit Agreement, the Board declared a special cash distribution to our shareholders, as a reduction of stated capital,
in the amount of approximately $656 million. On March 28, 2012, we paid our shareholders approximately $586 million relating to
the special distribution, which was funded by the proceeds from the Senior Secured Credit Facilities and excess cash from operations,
while the remaining $70 million was paid in early July 2012. In connection with the cash distribution made to our shareholders,
the Board also authorized approximately $49 million in special payments to executives and certain employees of the Company.



Issuance of 6.0% Senior Notes and redemption
of 11.0% Senior Notes



On May 14, 2012, Telesat Canada
issued, through a private placement, USD $700 million of 6.0% Senior Notes which mature on May 15, 2017. The 6.0% Senior Notes
are subordinated to Telesat Canada’s existing and future secured indebtedness, including obligations under its Senior Secured
Credit Facilities, and are governed under the 6.0% Senior Notes Indenture. The net proceeds of the offering, along with available
cash on hand, were used to repurchase and redeem all of our 11.0% Senior Notes due November 1, 2015 issued under an indenture dated
as of June 30, 2008 and to pay certain financing costs and redemption and tender premiums.



Nimiq 6



On May 18, 2012, we successfully
launched our Nimiq 6 direct broadcast satellite. Nimiq 6 was placed into commercial service at the 91.1 degrees West orbital location
during June 2012 and provides a broad range of video services across Canada. The satellite was manufactured by Space Systems/Loral
and is based on its 1300 platform. The Nimiq 6 satellite carries 32 high-powered Ku-band transponders which are fully contracted
to Bell TV for 15 years.





2







Initial Public Offering Registration Notice
and Withdrawal



Under Telesat’s Unanimous
Shareholders’ Agreement, either PSP Investments or Loral can initiate the process of Telesat conducting an initial public
offering of the equity shares of Telesat if an initial public offering has not been completed by October 31, 2011. In Q3 2012,
PSP Investments delivered to Telesat and Loral a notice initiating this process which notice PSP Investments subsequently withdrew.



Issuance of Additional 6.0% Senior Notes



On October 29, 2012, Telesat Holdings
Inc. together with Telesat LLC, completed an offering for an additional USD $200 million of 6.0% Senior Notes due May 15, 2017.
The net proceeds of the offering were used to repay the PSP Note and Loral promissory notes (the “Loral Notes”), including
accrued and unpaid interest thereon, and for general corporate purposes.



Stock Option Repurchase and Exercise of Share
Appreciation Rights



In December 2012, the Board approved
the repurchase for cash consideration of 20% of all vested stock options. A total of 1,660,619 options were repurchased by the
Company. Also in December 2012, certain executives exercised their share appreciation rights (“SARs”) in respect of
vested options granted under the Company’s share based compensation plan and received 2,249,747 non-voting participating
preferred shares and cash equivalent to certain withholding taxes payable in respect of the exercise of the SARs.



FUTURE OUTLOOK



Our commitment to providing strong
customer service and our focus on innovation and technical expertise has allowed us to successfully build our business to date.
Building on our existing contractual revenue backlog, our focus is on taking disciplined steps to grow our core business and sell
newly launched and existing in-orbit satellite services; and, in a disciplined manner, use the cash flow generated by existing
business, contracted expansion satellites and cost savings to strengthen the business.



We believe our satellite fleet
offers a strong combination of existing revenue backlog and a strong foundation upon which we will seek to continue to grow our
revenue and cash flows. The growth is expected to come from the sale of available capacity on our existing fleet of in-orbit satellites,
the Canadian payload on the ViaSat-1 satellite which launched in October 2011, our Nimiq 6 satellite which launched in May 2012
and our Anik G1 satellite, which we anticipate will launch in the first half of 2013. With Nimiq 6 having entered into commercial
service in June 2012, our customer returned our Nimiq 1 satellite on October 31, 2012. We intend to use Nimiq 1 to pursue other
revenue growth opportunities.



We believe we are well-positioned
to serve our customers and the markets in which we participate. We actively pursue opportunities to develop new satellites, particularly
in conjunction with current or prospective customers who will commit to long-term service agreements prior to the time the satellite
construction contract is signed. Although we regularly pursue opportunities to develop new satellites, we do not procure additional
or replacement satellites until we believe there is a demonstrated need and a sound business plan for such satellite capacity.



We anticipate that the relatively
fixed cost nature of the business, combined with contracted revenue growth and other growth opportunities, will produce growth
in operating income and cash flow.



Leading into 2013, we will remain
focused on: increasing utilization on our existing satellites, continuing our preparation for the launch and deployment of Anik
G1, identifying and pursuing opportunities to expand our satellite fleet, and maintaining cost and operating discipline.



RESULTS OF OPERATIONS



Review of financial performance



Our significant revenue backlog
and long-term customer contracts protect us, to a certain extent, from short-term market fluctuations. With the entry into commercial
service of the Canadian payload on ViaSat-1 in December 2011, the launch and entry into commercial service of the Nimiq 6 satellite
in the second quarter of 2012 and the anticipated launch of Anik G1 in the first half of 2013, we believe we are well positioned
to strengthen our overall financial performance.



Our net income for the year ended
December 31, 2012, was $27 million compared to a net income of $237 million in the prior year for a net decrease of $210 million.
The 2012 net income was lower than 2011 due in part to the recognition in 2011 of a $135 million gain from insurance proceeds received
in connection with an insurance claim filed for the failure of the north solar array on Telstar 14R/Estrela do Sul 2. The decrease
in net income was also impacted by a loss on refinancing of $77 million in 2012, which was the result of the repurchase and redemption
of our 11.0% Senior Notes due November 1, 2015, and the write-off of deferred financing costs capitalized with the carrying value
of our previous senior secured credit facilities. Results were also negatively impacted by a $57 million increase in operating
expenses mainly due to special payments made to management related to the cash distribution made to our shareholders. The unfavorable
variations were partially offset by meaningful revenue growth in 2012 as a result of the successful deployment of our Nimiq 6 satellite
in the second quarter of 2012 and the commencement of commercial service of the Canadian payload on the ViaSat-1 satellite in December
2011.





3







Our net income for the year ended
December 31, 2011, was $237 million compared to a net income of $286 million in the prior year for a net decrease of $49 million.
The 2011 net income was negatively impacted by $243 million due to foreign exchange losses of $79 million in 2011 compared to foreign
exchange gains of $164 million in 2010. Our debt is primarily denominated in U.S. dollars and therefore we are directly impacted
by movements in foreign exchange rates. The value of the Canadian dollar compared to the U.S. dollar at December 31, 2011 was weaker
than at December 31, 2010 creating a foreign exchange loss. The loss on foreign exchange was partially offset by a gain of $99
million on the fair value of financial instruments as compared to a loss of $11 million during 2010. Net income was also impacted
by $31 million due to higher other operating gains in 2011. The 2010 other operating gain was mainly comprised of $79 million of
orbital slot and satellite impairment reversals. The 2011 other operating gain amount was comprised of a USD $132.7 million gain
from the insurance proceeds received for T14R/Estrela do Sul 2 partly offset by a $20 million orbital slot impairment. Results
were also impacted by approximately $30 million of lower interest expense also due to movements in foreign exchange and the maturity
of interest rate swaps during 2011.



Below are the foreign exchange
rates used in our annual financial statements:





|                                      |  | 2012 |        |  | 2011 |  |        | 2010 | 
|------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- | 
|USD to CAD spot rate at December 31   |  |      | 0.9921 |  |      |  | 1.0213 |      | 
|USD to CAD average rates for the year |  |      | 1.0013 |  |      |  | 0.9850 |      | 



Revenue



|                                                     |  | Year Ended December 31, |     |  | % Increase (Decrease) |  
|---------------------------------------------------- |  | ----------------------- | --- |  | --------------------- | -
|(in millions of Canadian dollars except percentages) |  | 2012                    |     |  | 2011                  |  
|Broadcast                                            |  | $                       | 439 |  |                       | $
|Enterprise                                           |  |                         | 381 |  |                       |  
|Consulting and other                                 |  |                         | 26  |  |                       |  
|Total revenue                                        |  | $                       | 846 |  |                       | $



Total revenue for the year ended
December 31, 2012, was $846 million, an increase of $38 million from the $808 million for the prior year.



Revenue from Broadcast services
increased by $3 million for the year ended December 31, 2012, as compared to the prior year. The increase was mainly due to revenue
earned on our Nimiq 6 satellite which entered into commercial service in June 2012, partially offset by a scheduled rate reduction
on a long-term contract for one of our North American DTH satellites which occurred during 2011.



Revenue from Enterprise services
increased by $39 million for the year ended December 31, 2012, when compared to the prior year. The increase was primarily due
to the continued growth in our international enterprise activities and revenue earned from the Canadian payload on the ViaSat-1
satellite which entered commercial service in December 2011.





Consulting and other revenue decreased
by $4 million for the year ended December 31, 2012, when compared to the prior year. The decrease was primarily due to the termination
of a customer contract.



Total revenue for the year ended
December 31, 2011, decreased by $13 million to $808 million compared to $821 million for the prior year. Revenue from Broadcast
services decreased by $18 million for the year ended December 31, 2011, as compared to the prior year. The decrease was mainly
due to the scheduled rate reduction on a long-term contract and the impact of the weaker average U.S. dollar in 2011 and its effect
on the conversion of our U.S. denominated revenue into Canadian dollars. Revenue from Enterprise services increased by $7 million
for the year ended December 31, 2011, when compared to the prior year. Growth in our international enterprise activities and in
our Infosat subsidiary was partially offset by the negative impact of the weaker average U.S. dollar. Consulting and other revenue
decreased by $2 million for the year ended December 31, 2011, when compared to the prior year. This was primarily due to the impact
of the weaker average U.S. dollar.



Expenses





|                                                         |  | Year Ended December 31, |     |   | % Increase (Decrease) |  
|-------------------------------------------------------- |  | ----------------------- | --- | - | --------------------- | -
|(in millions of Canadian dollars except
    percentages) |  | 2012                    |     |   | 2011                  |  
|Depreciation                                             |  | $                       | 209 |   |                       | $
|Amortization                                             |  |                         | 36  |   |                       |  
|Operating expenses                                       |  |                         | 245 |   |                       |  
|Other operating gains, net                               |  |                         | (6  | ) |                       |  
|Total expenses                                           |  | $                       | 484 |   |                       | $





4







Depreciation and Amortization



Depreciation of satellite, property
and other equipment increased by $10 million for the year ended December 31, 2012, as compared to the prior year. The increase
in depreciation was due to Telstar 14R/Estrela do Sul 2 and the Canadian payload on the ViaSat-1 satellite which entered commercial
service in the second half of 2011, as well as the Nimiq 6 satellite which entered commercial service in June 2012. The increase
was partially offset by the end of the useful lives for accounting purposes of Nimiq 1 and Telstar 14/Estrela do Sul. Amortization
of intangible assets decreased by $5 million for the year ended December 31, 2012, due to lower amortization of intangible assets
related to revenue backlog as certain contracts were completed.



Depreciation of satellite, property
and other equipment decreased by $3 million for the year ended December 31, 2011, as compared to the prior year. The decrease in
depreciation was due to the end of the term over which Nimiq 1 was depreciated (based on previous estimated useful life) and the
removal from service of Telstar 14/ Estrela do Sul 1, partially offset by the commencement of depreciation for Telstar 14R/Estrela
do Sul 2. Amortization of intangible assets decreased for the year ended December 31, 2011, by $4 million primarily due to the
end of life of certain intangible assets related to revenue backlog and the ensuing lower monthly amortization.



Operating Expenses





|                                                     |  | Year Ended December 31, |     |  | % Increase (Decrease) |  
|---------------------------------------------------- |  | ----------------------- | --- |  | --------------------- | -
|(in millions of Canadian dollars except percentages) |  | 2012                    |     |  | 2011                  |  
|Compensation and employee benefits                   |  | $                       | 116 |  |                       | $
|Other operating expenses                             |  |                         | 47  |  |                       |  
|Cost of sales                                        |  |                         | 82  |  |                       |  
|Total operating expenses                             |  | $                       | 245 |  |                       | $



Operating expenses consist of
compensation and employee benefits, other operating expenses such as marketing, general and administration expenses and cost of
sales. Total operating expenses increased by $57 million for the year ended December 31, 2012, as compared to the prior year. The
variation was mainly the result of compensation and employee benefit expenses which increased by $54 million, primarily due to
expenses related to special payments to executives and certain employees of the Company in connection with the cash distribution
made to our shareholders. Other operating expenses decreased by $1 million for the year ended December 31, 2012, as compared to
the prior year. The decrease was primarily due to lower in-orbit insurance premiums, legal and facility related costs, partially
offset by lower investment tax credits. Cost of sales increased by $4 million for the year ended December 31, 2012, as compared
to the prior year. The increase in cost of sales was a result of higher equipment sales and higher revenue related expenses.



Total operating expenses decreased
by $18 million for the year ended December 31, 2011, as compared to the prior year. Compensation and employee benefit expenses
decreased by $4 million for the year ended December 31, 2011, in comparison to the same period in the prior year. This was a result
of our operating discipline, lower stock based compensation and higher capitalized engineering due to the acceleration of our capital
programs. Other operating expenses decreased by $4 million for the year ended December 31, 2011, as compared to the prior year.
This variation was related to lower in-orbit insurance premiums, higher investment tax credits earned on eligible research and
development expenses and the absence of capital taxes in 2011. Cost of sales decreased by $10 million for the year ended December
31, 2011, when compared to the prior year. The year over year decrease was a result of lower service revenue related expenses as
well as the impact of a weaker average U.S. dollar partially offset by an increase in cost of equipment sales.



Other Operating Gains, Net





|                                                     |  | Year Ended December 31, |    |   | % Increase (Decrease) |  
|---------------------------------------------------- |  | ----------------------- | -- | - | --------------------- | -
|(in millions of Canadian dollars except percentages) |  | 2012                    |    |   | 2011                  |  
|Insurance proceeds                                   |  | $                       | —  |   |                       | $
|Impairment reversal (loss) on intangible assets      |  |                         | 1  |   |                       |  
|Impairment reversal on tangible assets               |  |                         | —  |   |                       |  
|Gain on forgiveness of satellite incentive payments  |  |                         | 6  |   |                       |  
|(Loss) gain on disposal of assets                    |  |                         | (1 | ) |                       |  
|Total other operating gains, net                     |  | $                       | 6  |   |                       | $



Total other operating gains were
$6 million for the year ended December 31, 2012, compared to other operating gains of $114 million for the prior year. In 2012,
we recognized a $6 million gain on the elimination of satellite incentive payments relating to one of our satellites. In 2011,
insurance proceeds of USD $132.7 million were received in connection with an insurance claim filed for the failure of the north
solar array on Telstar 14R/Estrela do Sul 2, partially offset by a $20 million impairment loss on the orbital slots as a result
of an increase in discount rates during the year.





5







Total other operating gains increased
by $31 million for the year ended December 31, 2011, in comparison to the prior year. As stated above, insurance proceeds of USD
$132.7 million were received in December 2011. In 2010, we reversed $71 million in impairment loss on our orbital slots originally
recorded in 2008 as a result of the high discount rate environment created by liquidity issues in the credit markets prevailing
at the time. A decrease in discount rates, as well as changes in our revenue projections and gross margin assumptions, positively
impacted the valuation of the orbital slots in 2010 resulting in the reversal. However, in 2011, we recognized a $20 million impairment
loss on the orbital slots due to an increase in discount rates during the year. In 2010, we fully reversed a tangible asset impairment
loss due to changes in our revenue projections stemming from our ability to obtain higher prices for the same capacity as well
as a higher utilization rate for the satellite.



Interest Expense





|                                                         |  | Year Ended December 31, |     |   | % Increase (Decrease) |  
|-------------------------------------------------------- |  | ----------------------- | --- | - | --------------------- | -
|(in millions of Canadian dollars except
    percentages) |  | 2012                    |     |   | 2011                  |  
|Debt service costs                                       |  | $                       | 243 |   |                       | $
|Interest expense on performance incentive payments       |  |                         | 4   |   |                       |  
|Interest on senior preferred shares                      |  |                         | 2   |   |                       |  
|Interest expense on PSP Note                             |  |                         | 9   |   |                       |  
|Interest expense on Loral Notes                          |  |                         | 1   |   |                       |  
|Capitalized interest                                     |  |                         | (17 | ) |                       |  
|Interest expense                                         |  | $                       | 242 |   |                       | $



Interest expense includes interest
related to our debt, interest on the performance incentive payments, interest on the former senior preferred shares and PSP Note,
net of capitalized interest on our satellites under construction. Total debt service costs, which include interest expense on indebtedness
and interest expense on derivative instruments, decreased by $1 million for the year ended December 31, 2012, as compared to the
prior year. This was primarily the result of a $16 million decrease in interest expense incurred on our interest rate swaps and
a $6 million decrease due to a more favorable interest rate on our new Senior Notes, partially offset by a $21 million increase
in interest expense due to additional indebtedness as a result of the refinancing of our Senior Secured Credit Facilities. Interest
expense on the senior preferred shares decreased by $8 million for the year ended December 31, 2012, as compared to the prior year
as a result of the redemption of the senior preferred shares at the end of the first quarter of 2012. The former PSP Note was issued
in the first quarter of 2012 and therefore we did not incur interest in the comparative years. Capitalized interest decreased by
$15 million for the year ended December 31, 2012, as compared to prior year as a result of having fewer satellites under construction.



Total debt service costs decreased
by $10 million for the year ended December 31, 2011, as compared to the prior year, primarily due to $109 million in principal
repayments on our Canadian and U.S. Term Loan Facilities and a weaker average U.S. dollar. Interest on the senior preferred shares
decreased by $2 million for the year ended December 31, 2011, due to a decrease in the dividend rate from 8.5% to 7% beginning
in July 2010 and foreign exchange impacts. Capitalized interest increased by $17 million for the year ended December 31, 2011,
due to increased activity on our satellite construction programs during 2011 including Telstar 14R/Estrela do Sul 2, Nimiq 6, Anik
G1 and the Canadian payload on the ViaSat-1 satellite.



Loss on Financing



|                                                     |  | Year Ended December 31, |    |  | % Increase (Decrease) |  
|---------------------------------------------------- |  | ----------------------- | -- |  | --------------------- | -
|(in millions of Canadian dollars except percentages) |  | 2012                    |    |  | 2011                  |  
|Loss on financing                                    |  | $                       | 77 |  |                       | $



The loss on financing of $77 million
for the year ended December 31, 2012, was a result of a $54 million loss recognized in May 2012 on the repurchase and redemption
of our 11.0% Senior Notes due November 1, 2015, a $22 million loss recognized in March 2012 as a result of the write-off of deferred
financing costs capitalized with the carrying value of our previous senior secured credit facilities dated October 31, 2017, and
a $1 million loss on the repayment of certain indebtedness owed to principal shareholders. The previous senior secured credit facilities
included the Canadian term loan, U.S. term loan and U.S. term loan II facilities which were all repaid during the first quarter
of 2012.





6







Foreign Exchange and Derivatives





|                                                              |  | Year Ended December 31, |    
|------------------------------------------------------------- |  | ----------------------- | ---
|(in millions of Canadian dollars except percentages)          |  | 2012                    |    
|(Loss) gain on changes in fair value of financial instruments |  | $                       | (59
|Foreign exchange gain (loss)                                  |  | $                       | 79 



The $59 million loss on changes
in fair value of financial instruments in 2012 reflects fluctuations in fair values of our cross-currency basis swaps, interest
rate swaps, prepayment options on the 6.0% Senior Notes, 11.0% Senior Notes which were redeemed in May 2012, and 12.5% Senior Subordinated
Notes and embedded derivatives related to interest rate floors included on the Canadian and U.S. Term Loan B and the former PSP
Note. This represented a net decrease of $158 million from the end of 2011 to the end of 2012. The negative variation was mainly
due to losses on changes in fair value of the prepayment options on our former 11.0% Senior Notes, partially offset by gains on
the fair value of the prepayment options on our 6.0% Senior Notes and 12.5% Senior Subordinated Notes due to lower credit spreads.
The foreign exchange gain for the year ended December 31, 2012, was $79 million compared to a foreign exchange loss of $79 million
in the prior year resulting in a total variation of $158 million. The positive variation was mainly the result of a weaker U.S.
dollar to Canadian dollar spot rate at December 31, 2012 ($0.9921), compared to the spot rate at December 31, 2011 ($1.0213), and
the resulting favorable impact on the translation of our U.S. dollar denominated debt.





The $99 million gain on changes
in fair value of financial instruments in 2011 reflects the fluctuations in the fair values of our cross-currency basis swaps,
interest rate swaps, forward foreign exchange contracts, and prepayment options on our former 11.0% Senior Notes and 12.5% Senior
Subordinated Notes. This represented a net increase of $110 million from the end of 2010 to the end of 2011. The positive variation
is mainly related to the $62 million fair value change of the embedded derivative prepayment options on the Company’s Senior
Notes and Senior Subordinated Notes due to lower credit spreads. The balance of the favorable impact was related to the increase
in the fair value of the cross-currency basis swaps and interest rate swaps. The foreign exchange loss for the year ended December
31, 2011, was $79 million compared to a foreign exchange gain of $164 million for the prior year resulting in a total variation
of $243 million. The loss for the year ended December 31, 2011, was mainly the result of a stronger U.S. dollar to Canadian dollar
spot rate at December 31, 2011 ($1.0213), compared to the spot rate at December 31, 2010 ($0.9980), and the resulting unfavorable
impact on the translation of our U.S. dollar denominated debt.



Income Taxes



|                                                     |  | Year Ended December 31, |    |   | % Increase (Decrease) |  
|---------------------------------------------------- |  | ----------------------- | -- | - | --------------------- | -
|(in millions of Canadian dollars except percentages) |  | 2012                    |    |   | 2011                  |  
|Current income tax (recovery) expense                |  | $                       | (2 | ) |                       | $
|Deferred income tax expense                          |  |                         | 38 |   |                       |  
|Total income tax expense                             |  | $                       | 36 |   |                       | $



The income tax expense for the
year ended December 31, 2012, was $16 million lower than the prior year. The decrease was mainly due to the decrease in operating
income and was partially offset by an increase in tax rates.



The income tax expense for the
year ended December 31, 2011, was $14 million lower than the prior year. The decrease was partly due to the recognition of previously
unrecognized foreign tax credits in 2011, as well as a realized foreign exchange loss in 2011 compared to a realized foreign exchange
gain in 2010. The decrease in 2011 was also due to lower operating income.



Backlog



Contracted revenue backlog represents
our expected future revenue from existing service contracts (without discounting for present value) including any deferred revenue
that we will recognize in the future in respect of cash already received. The significant majority of our contracted revenue backlog
is generated from service or other agreements for satellite capacity. We do not include revenue beyond the stated expiration date
of a contract regardless of the potential for a renewal. Our contracted revenue backlog is attributable to satellites currently
in-orbit and Anik G1, our satellite awaiting launch. As of December 31, 2012, our contracted backlog was approximately $5.1 billion
as compared to $5.4 billion as of December 31, 2011.



Generally, following the successful
launch of a satellite, if the satellite is operating nominally, our customers may only terminate their service agreements for satellite
capacity by paying us all, or substantially all, of the payments that would have otherwise become due over the term of the service
agreement. However, if certain of our existing satellites and satellites under construction were to experience a significant launch
delay, launch or in-orbit failure, or otherwise fail to operate as anticipated, we may be obligated to return all or a portion
of the customer prepayments made under service agreements for that satellite. Those repayments would be funded by insurance proceeds
we may receive, cash on hand and/or funds available under our Revolving Credit Facility.





We expect our backlog to be recognized
as follows:





7











|(in millions of Canadian dollars) |  | 2013 |     |  | 2014 |   |     | 2015 |  |   | 2016 |  |  | 2017 and thereafter |    
|--------------------------------- |  | ---- | --- |  | ---- | - | --- | ---- |  | - | ---- |  |  | ------------------- | ---
|Backlog                           |  | $    | 667 |  |      | $ | 598 |      |  | $ | 513  |  |  | $                   | 443



LIQUIDITY AND CAPITAL RESOURCES



Cash and Available Credit



As at December 31, 2012, we had
$181 million of cash and short-term investments as well as approximately $140 million of borrowing availability under our Revolving
Facility (as defined below). We believe the unrestricted cash and short-term investments as at December 31, 2012, cash flow from
operating activities, including amounts from customer prepayments, and drawings on the available lines of credit under the Credit
Facility (as defined below) will be adequate to meet our expected cash requirements for at least the next twelve months for activities
in the normal course of business, including interest and required principal payments on debt.



As at December 31, 2012, our commitments
for capital expenditures and operating leases expected to be paid in fiscal 2013 were $32 million and $29 million, respectively.
For fiscal 2013, we also expect our repayment in principal and interest payments on long-term debt (including the swaps) to be
approximately $291 million. We expect to meet our cash needs for fiscal 2013 through a combination of cash and short-term investments,
cash flow from operations, cash flow from customer prepayments or through borrowings on available lines of credit under the Credit
Facility.



Cash Flows from Operating Activities



Cash generated from operating
activities for the year ended December 31, 2012, was $293 million, a $130 million decrease over the prior year. The decrease was
primarily due to special payments made to executives and certain employees of our Company in connection with the cash distribution
made to our shareholders, repurchase of stock options for cash consideration, exercise of share appreciation rights for non-voting
participating preferred shares, lower customer prepayments on future services and lower insurance proceeds.



Cash generated from operating
activities for the year ended December 31, 2011, was $424 million, an $82 million increase over the prior year. The increase was
driven by improved positive cash flows from operating activities, larger customer prepayments for future satellite services and
insurance proceeds relating to our Anik F1 satellite.



Cash Flows used in Investing Activities



Cash used in investing activities
for the year ended December 31, 2012, was $170 million. This consisted of cash outflows related to capital expenditures of $163
million for the construction of the Anik G1 satellite and the successful completion of the Nimiq 6 satellite, as well as $8 million
for other equipment.



Cash used in investing activities
for the year ended December 31, 2011, was $251 million. This consisted of cash outflows related to capital expenditures of $356
million for the construction of the Telstar 14R/Estrela do Sul 2, Anik G1, Nimiq 6 satellites, and the Canadian payload on the
ViaSat-1 satellite, $18 million on other capital expenditures and $13 million for the assumption of Loral’s 15 year revenue
contract with Xplornet Communications Inc. This was offset by cash inflows of $135 million in insurance proceeds related to Telstar
14R/Estrela do Sul 2.



Cash used in investing activities
for the year ended December 31, 2010, was $235 million. Most of the cash outflow related to the capital expenditures of $262 million,
offset by $27 million of proceeds primarily from the sale of our ownership interest in our headquarters building and our leasehold
interest in the Telstar 10 satellite. The main components of the capital expenditure programs were the construction of Telstar
14R/Estrela do Sul 2, Nimiq 6 and Anik G1.



Cash Flows used in Financing Activities





Cash used in financing activities
for the year ended December 31, 2012, was $219 million. The cash flows used in financing consisted of $1.9 billion repayment of
our prior senior secured credit facilities, $695 million repayment of our 11.0% Senior Notes and $14 million repayment of our Term
Loan B facilities. There were also amounts paid to shareholders which included $657 million as a return of capital and $162 million
for repayment of senior preferred shares and promissory notes. There were $52 million of debt issue costs related to our new Senior
Secured Credit Facilities and issuance of the 6.0% Senior Notes, as well as $39 million of redemption premiums. The cash flows
from financing activities consisted of $2.4 billion of proceeds from the Credit Agreement and $900 million of proceeds from the
issuance of the 6.0% Senior Notes.



Cash used in financing activities
for the year ended December 31, 2011, was $115 million and related to $109 million in scheduled principal repayments on our Canadian
Term Loan Facility and U.S. Term Loan Facility, as well as satellite performance incentive payments of $6 million.



Cash used in financing activities
for the year ended December 31, 2010, was $40 million resulting from the repayment of debt financing of approximately $35 million
and satellite performance incentive payments of approximately $5 million.



Liquidity



A large portion of our annual
cash receipts are reasonably predictable because they are primarily derived from an existing backlog of long-term customer contracts
and high contract renewal rates. We believe our cash flows from operating activities, in addition to cash on hand and available
credit facilities will be sufficient to provide for our capital requirements and to fund our interest and debt payment obligations
for the next twelve months.





8







The construction of any satellite
replacement or expansion program will require significant capital expenditures. We may choose to invest in new satellites to further
grow our business. Cash required for current and future satellite construction programs will be funded from some or all of the
following: cash and short-term investments, cash flow from operating activities, cash flow from customer prepayments or through
borrowings on available lines of credit under the Revolving Facility. In addition, we may sell certain satellite assets, and in
accordance with the terms and conditions of our Senior Secured Credit Facilities, reinvest the proceeds in replacement satellites
or pay down indebtedness under those Senior Secured Credit Facilities. Subject to market conditions and subject to compliance with
the terms and conditions of our Credit Facility and the financial leverage covenant tests therein, we may also have the ability
to obtain additional secured or unsecured financing to fund current or future satellite construction. However, our ability to access
these sources of funding is not guaranteed, and therefore, we may not be able to fully fund additional replacement and new satellite
construction programs.



Debt



On March 28, 2012, Telesat Canada
entered into a new Credit Agreement arranged with a syndicate of banks which provides for the extension of credit under the Senior
Secured Credit Facilities. All obligations under the Credit Agreement are guaranteed by the Company and certain of Telesat Canada’s
existing subsidiaries (the “Guarantors”). Simultaneously with entering into the Credit Agreement, Telesat Canada terminated
and paid all outstanding amounts under its previously existing credit facilities, which were evidenced by a Credit Agreement dated
as of October 31, 2007.



On April 30, 2012, Telesat Canada
announced a tender offer for all of its 11.0% Senior Notes due November 1, 2015. On May 14, 2012, Telesat Canada issued USD $700
million of 6.0% Senior Notes which mature on May 15, 2017. A portion of the net proceeds of the offering were used to pay all holders
of the 11.0% Senior Notes due November 1, 2015, who validly tendered such Senior Notes. All remaining funds from the 6.0% Senior
Notes offering, together with cash on hand, were used to fund the redemption of the remaining 11.0% Senior Notes not already validly
tendered and accepted for purchase pursuant to Telesat’s tender offer. On October 29, 2012, an additional USD $200 million
of 6.0% Senior Notes were issued, which have the same terms and conditions other than issue price as those issued on May 14, 2012,
and thus also mature on May 15, 2017. The net proceeds of the additional offering, together with cash on hand, were used to pay
certain indebtedness owed to the principal shareholders. The 6.0% Senior Notes are subordinated to Telesat Canada’s existing
and future secured indebtedness, including obligations under the Senior Secured Credit Facilities, and are governed under the 6.0%
Senior Notes indenture.



The Senior Secured Credit Facilities



The obligations under the Credit
Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by first priority liens and security
interest in the assets of Telesat Canada and the Guarantors. The Credit Agreement contains covenants that restrict the ability
of Telesat Canada and certain of its subsidiaries to take specified actions, including, among other things and subject to certain
significant exceptions: creating liens, incurring indebtedness, making investments, engaging in mergers, selling property, paying
dividends, entering into sales-leaseback transactions, creating subsidiaries, repaying subordinated debt or amending organizational
documents. The Credit Agreement requires Telesat Canada to comply with a maximum senior secured leverage ratio. The Credit Agreement
also contains customary affirmative covenants and events of default.



The Senior Secured Credit Facilities
are comprised of the following facilities:



i — Revolving Credit Facility



The Revolving Credit Facility
(“Revolving Facility”) is a CAD/USD $140 million loan facility available in either Canadian or U.S. dollars, maturing
on March 28, 2017. Loans under the Revolving Facility bear interest at a floating rate plus an applicable margin of 2.00% for prime
rate and Alternative Base Rate (“ABR”) loans and 3% for Bankers Acceptance (“BA”) and Eurodollar loans.
The Revolving Facility currently has an unused commitment fee of 50 basis points. As of December 31, 2012, other than approximately
$0.2 million in drawings related to letters of credit, there were no borrowings under this facility.



ii — Term Loan A Facility



The Term Loan A Facility (“TLA
Facility”) is a $500 million loan maturing on March 28, 2017. The outstanding borrowings under the TLA Facility currently
bear interest at a floating rate of the BA borrowing rate plus an applicable margin of 3.00%. There were no required repayments
on the TLA Facility for the year ended December 31, 2012, however, repayments of $25 million are required for the year ending December
31, 2013.



iii — Term
Loan B — Canadian Facility



The Term Loan B — Canadian
Facility (“Canadian TLB Facility”) was initially a $175 million loan maturing on March 28, 2019. As of December 31,
2012, $174 million of the facility was outstanding, which represents the full amount available following mandatory repayments.
The Canadian TLB Facility currently bears interest at a floating rate of the BA borrowing rate, but not less than 1.25%, plus an
applicable margin of 3.75%. The mandatory principal repayments on the Canadian TLB Facility are 1⁄4 of 1% of the original
amount of the loan, which must be paid on the last day of each quarter and commenced with the fiscal quarter ended September 30,
2012.





9







iv — Term Loan B — U.S.
Facility



The Term Loan B — U.S.
Facility (“U.S. TLB Facility”) was originally a USD $1,725 million loan maturing on March 28, 2019. As at December
31, 2012, USD $1,716 million of the facility was outstanding, which represents the full amount available following mandatory repayments.
The outstanding borrowings under the U.S. TLB Facility currently bear interest at a floating rate of Libor, but not less than 1.00%,
plus an applicable margin of 3.25%. The mandatory principal repayments on the U.S. TLB Facility are 1⁄4 of 1% of the original
amount of the loan, which must be paid on the last day of each quarter and commenced with the fiscal quarter ended September 30,
2012.



Each of the Senior Secured Credit
Facilities is subject to mandatory principal repayment requirements. The maturity date for each of the Senior Secured Credit Facilities
described above will be accelerated if Telesat Canada’s existing 6.0% Senior Notes due in 2017 and 12.5% Senior Subordinated
Notes due in 2017 or certain refinancing thereof are not repurchased, redeemed, refinanced or deferred before the date that is
91 days prior to the maturity date of such notes.



In order to hedge our currency
risk, we kept our cross-currency basis swaps to synthetically convert USD $1.0 billion of future U.S. dollar denominated payment
obligations to $1.2 billion. The cross-currency basis swaps are being amortized on a quarterly basis at 1⁄4 of 1% of the original
amount. As of December 31, 2012, the balance of the swaps was $1.2 billion and bears interest at a floating rate of Bankers Acceptance
plus an applicable margin of approximately 387 basis points.



6.0% Senior Notes due May 15, 2017



The Senior Notes, in the amount
of USD $900 million, bear interest at an annual rate of 6.0% and are due May 15, 2017. The Senior Notes include covenants or terms
that restrict our ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make
certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) modify
or cancel our satellite insurance, (vi) effect mergers with another entity, and (vii) redeem the Senior Notes prior to May 15,
2014, in each case subject to exceptions provided in the Senior Notes indenture.



12.5% Senior Subordinated Notes due November
1, 2017



The Senior Subordinated Notes,
in the amount of USD $217 million, bear interest at a rate of 12.5% and are due November 1, 2017. The Senior Subordinated Notes
include covenants or terms that restrict our ability to, among other things, (i) incur additional indebtedness, (ii) incur liens,
(iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions
with affiliates, (v) modify or cancel our satellite insurance, (vi) effect mergers with another entity, and (vii) redeem the Senior
Subordinated Notes prior to May 1, 2013, in each case subject to exceptions provided in the Senior Subordinated Notes indenture.



As of December 31, 2012, we were
in compliance with the financial covenants of our Credit Facility and the indentures governing our 6.0% Senior Notes due in 2017
and 12.5% Senior Subordinated Notes due in 2017.



Debt Service Cost



An estimate of the interest expense
is based upon assumptions of LIBOR and Bankers Acceptance rates and the applicable margin for the Senior Secured Credit Facilities,
the Senior Notes and the Senior Subordinated Notes. Our estimated interest expense for the year ending December 31, 2013, is approximately
$231 million.



Derivatives



We have used interest rate and
currency derivatives to hedge our exposure to changes in interest rates and foreign exchange rates.



In order to hedge our currency
risk, we have cross-currency basis swaps to synthetically convert USD $1.0 billion of the U.S. Term Loan Facility debt into $1.2
billion of debt. As of December 31, 2012, the fair value of the cross-currency basis swaps was a liability of $192 million (December
31, 2011 — $160 million). Any non-cash loss will remain unrealized until this contract is settled. The contract
matures on October 31, 2014.





At December 31, 2012, the Company
had a series of five interest rate swaps to fix interest on $1.5 billion of Canadian dollar denominated debt at a weighted average
fixed rate of 2.63% (excluding applicable margins) and one interest rate swap to pay a fixed rate of 1.46% (excluding applicable
margins) on $300 million of U.S. dollar denominated debt. As of December 31, 2012, the fair value of the interest rate swaps was
a liability of $37 million (December 31, 2011 — $53 million). These contracts mature between October 31, 2014 and
September 30, 2016.



We also have embedded derivatives
that are accounted for separately at fair value. These embedded derivatives are related to prepayment options included in our Senior
Notes and Senior Subordinated Notes as well as interest rate floors included in our Canadian and U.S. TLB Facilities. At December
31, 2012, the fair value of the embedded derivatives related to the prepayment options on our Senior Notes and Senior Subordinated
Notes was an asset of $109 million (December 31, 2011 — $134 million). The fair value of the embedded derivatives
related to the interest rate floors was a liability of $54 million at December 31, 2012 (December 31, 2011 — $nil).
The changes in fair value of these embedded derivatives are recorded on our consolidated statement of income as a gain or loss
on changes in the fair value of financial instruments and are non-cash. The prepayment options on the Senior Notes and Senior Subordinated
Notes will expire on their respective maturity dates of May 15, 2017 and November 1, 2017. The interest rate floors on the Canadian
and U.S. TLB Facilities will expire on their respective maturity dates.





10







Capital
Expenditures



We have entered into contracts
for construction, launch and in-orbit insurance of the Anik G1 satellite. As of December 31, 2012, the outstanding commitments
on these contracts were approximately $32 million. These expenditures will be funded from some or all of the following: cash and
cash equivalents, cash flow from operating activities, cash flow from customer prepayments or through borrowings on available lines
of credit under the Revolving Facility. For the year ended December 31, 2012, the Company had capital expenditures of $170 million
as compared to $386 million in the prior year.



CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS



The following table summarizes
the contractual obligations at December 31, 2012, that are due in each of the next five years and after 2017. This table does not
include any future satellite expenditures not committed to at year end.



|                                                                                                            |  | 2013                              |       |  | 2014 |   |       | 2015 |  |   | 2016  |  |  | 2017 |       |  | After 2017 |   |         | Total | 
|----------------------------------------------------------------------------------------------------------- |  | --------------------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  | ---------- | - | ------- | ----- | 
|                                                                                                            |  | (in millions of Canadian dollars) |      
|Senior
    Secured Credit Facilities and Notes, excluding interest and amortization of debt issue costs (1) |  | $                                 | 43.9  |  |      | $ | 68.9  |      |  | $ | 68.9  |  |  | $    | 93.9  |  |            | $ | 1,427.2 |       | 
|Interest on long-term debt                                                                                  |  |                                   | 195.2 |  |      |   | 181.0 |      |  |   | 178.0 |  |  |      | 174.4 |  |            |   | 121.2   |       | 
|Swaps, including interest                                                                                   |  |                                   | 52.1  |  |      |   | 208.2 |      |  |   | 1.5   |  |  |      | 0.8   |  |            |   | —       |       | 
|Operating leases                                                                                            |  |                                   | 7.1   |  |      |   | 6.3   |      |  |   | 5.9   |  |  |      | 5.3   |  |            |   | 4.8     |       | 
|Other contractual obligations                                                                               |  |                                   | 22.0  |  |      |   | 15.5  |      |  |   | 7.7   |  |  |      | 3.5   |  |            |   | 0.1     |       | 
|Post-retirement and employment benefit payments (2)                                                         |  |                                   | 8.2   |  |      |   | 8.8   |      |  |   | 10.1  |  |  |      | 11.1  |  |            |   | 12.1    |       | 
|Commitments for capital expenditures (3)                                                                    |  |                                   | 32.2  |  |      |   | —     |      |  |   | —     |  |  |      | —     |  |            |   | —       |       | 
|Deferred satellite performance incentive payments, including interest                                       |  |                                   | 9.8   |  |      |   | 8.2   |      |  |   | 8.2   |  |  |      | 8.2   |  |            |   | 8.2     |       | 
|Total                                                                                                       |  | $                                 | 370.5 |  |      | $ | 496.9 |      |  | $ | 280.3 |  |  | $    | 297.2 |  |            | $ | 1,573.6 |       | 



| | (1) | See Note 18 to the Company’s audited consolidated financial statements at December 31, 2012.
| | --- | --------------------------------------------------------------------------------------------



| | (2) | Benefit payments to 2022 only as obligations beyond this date are not quantifiable.
| | --- | -----------------------------------------------------------------------------------



| | (3) | The commitments for capital expenditures include the construction, launch and insurance of the Anik G1 satellite (see note 27 to the Company’s audited consolidated financial statements at December 31, 2012).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our future contributions to the
pension plans and future income tax liabilities have not been included in the table as the timing and amount of cash required cannot
be accurately determined as:



| | • | future contributions to the pension plans depend largely on the result of actuarial valuations that are performed periodically and on the investment performance of the pension fund assets; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | future payments of income taxes depend on the amount of taxable earnings and on whether there are tax loss carry forwards available to reduce income tax liabilities.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



Deferred revenues and gains on
assets have not been included in the table above because they do not represent future cash payments. See note 16 and 17 of our
audited consolidated financial statements.



MARKET RISK



Credit Risk Related to Financial Instruments



Financial instruments that potentially
subject us to a concentration of credit risk consist of cash and cash equivalents, short-term investments, accounts receivable,
derivative assets as well as other assets. Cash and cash equivalents and short-term investment are invested with high quality financial
institutions and are governed by our corporate investment policy, which aims to reduce credit risk by restricting investments to
high-grade U.S. dollar and Canadian dollar denominated investments. Credit checks are performed to minimize exposure to any one
customer. We are exposed to credit risk if counterparties to our derivative instruments are unable to meet their obligations. It
is expected that these counterparties will be able to meet their obligations as they are institutions with strong credit ratings.
We periodically monitor their credit risk and credit exposure.







11







Foreign Exchange Risk



Our 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 most significant impact of variations in the exchange rate is on the U.S. dollar denominated debt financing. We are
also exposed to foreign currency risk on anticipated transactions, such as the costs of satellite construction and acquisition.



Our main currency exposures as
at December 31, 2012, lie in our U.S. dollar denominated cash and cash equivalents, accounts receivable, accounts payable and debt
financing.





Approximately 47% of our revenue,
a substantial portion of our expenses and of our indebtedness and capital expenditures are denominated in U.S. dollars for the
year ended December 31, 2012. As a result, the volatility of U.S. currency may expose us to foreign exchange risks. At December
31, 2012, as a result of a weaker U.S. to Canadian dollar spot rate ($0.9921) compared to December 31, 2011 ($1.0213), we recorded
foreign exchange gains of approximately $79 million, prior to any impact of hedging instruments. Conversely, at December 31, 2011,
the U.S. to Canadian dollar spot rate strengthened ($1.0213) as compared to December 31, 2010 ($0.9980), thus resulting in foreign
exchange rate losses of approximately $79 million. As at December 31, 2012, a 5 percent increase (decrease) in the Canadian dollar
against the U.S. dollar would have increased (decreased) the Company’s net income by approximately $145 million and increased
(decreased) other comprehensive loss by approximately $1 million. This analysis assumes that all other variables, in particular,
interest rates, remain constant.



Interest Rate Risk



We are exposed to interest rate
risk on our cash and cash equivalents and our long-term debt, which is primarily variable-rate financing. Changes in the interest
rates could impact the amount of interest that we are required to pay.



Derivative Financial Instruments



We use derivative instruments
to manage our exposure to foreign currency and interest rate risk. Our policy is that we do not use derivative instruments for
speculative purposes.



We use, as required, the following
instruments:



| | • | forward currency contracts to hedge foreign currency risk on anticipated transactions, mainly related to the construction of satellites and interest payments;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | cross-currency basis swaps to hedge the foreign currency risk on a portion of our U.S. dollar denominated debt; and
| | - | -------------------------------------------------------------------------------------------------------------------



| | • | interest rate swaps to hedge the interest rate risk related to debt financing which is primarily variable rate financing.
| | - | -------------------------------------------------------------------------------------------------------------------------



Our derivative financial instruments
also include embedded derivatives that are related to prepayment options included in our Senior Notes and Senior Subordinated Notes,
as well as interest rate floors included in our Canadian and U.S. TLB Facilities.



The fair value of a financial
instrument is the amount that willing parties would accept to exchange based on the current market for instruments with the same
risk, principal and remaining maturity. Fair values are based on estimates using present value and other valuation methods. As
required under IFRS, the fair values also include an adjustment related to the counterparty credit risk.



These estimates are affected significantly
by the assumptions for the amount and timing of estimated future cash flows and discount rates, which all reflect varying degrees
of risk. Potential income taxes and other expenses that would be incurred on disposition of these financial instruments are not
reflected in the fair values. As a result, the fair values are not necessarily the net amounts that would be realized if these
instruments were actually settled.



Through our long-term debt, we
are exposed to interest rate and foreign exchange fluctuations. The following tables, which are based on scheduled debt repayments,
derivative maturities and foreign exchange rates as at December 31, 2012, contain additional information on some of our exposures
and the derivative instruments that mitigate these risks.





|Foreign Exchange Rate Exposure (Long-term Debt) |  |      |        
|----------------------------------------------- |  | ---- | -------
|(CAD millions, beginning of year)               |  | 2013 |        
|                                                |  |      |        
|Long-term debt (USD denominated):               |  |      |        
|US Term Loan                                    |  | $    | 1,702.8
|Senior and Senior Subordinated Notes            |  |      | 1,108.4
|Foreign exchange exposure                       |  | $    | 2,811.2
|Foreign exchange derivatives:                   |  |      |        
|Cross-currency basis swaps                      |  |      | (993.4 
|Net foreign
    exchange exposure               |  | $    | 1,817.8





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|Interest Rate Exposure                                
|------------------------------------------------------
|(CAD millions, beginning of year)                     
|                                                      
|Long-term debt exposed to variable interest rate (1) :
|CAD denominated (CDOR + spread)                       
|CAD denominated (CDOR with 1.25% floor + spread)      
|USD denominated (Libor with 1.00% floor + spread)     
|Interest rate exposure                                
|Interest rate derivatives:                            
|Variable to fixed (CAD notional)                      
|Weighted average fixed rate (before spread)           
|Variable
to fixed (USD notional) (2)                  
|Weighted average fixed rate (before spread)           
|Total interest rate exposure mitigated                
|Net interest rate exposure                            





|(1) | Net of impact of cross-currency basis swaps
|--- | -------------------------------------------



|(2) | Variable rate is greater of 3 month Libor or 1.00%
|--- | --------------------------------------------------





Guarantees



In the normal course of business,
we enter into agreements that provide for indemnification and guarantees to counterparties in transactions involving sales of assets,
sales of services, purchases and development of assets, securitization agreements and operating leases. The nature of almost all
of these indemnifications prevents us from making a reasonable estimate of the maximum potential amount that we could be required
to pay counterparties. As a result, we cannot determine how they could affect future liquidity, capital resources or our credit
risk profile. We have not made any significant payments under these indemnifications in the past. See note 27 to our audited consolidated
financial statements for more information.





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RELATED PARTY TRANSACTIONS



As at December 31, 2012, related
parties consisted of PSP Investments and Loral, the common shareholders, together with their subsidiaries and affiliates. In addition
to the documents related to the Telesat Canada Acquisition, we have also entered into various commercial arrangements with Loral
and subsidiaries and affiliates of Loral. These arrangements primarily relate to the sale or use of satellite transponder capacity
and consulting services, and are entered into in the form of either service agreements or consulting service agreements. See note
29 to our audited consolidated financial statements.



NON-IFRS MEASURES



Consolidated EBITDA for Covenant Purposes



Under the terms of the Credit
Agreement for our Senior Secured Credit Facilities, we are required to comply with a senior secured leverage ratio maintenance
covenant.



Our Consolidated EBITDA for Covenant
Purposes is defined as net income (loss) for Telesat Holdings and Restricted Subsidiaries plus interest expense, depreciation expense,
amortization expense, extraordinary losses and unusual and non-recurring charges, non-cash charges, any expenses or charges incurred
in connection with any issuance of debt, any impairment charges or asset write off, foreign withholding taxes paid or accrued,
non-cash charges related to stock compensation expense and consulting fees payable to Loral. Additional sums which may be added
include projected cost savings from an acquisition and lost revenues which may have been earned by satellites that have been subject
to an insured loss. Deductions which are made in calculating Consolidated EBITDA for Covenant Purposes include extraordinary, non-recurring
gains and non-cash gains. Further adjustments are made to account for income from Unrestricted Subsidiaries, and currency gains
and losses (including non-cash gains or losses on derivative contracts). Unrestricted Subsidiaries are defined as (a) The SpaceConnection,
Inc. (b) any Subsidiary of Holdings that is formed or acquired after the closing date of the Credit Agreement (or March 28, 2012),
provided that such Subsidiary is designated as an Unrestricted Subsidiary, and (c) any Restricted Subsidiary subsequently re-designated
as an Unrestricted Subsidiary.



Consolidated EBITDA for Covenant
Purposes is not a presentation made in accordance with IFRS, is not a measure of financial condition or profitability, and should
not be considered as an alternative to (1) net income (loss) determined in accordance with IFRS or (2) cash flows from operating
activities determined in accordance with IFRS. Additionally, Consolidated EBITDA for Covenant Purposes is not intended to be a
measure of free cash flow for management’s discretionary use as it does not include certain cash requirements for such items
as interest payments, tax payments and debt service requirements. We believe that the inclusion of Consolidated EBITDA for Covenant
Purposes herein is appropriate to provide additional information concerning the calculation of the maintenance financial covenant
in the Senior Secured Credit Facilities. Consolidated EBITDA for Covenant Purposes is a material component of this covenant. Non-compliance
with the financial ratio maintenance covenant contained in our Senior Secured Credit Facilities could result in the requirement
to immediately repay all amounts outstanding. Because not all companies use identical calculations, this presentation of Consolidated
EBITDA for Covenant Purposes may not be comparable to other similarly titled measures of other companies. We believe the disclosure
of the calculation of Consolidated EBITDA for Covenant Purposes provides information that is useful to an investor’s understanding
of our liquidity and financial flexibility.



The following is a reconciliation
of net income, which is an IFRS measure of our operating results, to Consolidated EBITDA for Covenant Purposes, as defined in the
Credit Agreement and the calculation of the ratio of Consolidated Total Secured Debt to Consolidated EBITDA for Covenant Purposes
as defined in the Credit Agreement. The terms and related calculations are defined in the Credit Agreement, a copy of which are
publicly available at www.sec.gov .



|(in millions of Canadian dollars)                                                              |  | Year Ended December 31, 2012 |      
|---------------------------------------------------------------------------------------------- |  | ---------------------------- | -----
|Net income                                                                                     |  | $                            | 27.1 
|Impact of unrestricted subsidiary                                                              |  |                              | (0.5 
|Consolidated earnings for Covenant Purposes                                                    |  |                              | 26.6 
|Plus:                                                                                          |  |                              |      
|Income taxes (note 1)                                                                          |  |                              | 36.3 
|Interest expense (note 1)                                                                      |  |                              | 241.1
|Depreciation and amortization expense (note 1)                                                 |  |                              | 244.5
|Transaction expenses and planned distribution to option holders                                |  |                              | 76.2 
|Expenses related to issuance of Indebtedness                                                   |  |                              | 55.3 
|Other                                                                                          |  |                              | 4.5  
|Increased (decreased) by:                                                                      |  |                              |      
|Non-cash losses (gains) on changes in fair value of financial instruments and swap obligations |  |                              | 60.7 
|Non-cash losses (gains) resulting from changes in foreign exchange rates                       |  |                              | (78.9
|Other extraordinary, unusual or non-recurring losses (gains)                                   |  |                              | (6.8 
|Consolidated EBITDA for Covenant Purposes                                                      |  | $                            | 659.5





14







|Note 1: | Tax, interest, depreciation and amortization expense for covenant purposes excludes certain specific expenses as defined in the Credit Agreement and as a result does not reconcile to the financial statement line items.
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Consolidated Total Secured Debt for Covenant
Purposes



Consolidated Total Secured Debt
for Covenant Purposes is a non-IFRS measure. We believe that the inclusion of Consolidated Total Debt for Covenant Purposes herein
is appropriate to provide additional information concerning the calculation of the maintenance financial covenant under our Senior
Secured Credit Facilities. We believe the disclosure of the calculation of Consolidated Total Secured Debt for Covenant Purposes
provides information that is useful to an investor’s understanding of our compliance with this financial covenant.



The following is a reconciliation
of our Consolidated Total Secured Debt for Covenant Purposes to Indebtedness:





|                                                                                |  | As at December 31, 2012 |         
|------------------------------------------------------------------------------- |  | ----------------------- | --------
|(in millions of dollars)                                                        |  |                         |         
|U.S. dollar denominated debt                                                    |  |                         |         
|Term Loan B - U.S. Facility (USD)                                               |  | $                       | 1,716.4 
|6.0% Senior Notes (USD)                                                         |  |                         | 900.0   
|12.5% Senior Subordinated Notes (USD)                                           |  |                         | 217.2   
|                                                                                |  |                         | 2,833.6 
|Foreign exchange adjustment                                                     |  |                         | (22.4   
|Subtotal (CAD)                                                                  |  |                         | 2,811.2 
|Deferred financing costs, interest rate floors, prepayment options and premiums |  |                         | (78.4   
|CAD denominated debt                                                            |  |                         |         
|Term Loan A                                                                     |  |                         | 500.0   
|Term Loan B - Canadian Facility                                                 |  |                         | 174.1   
|Indebtedness                                                                    |  | $                       | 3,406.9 
|(in millions of Canadian dollars)                                               |  |                         |         
|Indebtedness                                                                    |  | $                       | 3,406.9 
|less: Unsecured debt (6.0% Senior and 12.5% Senior Subordinated Notes)          |  |                         | (1,108.4
|Adjustments for covenant purposes:                                              |  |                         |         
|Deferred financing costs, interest rate floors, prepayment options and premiums |  |                         | 78.4    
|Effects of currency swap agreements                                             |  |                         | 169.7   
|Consolidated Total Secured Debt for Covenant Purposes                           |  | $                       | 2,546.6 



As of December 31, 2012, the Consolidated
Total Secured Debt to Consolidated EBITDA for Covenant Purposes ratio, for purposes of the Senior Secured Credit Facilities, was
3.86:1.00, which was less than the maximum test ratio of 5.25:1.00.



CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES



The preparation of financial statements
in accordance with IFRS requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenue and expenses
reported for the year. Actual results could differ from these estimates under different assumptions and conditions. We believe
the following describes the significant judgments and estimates used in the preparation of our consolidated financial statements
for the year ended December 31, 2012.



Critical judgments in applying accounting policies



Revenue recognition



Revenue for fixed priced consulting
contracts are recognized using the percentage of completion method. When using this method for revenue recognition, we are required
to make judgments to accurately estimate costs incurred and accurately estimate costs required to complete our contracts.



15







Uncertain income tax positions



We operate in numerous jurisdictions
and are subject to country-specific tax laws. We use significant judgment when determining the worldwide provision for tax and
estimate provisions for uncertain tax positions as the amounts expected to be paid based on a qualitative assessment of all relevant
factors. In the assessment, we consider risk with respect to tax matters under active discussion, audit, dispute or appeal with
tax authorities, or which are otherwise considered to involve uncertainty. We review the provisions at each balance sheet date.



Determining whether an arrangement contains a
lease



We use significant judgment to
assess whether each new arrangement contains a lease based on IFRIC 4. The determination of whether an arrangement is, or contains
a lease, is based on the substance of the arrangement at inception date or whether the fulfillment of the arrangement is dependent
on the use of a specific asset or assets or the arrangement conveys a right to use the asset. If contracts contain a lease arrangement,
the leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.



Critical accounting estimates and assumptions



Derivative financial instruments measured at fair
value



Derivative financial assets and
liabilities are measured at fair value. When quoted market values are unavailable for our financial instruments, and in the absence
of an active market, we determine fair value for financial instruments based on prevailing market rates (bid and ask prices, as
appropriate) for instruments with similar characteristics and risk profiles or we make use of internal/external valuation models,
such as option pricing models and discounted cash flow analysis, using observable market-based inputs. The determination of fair
value is affected significantly by the assumptions used for the amount and timing of estimated future cash flows and discount rates.
As a result, the fair value of financial assets and liabilities and the amount of gains or losses on changes in fair value recorded
to net income could vary.



Impairment of goodwill



Goodwill represented $2,446.6
million of our total assets. Determining whether goodwill is impaired requires an estimation of our value. Our value requires us
to estimate the future cash flows expected to arise from operations and to make assumptions regarding economic factors, tax rates,
and annual growth rates. Actual operating results and our related cash flows could differ from the estimates used for the impairment
analysis.



Impairment of intangible assets



Intangible assets represent a
significant portion of our total assets. We test intangible assets for impairment annually or more frequently if indicators of
impairment exist. The impairment analysis requires us to estimate the future cash flows expected to arise from operations and to
make assumptions regarding economic factors, discount rates, tax rates, and annual growth rates. Actual operating results and our
related cash flows could differ from the estimates used for the impairment analysis.



The reversal of an impairment
loss requires us to re-assess several indicators that led to the impairment. It requires the valuation of the recoverable amount
by estimating the future cash flows expected to arise from the cash generating unit or individual asset and the determination of
a suitable discount rate in order to calculate its present value. Significant judgments are made in establishing these assumptions.



Employee benefits



The cost of defined benefit pension
plans and other post employment medical benefits and the present value of the pension obligation are determined using actuarial
valuations. An actuarial valuation involves making various assumptions which may differ from actual developments in the future.
These include the determination of the discount rate, future salary increases, mortality rates, future pension increases and return
on plan assets. Due to the complexity of the valuation, the underlying assumptions, and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.



Determination of useful life of satellites and
finite life intangible assets



The estimated useful life and
depreciation method for satellites and finite life intangible assets are reviewed at the end of each year, with the effect of any
changes in estimate being accounted for on a prospective basis. Any change in these estimates may have a significant impact on
the amounts reported.



Income taxes



We assess the recoverability of
deferred tax assets based upon an estimation of our projected taxable income using existing tax laws, and our ability to utilize
future tax deductions before they expire. Actual results could differ from expectations.





16









ACCOUNTING STANDARDS



Changes in Accounting Policies



We have prepared the consolidated
financial statements in accordance with IFRS. There were no changes in accounting policy during the year.



Recent IFRS Accounting Pronouncements



The International Accounting Standards
Board (“IASB”) recently issued a number of new accounting standards. The new standards determined to be applicable
to the Company are disclosed below. The remaining standards have been excluded as they are not applicable or not material.



Financial instruments



IFRS 9, Financial Instruments
(“IFRS 9”) was issued by the International Accounting Standards Board (“IASB”) on October 28, 2010, and
will replace IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a single approach
to determine whether a financial asset is measured at amortized cost or fair value, replacing multiple rules in IAS 39. The approach
in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual
cash flow characteristics of the financial assets. Two measurement categories continue to exist to account for financial liabilities
in IFRS 9, fair value through profit or loss (“FVTPL”) and amortized cost. Financial liabilities held-for-trading are
measured at FVTPL, and all other financial liabilities are measured at amortized cost unless the fair value option is applied.
The treatment of embedded derivatives under the new standard is consistent with IAS 39 and is applied to financial liabilities
and non-derivative hosts not within the scope of this standard. IFRS 9 is effective for annual periods beginning on or after January
1, 2015. The Company is currently evaluating the impact of IFRS 9 on its consolidated financial statements.



Presentation of Financial Statements



On June 16, 2011, the IASB issued
and amended version of IAS 1, Presentation of Financial Statements (“IAS 1”). The amendments to IAS 1 retain the “one
or two statements” approach at the option of the entity and revised how the components of other comprehensive income are
presented. The revised standard is effective for annual periods beginning on or after July 1, 2012. The Company is currently evaluating
the impact of revised IAS 1 on its consolidated financial statements.



Accounting for post employment benefits



On June 16, 2011, the IASB issued
the amended version of IAS 19, Employee Benefits (“IAS 19R”). The amendments make changes in eliminating the
accounting option to defer the recognition of actuarial gains and losses, streamlining the presentation of changes in assets and
liabilities arising from defined benefit plans as well as amendments to disclosure requirements. Changes in the defined benefit
obligation and plan assets are disaggregated into three components: service costs, net interest on the net defined benefit obligation
(asset) and remeasurements of the net defined benefit obligation (asset). The revised standard is effective for annual periods
beginning on or after January 1, 2013 with earlier application permitted. The Company is currently evaluating the impact of revised
IAS 19R on its consolidated financial statements.



Fair value measurement and disclosure requirements



IASB issued IFRS 13, Fair value
measurement (“IFRS 13”) on May 12, 2011. IFRS 13 provides guidance on how fair value measurement should be applied
whenever its use is already required or permitted by other standards within IFRS. IFRS 13 is effective January 1, 2013, with earlier
application permitted. The Company is currently evaluating the impact of revised IFRS 13 on its consolidated financial statements.





17







SIGNATURES



The registrant hereby certifies
that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign
this Annual Report on its behalf.



| | Telesat Holdings Inc.                        | 
| | -------------------------------------------- | 
| |                                              | 
| | /s/ Daniel S. Goldberg                       | 
| | Name: Daniel S. Goldberg                     | 
| | Title: President and Chief Executive Officer | 



Date: February 26, 2013



18