Hello, welcome to Inderes TV. Eltel published its Q1 earnings result earlier today, and here with me to go through the report I have the CEO of Eltel, Håkan Dahlström. Welcome.

Thank you very much.

Alright, so if we start with the report, how would you summarise the first quarter for Eltel?

Yeah, I would say that we have strong growth and impressive profit improvement. So, a very good quarter.

Hmm. Obviously the revenue growth was the bright spot in the report, but it's also clear that the macro picture has swung rather quickly following the Iran-US conflict, with the narrative shifting from rate cuts to rate hikes and new inflation and growth concerns. Based on that, have you seen anything concrete in customer dialogues in terms of investment appetite, or do you view it as business as usual from here?

I think it's a bit too early. Normally those types of decisions are quite a long process until our customers come to a decision to invest in a solar park or data center. And so, even before, I would say that we saw a bit of softness when it comes to green energy, renewable energy with the exception of energy storage. I would say energy storage is still very active. But when it comes to wind and solar PV, we see less activity during this winter that we just have had than what we had just a year ago.

Hmm.

On the opposite side I would say that data centre is more active. So it's a lot of prospects on that side.

Hmm. And looking at the rest of 2026, has your view on the different markets across your country units changed at all from your view at the time of your Q4 report?

Maybe that the swing, sort of the softness in renewable energy, comes faster than I expected, and also the pickup, if we say so, in data center also comes faster. Mm. So, but it's still very early days. Let's see. Geopolitical situation where we have both wine and water, so to say, meaning that public sector increase their demand. We do more and more for them, and that's great. I think we have a perfect fit towards the defense and other actors in the public sector. But then, of course, prices on fuel, asphalt, cabling might be something in the future that impact that impacts us.

Hmm.

For the first quarter, very, very minor. I have no complaint, so to say, on the cost of those in the first quarter. But let's see what happens going forward.

Hmm. And if we just play with the narrative that the demand would weaken from here, what specifically in your operating model makes you better positioned today than Mm-hmm. better positioned today than a couple of two, three years ago?

Yeah. First, I don't predict that the demand will be softer.

If we play with If the narrative, it yeah.

if it becomes, I would say that we have a much more flexible cost structure now than three years ago. We were, for three years ago, roughly five thousand people inside. We had a not so big usage of subcontractors and partners. Today we are roughly 3,600 and keeping up the revenue at the same level. And this means that in the emerging services, that part of our business, we have a model where we work more with partners, a big portion of subcontractors. Of course, we have subcontractors also in the classic business, but the portion of it is larger in the emerging services, and now when that comes up to almost a... Almost a quarter of everything we do. That also gives us, of course, flexibility in the cost structure. Then, as we have said many times, 2022, we didn't have the same type of indexes in our contracts. But yeah, so better flexibility in the cost structure, better protection in the contract by indexes.

Mm. And I think the margin story is quite well understood at this point, where we have shown 11 quarters in a row with year-on-year improvement. And now, obviously, the revenue growth in Q1 was the bright spot, as I mentioned. But I think, looking back, that the revenue growth has been something that investors maybe wrestle with when it comes to the Eltel case, basically. What gives you the most confidence today that revenue growth can accelerate meaningfully from previous years, and is that confidence mostly based on pipeline visibility or on something more structural?

Mm-hmm. I would first mention our customer base. So, three years ago the top five customers were very much network owners. They were representing more than 50% of our revenue. Today top five is 40%. So we have a much broader customer base and we continue doing that. I think that is one part of this. We are not so dependent as we were in the past. Emerging services give us a possibility to address a much broader market. All of those areas will not develop great in every market every year. And I think this is what we talk internally about as our competitive edge or advantage is that we are able to do business in solar in one market one year, next year we are focusing on data center energy storage, so we should not sort of build a structure and an organization. that are so dependent on what type of areas. We do service maintenance, upgrade, installation, we can run big projects, small projects. If it is a solar park or if it's a data center we should be able to move from area to area.

And you have talked a lot about data centers, solar PV and BES as important growth areas going forward. These contracts are often fixed-priced, Mm. which is a different risk profile than your classic service and maintenance business. How do you think about the right long-term mix between the two?

Mm. Well, I've said before that my expectation is that we should have twenty-five percent in emerging services at the end of twenty-seven. Now Q1 has a very much larger portion there. I don't, I will not be disappointed if we don't have that portion during the full year. But I think it will be somewhere there. A third of our business in emerging services, meaning more projects at this time, and two thirds in the classic business, meaning that it will be a A bulk of everything we do will still be service and maintenance. Hmm. Up to today, we have 72% of everything we do in upgrade and maintenance services. I think you should also recognize that when you build a data center, someone has to take care of it in the future. And with the... I would say quite surprisingly short life cycle of a GPU. Someone will have to sort of maintain and recycle this. investment.

And if we then look at the industry, some of your closest Nordic peers are clearly under pressure right now for different reasons basically. Has that in turn translated into anything concrete for Eltel, like some of their customers switching, or talent that you have been able to attract, or framework agreements won against them? Or is this still more of a theoretical tailwind at this point, as you see it?

I Yeah, hard to know, but I would say that my perception is that we are gaining market share in those areas.

Hmm.

I can see that when we renew contracts, we have a tendency to have a larger portion in the new contract than what we had in the past contract.

Hmm.

But no, I'm quite happy with the development. On talent, it's of course... it's a fight about talent.

Mm-hmm.

Our positive development is noticed. I can see that. People are happy to come. Hmm. We're really happy for that. We need more talent. But yeah, I can't really speculate on the root causes for this, but yeah. So far, so good, I would say.

And I thought that we would end this interview on a different note this time. So if you weren't the CEO of Eltel, but instead an investor looking at the company from the outside today, what's the first questions that you would want answered before putting your money in?

Well, I think we have the 11 quarters of... improvement. And then, of course, I think everybody sees that is what has to be also for the future, that we steadily improve. It's of course great to be able to report the double-digit growth on top line, but I will say that the main reason to invest in Eltel is that the demand is not short term. There is a long-term demand for our services. Uh when I talk about this internally, I say that everyone more or less can do a PowerPoint,

Mm.

but then you need someone to do it in real life, and that's when you need Eltel. So there's a lot of plans and lots of ambitions, but then someone has to build it.

Hmm.

And that's when you need Eltel. And it's in all of these areas. So I would say that the demand is there.

Hmm.

It will also be there in the future. And I think that, together with our structured way of improving margin, hopefully convinces investors that this is a good alternative for them.

Hmm. All right, and with that, thank you, Håkan, for joining me here today.

Thank

And

you.

and thank you for watching.