Welcome to InderesTV. Eltel published its Q3 earnings result earlier today, and as always, I have the CEO, Håkan Dahlström, here with me today. Welcome.

Thank you.

All right. Let's start with the report. How would you summarize the third quarter for Eltel?

I would claim that this is a very strong quarter. It's our record-high profit and also a great order book development. So even though I would have wanted to see something different on the net sales, as you understand, I would say that we are following the development. We have said priority one is to improve the margin. And with the €11 million, I think we are doing great.

And over the past few months, you have signed some of the largest and longest contracts in your history, with Vattenfall being the most recent one. Mm-hmm. What do these wins say about how customers view Eltel today compared with a few years ago?

Well, for me, I would say that this is evidence that they have great trust in Eltel and that my colleagues are delivering great customer experience. That's how you win this type of contract. You have to give them great confidence and customer experience, and I think that's what we have delivered in previous contracts. So it has been logical for them to expand the commitment with us. And of course, we are really happy for this.

Mm-hmm. And do you see a broader shift in how network owners buy services, toward maybe fewer and larger partners, or are these wins specific to Eltel, would you say?

I think that when we talk about long and quite complex contracts and delivery commitments, I see maybe less and less competition.

All right. And looking at 2027, you have a couple of large contracts starting up with contracts with Vattenfall and Telenor. What would you say a successful startup for this country looks like to you? And what will you be watching most closely as you scale up these contracts?

Yeah. It is the balance between how we're picking up costs and what type of revenue, so that it's easy, of course, in this ramp-up to accumulate a lot of cost that you don't really get paid for. So this is an act of balance. And we have to do this very closely together with our customers so that this is a smooth ramp-up and not a lot of early cost and late revenue. That, of course, is what we have to avoid.

Mm-hmm. And do you think investors should view 2027 as a year when the margin progress pauses before the benefit shows in 2028 due to the startup cost, or how would you quantify this? How would you quantify this?

No, I would say that there is no change in our priorities. Priority one: margin improvement. Then, of course, we need to expand the customer base, sort of addressing a larger market in our classic services. And we need to continue to develop the emerging services and catch the opportunity in the energy sector, in the data center sector. But margin is priority number one.

So no, I wouldn't easily accept that 2027 would be some sort of excuse. Due to that, we have to ramp up. We have more than one task.

All right. And if you look at your customer base, it seems like they are heading in different directions, with the grid owners investing heavily while the telecom operators are holding back. How do you see the balance between power and communication evolving over the next few years? And what does that mean for the kind of company Eltel becomes?

We have seen this now for a couple of years, that the volume of investment from telco operators has really been reduced. I think we are defending our position quite well, particularly if you take the Swedish example. I think they are doing great. Also Finland, defending the margin in a really good way under this pressure on the top line. But nothing indicates today that this will change. I would say that the possibilities in the energy sector, or power, are increasing.

We believe that we have had issues in Denmark. Due to that. There has not been any acceptance of requests to connect to the network. Now Denmark has figured out how to prioritize. So we see that this is the beginning of the solution in Denmark. Finland is discussing the same question: who would get the network connection? There is a first draft of a prioritization also in Finland. I would expect this to happen also in Sweden sooner or later. Because this first-come, first-served doesn't really work when you have this enormous amount of requests.

And then looking at the industry, some peers or other companies in that space describe a market that is shifting in the contractor's favor. Is that also your experience, and how do you make sure Eltel uses that sort of position wisely?

I go back to the megatrends. We see that the digitalization, electrification, the need for more resilient networks due to geopolitical chaos, and also climate change. All of those four megatrends are driving demand. And when demand is increasing faster than supply, and I don't really see any increase in supply, but I see a heavy increase in demand. I think this is what we have talked about, that Eltel has a really good position to capture this opportunity. So I think we are at the beginning of something where demand and supply are coming to a completely different situation than it was 4 or 5 years ago.

And then on the margin journey. So you have had a long run now of margin improvements. How far along the road to your 5% target do you feel that you are as of today? And what are the most important steps left?

We have somewhat more to do to reach the five. Absolutely. But I think the third quarter. 13 in a row where we beat the previous year, I think we just have to keep up this. We know what to do. We're going to do what we have done. We're going to do more of that.

And I think it's also so that sometimes you believe that the one that has the lowest performance should improve, but I would claim that those with great performance might have an even better possibility to improve further. And we see that. I think Finland is such a good example of this. We have done well now for some time in Finland and they do better than ever, I would claim, in the third quarter, and my expectation is high on them also going forward. So all of us have to improve. That's just how it is. We all have to beat our own history, but we don't need to invent something. We had Operation Excellence. We have the Commercial Excellence. We know what to do: stay disciplined, deliver on the margin.

And then in mid-November you will have your Capital Markets Day. What should investors expect to hear about Eltel's next chapter?

I think that we will open up a bit and explain in more detail than what we have time to do in a quarterly report like this, and there is also an opportunity to see my very good colleagues, the competent and skilled colleagues there that actually are closer to the business than what I have as a possibility, since they are hands-on leading our business in each market. So you have an opportunity to hear it from themselves, what they're going to do and what they are doing in each segment. So I think that's a great opportunity to understand even more how we will address the critical infrastructure in the future.

And then on balance sheet and leverage, which remained unchanged now in Q3 versus Q2 and still above your target there. And for several years, the focus has been on making Eltel more profitable, which now, when we look at 2027, you have new big contracts that start up, which sort of lays the foundation for growth. But that also usually comes with a higher working capital in the beginning. How do you make sure that growth and a stronger balance sheet go hand in hand, rather than pulling in opposite directions?

I think you can see when you look at our net working capital and net debt. And so we have had a structural change in how we finance Eltel. In the past, we had a hybrid bond. We had this tax deferral. We had repaid half of it. We have the second half now to be done in a year from now. That has to be considered when you look at those graphs and those numbers.

But I would say that we have been able to build a culture inside Eltel where we look at these also, the commercial questions when it comes to how do we get paid? When can we invoice, what are the payment terms, and so on. And that is of course important to manage the net working capital. And I would say that we are becoming better and better in that area. I hope that we will be able to show that also in the future. But it's. Every person in Eltel has a responsibility for the project, or for the team or for the customer. And all of us have to actively work on this on a weekly basis if it is going to be a good outcome of this. So discipline and constant, consistent improvement.

And then finally, Håkan, I know that you usually don't talk about the future per se, but what would make you say that 2027 was a good year for Eltel, 2027? Yeah, one year ahead.

Yeah. I think that we should have been able to improve the margin further, as I always start with, but I also want to see more and a broader customer base. I want to see some larger success in progress in the data center area.

I believe that we're going to see that on the energy side, that we will see more and more hybrid solutions, that a wind park will have an energy storage, a solar park will have an energy storage. I also believe that we will see data centers in combination with renewable energy, that we have a hybrid park, maybe wind, solar, energy storage in combination in a new establishment together with a data center, so that the discussion in society about is this good or not for society. I believe that this will be solved by the data center bringing their own power with commitment in investment in renewable energy, and then. Great. We are here to catch those opportunities, both on the consumption side, meaning the data center, and on the production side with the renewable energy. So we are all for it.

All right. Thank you so much for joining me here today. Thank you. And thank you for watching.

Thank you all.