A very warm welcome to Eltel's presentation of our third quarter results. My name is Alexandra Kärnlund. I am Communications Director of Eltel. The presentation will be held by our CEO and President, Håkan Dahlström, and our CFO, Tarja Leikas. After the presentation, we will open up for your questions. You can pose your questions through the webcast. Just write your question in the form, and we will pick it up. You can also dial in your questions. I will come back with instructions for that. With that, over to you, Håkan.
Thank you, Alexandra. Good morning, all. My name is Håkan Dahlström, and we are Eltel. Eltel, the leading Nordic service provider in critical infrastructure. That means that we do installations, we do service and maintenance, and we do upgrade of critical infrastructure. Critical infrastructure have never been as important as of today. This means that for customers like network and grid owners, for enterprise customers, for the public sector, we do corrective maintenance, we do technology modernization, and we install new infrastructure. That in the area of telecommunication, but also power transmission, distribution, smart metering, meaning utilities. During the last 3, 4 years, we also have expanded our addressable market into private networks, e-mobility, energy storage, solar PV, and now during the last two years also data center solutions. The share of recurring revenue year- to- date is 70%.
That is what we mean with maintenance services, upgrade services. That is a work that never ends. We also do 30% on establishing new infrastructure. By that, I would like to go to this third quarter that is really great for us in Eltel to see that we now, for the 13 quarters in a row, have been able to improve our profitability. We are delivering the highest profitability since 2015. We also have been able, during the third quarter, to win more contract than we normally do, so we land in the end of this quarter with a record high order book. On the financial side, the adjusted EBITA, as has been our priority now for these 3, 4 years that we have been working on this strategy, we now reach 5.6% in the quarter to be compared with the 4.3% previous year.
Here is Finland, and the team in Finland is taking the heaviest weight. We see Finland delivering more than 10% in the quarter. Really good to see, and Tarja will come back with more detail about Finland in a minute or two. As I said, 13 consecutive quarters of improved profitability. For us, with the seasonality, as you know we have, it's most relevant to compare Q3 with Q3 previous year, and that is how we talk about improvement inside Eltel. Also good to see that the cash flow improved during the third quarter. I have to admit that I would have loved to see a better development of net sales. Overall, I would claim that this is a very strong quarter for us in Eltel, so really happy about that.
If we then look a little bit on that order book that I mentioned, we come up to EUR 1.7 billion, a record high to be compared with EUR 1.2 billion a year ago. The good thing is also what it consists of. It is not only the level of it is the content of the order book here. See, extremely important agreement that we have been able to secure with Telenor in Norway. As you know, our Norwegian organization are mainly doing communication. More than 90% of the business in Norway is communication, and Telenor is the largest customer in that market. Now with this long-term, I would really like to emphasize that this long-term contract and partnership set up that we have been able to construct with Telenor is really, really important for us.
Now we have five years of close cooperation, and I can already see the new way of working is delivering good result for us and Telenor in that cooperation. For five years and then option of three years plus another three years. So in principle, 11 years ahead of us. Really nice to see. Also equally important for our business in Denmark, we have been able to secure an agreement with KONSTANT. In the same way as we have on communication, where we work on build, connect, and care, it is also the same in power. With KONSTANT, we will work with those three parts. We will build, we will connect, and we will care for the distribution network that KONSTANT has in Denmark. This is to a big extent new money for us and a really good step for the power business in Denmark.
I also have to say that there is a bit of diverse development in our Nordic markets where even though Finland creates a fantastic result in the third quarter, we are coming down on net sales, and that is mainly due to that we are on the later part of a big fiber rollout. Fiber rollout to household. We talk about fiber to the home. The peak has clearly been 2024, 2025. During the whole of this year, but also in the end of 2025, we saw lower volume. We expect this to continue a bit going forward. This is nothing odd. I would say that this is more a normalization of the volume in classic communication towards telco operators. But great to see how the team in Finland have been able to defend and also improve margin, even though lower volume. Really good.
Power has not been able to compensate fully on the net sales, but together, Finland delivering a really strong result. Sweden, doing really great in classic communication services, both towards operators but also towards public infra. Really strong and good margin development in Sweden. However, the decline in contribution from large project, mainly in smart metering, is not really possible to compensate for when it comes to net sales. Sweden do great, I would claim, in the classic services. Power have lower volume and lower contribution from big project in Sweden, leaving Sweden with a decline on top line. Norway, flattish on top line. Good activity level, particularly in data center. Not really being so strong that it could create significant growth due to that the communication is in decline. Here, of course, this contract that I just mentioned, they are ahead of us.
We expect some new revenue on the Telenor agreement in the fourth quarter, more so in first and second quarter, but then fully in third quarter of next year. That means that in my own scenario, at least, we will have growth of significance in Norway during next year based on this. The KONSTANT agreement will come into play 1st of February, and that will of course help out the situation in Denmark. As I say, Denmark and this diverse development. For Denmark, we have had a little bit of troublesome for some quarters now. Also, in the third quarter, and this is lower volume in classic communication, but also lower volume in power. Here, I think that we have to look on ourself.
We have to become better in our sales activity, being better and more successful in our sales activity due to the fact that today we have just a bit too low workload to be in balance in the Danish operation. The German part of that segment is doing really great. Really happy for the contribution from Germany. But as a segment, we are struggling in Denmark, Germany. After Q3, we are really happy to see that the appeal has been dealt with by the court, and we have now everything in place. It is signed. We are clear with the agreement with Vattenfall, and this is the largest service and maintenance contract that Eltel Sweden have ever signed. Really important for us. We are now starting the cooperation with Vattenfall to be able to deliver on this agreement by 1st of June next year.
As you hear, gradually improvement and gradually more net sales based on this contract. The agreement with Telenor is our largest contract ever, and we have a really great hope and expectation on that cooperation going forward. A really strong quarter, I would say, even though I wanted to have something else on net sales, as I believe you understand. But here we are, and I think this order book of EUR 1.7 billion actually is the prerequisite for a more better development also top line. But priority one is still margin improvement.
Yes.
We will stick to that. Margin improvement is number one. We need to broadening the customer base. We need to grow in emerging services. I would claim we are doing just that.
Very good.
Tarja, please.
Thank you, Håkan. I think I need. Here is the right slide. Thank you, Håkan. I am delighted to report the third quarter and the year-to-date result of Eltel. During the quarter, we delivered the strongest profitability since Eltel's listing in year 2015. With the adjusted EBITA increasing to EUR 11 million and the adjusted EBITA margin reaching 5.6%. Three of our segments improved profitability, supported by continued progress in operational excellence, commercial discipline, and execution excellence.
Achieving margin expansion despite lower net sales demonstrates the strength of our transformation and the resilience of our business model. Commercial momentum was exceptionally strong, like Håkan mentioned earlier. We secured contract awards with a combined value of EUR 681 million and increased our order book to record high EUR 1.7 billion. Importantly, the majority of the new orders relate to service and maintenance contracts. This is providing a stable and predictable foundation for profitable growth.
Telenor contract is the largest ever Eltel contract, and Vattenfall, which was signed after the period, is the largest ever contract in Sweden. To be noted, Vattenfall is not yet accounted into our order book. While net sales growth remains below our ambitions, the record high order book and substantial contract wins give us a good position for future growth. Now our focus will be on converting this strong commercial momentum into profitable delivery. Same time maintaining a disciplined execution and further strengthening our cash generation across the group. For the first nine months of 2026, talking about the year-to-date numbers now, our sales increased by 1.4%, and it is now EUR 587 million, while adjusted EBITA improved almost 60% to EUR 19.7 million. Three of our segments delivered enhanced operational efficiency and strengthened the commercial performance. Then a bit closer look into our segments.
First, Finland, which accounted 47% of Eltel. Here Finland again delivered strong profitability, the strongest in Eltel. While communication volumes continued to be affected by the normalization of the FTTH activity, strong operational execution, both in power and communication, drove the adjusted EBITA margin to 10.3%, up from last year's 8.7%. The business has adapted well into changing market conditions, that is offsetting the lower fiber volumes through productivity improvements and growth in emerging services. They have increased the activity in data centers, which is quite meaningful. Our development efforts in emerging services are bearing fruits, and we have secured our first major Finnish contract to work inside data centers. Following the decline in FTTH volumes, we are adjusting the organization in Finland. This was initiated during this quarter, and we are expecting it to be completed before the year-end.
Then we go to Sweden, which represented 26% of group net sales during the quarter. Sweden delivered another quarter of improved profitability. The adjusted EBITA increased to EUR 1.8 million, and adjusted EBITA margin improved to 3.5% from last year's 1.8%. The improvement was driven by strong performance in telecommunications, public infra, and defense sectors. While the net sales were impacted by the completion of the smart meter projects, communication continued to show good momentum, and that was supported by higher activity levels and then improved margins as well. Looking ahead, after the period closing signed Vattenfall agreement, that will significantly strengthen the order book for the Swedish power business. Then we go to Denmark, Germany, which was 14% of total Eltel operations during the quarter. Here we faced a challenging quarter.
Continued constraints in the Danish power grid and ongoing volume declines within communication negatively impacted both net sales and profitability. At the same time, smart meters delivered a really positive contribution. To address the lower activity levels, Denmark continued to adapt its cost base and implemented measures to improve operational performance. While the quarter was challenging, we also made important strategic process. We progressed in the acquisition of the EWII's street lighting business, and then the EUR 73 million worth of agreement with KONSTANT, which will strengthen our position in the Danish power market. That will provide us a stronger platform for the future growth as well, importantly. Then last but not least, we move on to Norway, which represented 13% of Eltel during the quarter. Norway continued their positive development during the quarter. They delivered another step forward in the turnaround journey.
Adjusted EBITA increased to EUR 1 million, corresponding of a margin of 4%, and that was driven by the continued improvements of operational excellence, digitalization, and resource utilization. While telecommunications volumes remained under pressure, growth in emerging services, particularly within data centers, together with disciplined execution and improved operational performance, supported the profitability improvement. A major highlight during the quarter was a long-term partnership agreement with Telenor. This is the largest contract win in Eltel history, and it's a really transformational achievement for the Norwegian business. The agreement significantly strengthens the order book and provides a solid platform for sustainable, profitable growth. With a stronger profitability, improved operational performance, and record high contract win, Norway is well-positioned to continue creating value and contributing to the group's growth ambitions.
If you look into our profitability journey, our path towards the 5% EBITA margin continued, and I would say that the improvement initiatives are clearly delivering results. We achieved our highest profitability since Eltel's listing year 2015, reflecting the benefits of commercial excellence, operational efficiency, and digitalization across the whole Eltel Group. Gross margin improved 8 percentage points to 14.1%, and adjusted EBITA increased by 21% to EUR 11 million. Year-to-date adjusted EBITA increased 59% to EUR 19.7. Importantly, we are combining higher profitability with strong commercial momentum. During the quarter, like we have mentioned earlier, we secured contract wins of more than EUR 680 million, and our order book reached a record high EUR 1.7 billion. The order book, combined with the growing share of long-term service and maintenance contracts, will provide increased visibility and support to our ambition of delivering continued profitable growth in the years ahead.
Then final slide about the balance sheet. Our financial position, cash flow, and working capital remain on a healthy level. Net working capital was EUR -18 million. That reflects continued discipline in project management, invoicing, and collections. The net debt amounted to EUR 179 million, compared with last year's EUR 172. The increase is primarily reflecting the repayment of the Swedish tax deferral earlier this year. Despite the increase in net debt, our leverage continued to improve.
At the end of the quarter, leverage was 3.1% compared to last year's 3.5%. Here we see the profitability improvement over the past 12 months impacting. Operating cash flow in the third quarter improved significantly, and that reached half a million compared the EUR -19.1 million last year. Year to date, cash flow is impacted again by the Swedish tax deferral. With that, we close with the reminder of the financial targets, which we haven't changed. Profitability 5%, and now rolling 12 months, we are on the level of 3.4%.
Growth between 2% and 4%, and rolling 12 measures, we are on the level of 2.6%. Leverage 1.5%, and between 1.5% and 2.5%, and we have reached 3.1%.
Håkan will continue with the-
Thank-
strategy.
Thank you, Tarja. As we normally do, we show you the progress we have in our execution of the strategy. The strategy has been now since early 2023 to improve profit margin by operational and commercial excellence. It has been to expand our customer base in our classic service portfolio, but also to address a larger market by expanding into what we call emerging services. Now after the third quarter of 2026, we can see that we are on adjusted EBITA level of EUR 11 million, as Terhi just mentioned, a step upwards towards last year and the very best quarter since 2015.
Good to see that we now have a quarter here with a margin above 5%, with this 5.6%, and also to see a very strong development in the classic service portfolio with these new orders that have not yet become net sales and revenue, but of course, it's important going forward here with this total value of EUR 680 million. That is, of course, we as having EUR 800 million something in yearly net sales have, of course, a great step up in the order book with this agreement. As I said in the beginning, it's not only the value of it is actually the content here that is very strong. Really good to see. Then in emerging services, we have 13% of the net sales in the third quarter of 2026, coming a little bit down compared to last year where we had 14%. Why is it so?
During last year, we have a very big solar project in Finland that generated a great contribution to the net sales a year ago. That project has now fully been delivered, accepted by the customer. So, in the Q3 of 2026, we had more or less no revenue from that. That is how it is when you do project, and that is just to accept. We look then on the share of the pipeline. As you see, we are still having almost, or we have half of the pipeline in the area of emerging services. Now it has been like this for some time, but under the hood, there is a big swing from renewable energy towards data center. Even though it is 50%, it was 50% a year ago. It was, I would say, something similar even a year before that.
What it actually consists of is different, where we see our opportunities in the data center segment is coming to being a very strong part of this. On the signed contract, only 3% is in emerging services. That is, of course, reflecting the large portion of classic service contract. We are really happy for those.
Then, of course, this KPI is a little bit shy this time. No drama in that. Net sales 13%, as I mentioned, the solar park and so. Quite natural development. I still have the view that in the end of 2027, we will have 25% of everything we do in net sales based on emerging services, and I stick to that also today. Then a little bit, we get more and more questions about data center and what that means for Eltel, and I will then like to offer some type of Eltel's understanding about the structure in this, because a data center compared to another data center is not always the same.
But depends the purpose of that data center and what does it mean as an opportunity. This data center is a good thing for us since we can have an offset for our competence in communication, but also in power.
They are both needed in different parts of the data center. If we start from the outside, as you understand, there is a fiber connection, not only one, there are multiple fiber connections to a data center. It is also a power connection that most likely has a redundancy. So starting on the outside, we are in the site infrastructure area. Then you come in closer to the data center. You could say that you are inside the fence, and there we have the grey space with medium voltage, some low voltage part, and substations. Here we also, as we are active in the site infrastructure, we are also active in the grey space.
We also have recently been able to enter the white space, meaning that we are in that part of the data center that you could say is actually doing the computing and the storage of data.
Yeah.
The IT part, if you want to say so. Then we have the life cycle. As we have in all critical infrastructure, there is an installation part, there is an upgrade part, and there is a service and maintenance part. We have activities in all of those, and even larger ambition, I would claim, in all of those areas. But if we then look a little bit on, okay, where are we today? In the site infrastructure part, we have taken a strong position, meaning we are doing a lot of grid connections and connectivity infrastructure. Here are many projects that are completed or ongoing, and I would particularly highlight Finland. Really well done of our Finnish team to take this position here. On the left side, you see a few examples of that on the upper part.
The grey space, here we are utilizing the competence we have in power. Clearly, the Finnish team is successful here, and we work with that in multiple data centers. The white space, we have recently come into the white space in Norway and somewhat also in Finland. We have a couple of data centers in Norway where we are very active in the white space, also in Finland. Then of course there is a lot of examples where we have a few people involved in data center projects, and that's not really what we're talking about here. What we mention here is where we have significant contribution to the project.
A couple of up to a handful persons, we have many examples. But those that we have on the right side here is of more significance. I would say that we are able here to leveraging our Nordic scale and win this type of project in the Nordic. I think we have also proven, at least to ourself, that we are able to have a flexible resource allocation, mobilization cross country borders, and that we are becoming quite good actually incorporating on the Nordic level to take this type of opportunity. But it is very important to have this local presence and then that the resources and competence are local.
Very exciting development in the area of data centers today, and I think we will see much more of this going forward. Then I would like to invite you all to our Capital Markets Day, and we would in this event also deep dive in data center of course, and come closer to what we actually are doing. But here you can see the team that you will hear from in the Capital Markets Day, and we are really proud to talk about Eltel and what we see ahead of us. Please take the opportunity and register on our homepage for the Capital Markets Day on 17th of November. With that, I would like to hand over to you, Alex.
Yes. Okay, time for some questions. If you wish to ask a question by phone, you just dial pound key five to enter the queue. Then you of course, you can continue to ask questions via the web. I just want to say that we've had a lot of questions.
I will not repeat questions, just so you know. We will just deal with them one. I also want to remind you that we do not make any forward-looking statements. We can give you rough estimates of volumes picking up here and there, but we will not give you any precise numbers on that or on margins. But let's see if we have any questions on the phone conference. I believe we do.
The next question comes from Julia Sundvall from ABG Sundal Collier. Please go ahead.
Hello, Julia.
Yeah. Hi, and good morning. Just a few questions from my side. I would like to start on the new contracts. Can you say how much incremental revenue we should expect from the new contracts in 2027? I was particularly interested in the Telenor agreement. Is it replacing existing business or how should we think how much it should add?
Okay. There is a year-over-year decline also in the need of Telenor as it is for, I would claim, all telco operators. They invest or they use a little bit less of these type of services. So there is a yearly decline, but we come from a situation where we have had 30%-32% of share of wallet, if we describe it like that. What we are now seeing from today towards a year ahead of us, that we gradually will increase the share of wallet from this 30%-32%, what it can be, to 100%. But that sort of volume, as we are talking about 32% of something, that is having a decline of roughly 10%-15% in a yearly run rate. So the share of wallet will go up to 100%.
The volume as such will have a decline, but in absolute number it will of course mean a significant improvement and growth for our Norwegian business.
Okay. Yeah. Understood. That's helpful. Continuing on the contracts upfront cost and capacity investments should we expect? Are they need to deliver on the new contracts? Is it recruitment, training, et cetera, that can weigh on the margin?
There is of course a ramp-up. The footprint we have in Norway is quite sufficient, so it is only on two location that we need to have new establishment. But of course we will recruit and we will sign agreement with subcontractors. Here we try to be as flexible as possible in the cost structure of the obvious reason, as I just mentioned, that the underlying volume, the underlying need of these type of services, have a decline and no one believes that they are going to increase during the coming years, rather have a gradually decline. So it is important, of course, to deliver these services with a high level of flexibility in the cost structure. But of course it will be a ramp-up. Happy to do that. This is a fantastic opportunity for us.
Absolutely. To stress that this is in the very core of our competencies.
Absolutely.
Yeah.
Yeah. The good thing with this type of service contract is that the work is never done. There will be more.
Yes.
With great customer experience, you will be able to defend the contract.
Yeah. Perfect. On this contract, is there a minimum volume commitment? Is there cost indexation or productivity requirements? If you have efficiency gains with a customer, are you taking the efficiency or do you share it with the customer or how should we think there?
Now we go into details.
Yeah. I think it works like this. There is no volume guarantees. I do not really see the point of having volume commitment because that would also put another type of burden on us. Our boys and girls, if I say so, are local. We are a service organization. We are all over the country.
Even if it would be a volume guarantee, we would not know in which part of the country. So it is not really meaningful. What is meaningful is to have a close cooperation with the customer to be able to predict the future volume so that we could adjust our organization. This is how we work. We want to have a forward-looking 6-month, 9-month discussion with the customer. What is the need? What could we expect? How should we together plan this?
This is the good part with this agreement with Telenor, that even though we have worked close to our customers in the past, I have never seen this type of setup as we now are entering, where we work even closer with the customer to make sure that we do what is best for their customers, we do what is best for Eltel, and we do what is best for Telenor. So there is a much closer cooperation and more openness in this dialogue to do optimization when it comes to planning, digitalization, customer journey. All of this is on the table and I am quite convinced that we are going to be able to do this in a good way together.
When we announced the agreement, we were using the word partnership.
Yeah, because it is formulated a bit different.
Okay, perfect. Moving away from the contracts, I was just wondering on earnings, your lower cost on the group function this quarter, is this a temporary effect or is it something sustainable?
I would say that the same transformation which concerns the whole group concerns also our group. The level that we are there, of course everybody understand that we did make some adjustments that earlier we have been accruing too high cost, so we were correcting. As low as we are now, we won't be going forward. But the same cost efficiency and to be really prudent with the cost applies also us on the group level.
Yeah. The same expectation that we have on our—
Yeah
local segment we have—
Yeah
on ourself at group level. Yes. But Q3 was a bit lower.
Yes.
Yeah.
Yes.
Okay, perfect. One last question from me. Could you say something about the cash conversion? Your operating cash improved in the quarter, but in relation to earnings, it wasn't that much better. How should we think about the working capital requirements in the new contracts, et cetera?
In the working capital, you see, like I've mentioned several times, earlier this year, paid Swedish tax deferral. We are on the peak season. This is the season where we are consuming working capital. When you talk about cash conversion, you combine the profitability to the cash generation. Of course, when your profitability goes as high as ours is going, the cash conversion doesn't immediately follow. But we are satisfied with the third quarter cash generation and the first quarter payment, of course, impacts the balance sheet.
Okay, perfect. That was all for me. Thank you.
Thank you, Julia. All right. We had questions from DNB Carnegie regarding the ramp-up, but I hope that you had your questions answered, Coluan. Otherwise, you can just write again if anything is not clear. Let's turn to Nordea, Marco Moilanen. What explains the lower working capital tie-up in Q3 compared to last year, and how do you see working capital developing in the fourth quarter?
Well, this applies to working capital as well, that we do not give forward-looking statements. But of course, third quarter is the highest. It is the peak. But I do not see anything particular. I would say that our working capital has been following the normal pattern, with the exception of the Swedish tax deferral.
Yeah. A follow-up question on that from Marco Moilanen. As the new Telenor and Vattenfall contracts ramp up during 2027, should we expect meaningful upfront working capital requirements?
Not working capital, I wouldn't say.
No.
Of course, we will make some recruitments and do some, but we are a service company.
Mm. Your order book is at record high level. How is the order book split between each country where we operate, roughly?
That's something that we don't actually disclose.
No. Where are you currently seeing inflationary pressures, and could it impact your profitability in the short term? That is the first question.
Yeah, let us answer that one first.
Let us take that first.
Yeah.
In all contracts where it is relevant, we have indexes, and this is a question in every tender discussion we have. We talk about this, what about inflation and what cost is really possible to fix and what has to be estimated and so on. This is high up on our agenda, and we have not forgot 2022. That is up. We do not see, as we speak, that it is significant pressure on inflation. It has been during the whole year on fuel, different development in different countries. Of course, we have seen quite low level of fuel cost in Sweden, but high in the other Nordic countries. Asphalt has also gone up.
But these are things that we catch on our indexes. However, there is a delay, as you understand, that most contracts have a yearly adjustment towards the index. But when something happened rapidly, a war or something, then it takes a bit until we get compensated. But I would say that, no, not any urgent or big question for us today. We think that our contract and the discussions we have with our customers are working well for us.
Good. Yeah. Is the profitability of the Telenor agreement on a good level right from the start, or is it building up towards the end of the agreement?
No.
No.
It's where it should be from the start. This is not a contract that we have won based on price. I would like to emphasize that. I know that that is a question that many people have said, "What have you done to achieve this?" We have not compromised on price. That was from day one. This is about cooperation, developing together, about customers, customer's journey, national security, and a lot of important questions. Price is, of course, always a question. We have not bought this contract.
No.
This is margin that will support our further development.
Yeah.
Can you disclose what is the average margin level on service and maintenance agreement as compared to project deliveries?
Yeah.
That is not really possible, but it is 70% of everything we do, so by that—
Yeah
it is not far from. I would say that projects always have a possibility to have higher margin, but it depends what type of project. Of course, data center, where the demand is increasing so rapidly now, there is an opportunity for better pricing, of course. I would say that the more mature, the more commoditized a market is, no surprise, it is harder to improve margin. With that said, there is a reason why we look so much at emerging services.
Then again, our selection criteria of the projects, it is equal, so we do not favor something.
Okay.
It is a criteria.
Yes. Different topic, perhaps for you, Tarja. Can you remind us what was the remaining amount of the Swedish tax deferrals, and what was the repayment schedule of those?
Yeah. We have now paid half, and half is left, and the capital amount is EUR 14 million.
It is going to be repaid in September 2027.
Yes. Sorry.
I think that was also part.
Yes.
March 2026, September 2027.
Yes.
Half done. Half to do.
Okay.
Yes.
Thank you. Then we have some questions from Christoffer at Inderes. Gross margin improved to 14.5% from 13.3%, despite sales falling 6%. How would you split that improvement between pricing and indexation, business mix, and your own cost actions? Are the frame agreements that you have renewed this year on much better terms than the ones they replaced?
I do not have numbers for you to split like that. I would say that our commercial questions are equally important as the operational improvement. We work on the daily task to make sure that now here, before the weekend, everyone should know what they should do next week. Everybody should have a great understanding of what type of material do they need, where should they be, what is the task. That sort of weekly plan is, of course, important for us. That is one part of this. We also have to take the discussion with customers, partners about the commercial question, equally important. I think we, over the last four years, have seen it exactly like this, that there is at least 50% of the improvement coming from the commercial dimension and close to 50% on our internal operation. At least 50% of it is commercial dimension.
Here, I would stress the whole Eltel corporate culture, that it is within our nature that, depending on which organization level you are placed, you carry your own share. The distribution of the profitability and profit requirements, if you are on a project level, you are responsible for the project profitability. When you are responsible for the customer, then it is the customer profitability, and so forth. We all carry our share.
That is very much one of the key ingredients of our transformation.
Yes. We have a number of questions related to our segments. In Denmark as the current organization has now right-sized for the volumes that we see. It's a twofold question. Can we expect a second round of measures needed?
As we see today, no. You can't really be—
No
100% sure about the future, but we believe that we have taken the action needed to adjust to the market demand of today. Our Danish team have focused on being more successful in the sales activity, farming, and hunting of new customer commitments.
Mm-hmm.
Think about Danish team. Finland, Sweden, Norway shining, then they are facing difficulties. I am absolutely certain that they are geared up. They are geared up.
Yes. Hang in there. On that note, in Finland, you have started adjusting the organization after the decline in fiber to the home volumes.
Yep.
To be completed before year-end. How large is the adjustment in terms of people and restructuring costs? Should we expect those costs in Q4 as items affecting comparability?
There is no significant cost in this, and you should expect it in Q4. We are talking about something less than 40 of our colleagues that are impacted.
That is mainly, as you say, communication, but we also look on general overhead and see what we can do to become even more competitive.
We plan on taking the cost on the fourth quarter.
Yeah, on the fourth quarter. I think this is just how it has to be done, and this is just one example of what we are talking about when we talk about operational efficiency, commercial efficiency. We see the decline, we take measures, and we just want to do this upfront and not being late. I think the Finnish team is doing this in a very good way, so.
In our business, it is most important to be proactive.
Yes.
Yes.
On that note, how do you make sure that you keep the capacity you need for the data center work and the Finnish grid investments you expect to pick up next year?
We are professional.
Yeah, but it's of course a new area. A new area comes with new challenges, new experience. That's why it's also great fun. If we would know everything, it would be quite boring. We do this with a lot of expectation to have fun and great development in that new segment. That will also come with some surprises, of course.
When this is so new for us, even though, when we talk about this with our customers or internally, the precise work is not so different from what we have done for many years. It is the context in which it is done. It's a mega data center establishment, and very few people have that experience. But the different works part tasks is not so different. We have done substations, we have done medium voltage design. This is not new. We have, of course, installed servers and racks and cabling in many other circumstances. Okay, this is a new context. They have some new conditions or prerequisites that you have to live up to, but it's not so that it's completely different. But we pay attention to this, and we try to do this with as low risk as possible.
I think that is the way forward for us, in controlled steps, expand in this area, but be very well aware of the risk because this is time-critical activities. There is no possibility to have delays.
To this question, Eltel home turf is critical infrastructure, and that is a huge responsibility. So when we take measures, when we drive the business, we carry our responsibility. We need to be there.
I would also like to add to Christoffer's question here, that we share capacity, knowledge, experience, expertise across the countries.
Yes, of course. Independent where we are working in the value chain, the customer has, in most cases, a larger footprint than one country. For them, they have one project in Norway, they might have one in Sweden, one in Finland, one in Denmark, or multiple. It is of course important for us to share the knowledge and share the experience on everything from what does it actually mean, the demand they have, and how to solve the different tasks. Because it is, like if you take the HSE area, higher demand than what most project we have seen before, and then how do we meet that expectation?
It is of course a great opportunity, and we send colleagues from different country to those project where we have. If we have a project in one country, we try to send people from two other countries to be a part of that, so we could, by moving feet, we are sharing experience and knowledge.
Mm-hmm. Good. A question regarding Sweden. Power sales in Sweden more than halved after the smart meter projects closed.
Yep.
The Vattenfall agreement only starts in June 2027.
Yep.
What do you expect to fill Swedish power until then? Should we expect it to stay at roughly this level until Vattenfall starts?
We have more customers, it is not only Vattenfall even if it can sound like that today. We are happy to work for many of the big company in the energy sector of Sweden.
Yeah.
We of course, have ambition to do more with them.
Mm-hmm. Yeah.
When it come to the Vattenfall agreement, yes, then it is 1st of June. We have E.ON, we have Ellevio, we have many energy company we work with.
Yeah.
Yes.
Okay, and the final question from Christoffer. You reiterated that you are confident in reaching the 5% adjusted EBITA target on an unchanged timeline. On a rolling 12-month basis, you are at 3.4% today. Given that next year's start-up costs fall mainly in the seasonal weaker first half, is a full year 5% realistic already in 2027 as you see it? Or is it likely to happen later?
Yeah, I still stand by my statement from February 26th that we will reach the 5% within 12- 18 months. Yes.
Yes.
That is how I see it.
There was actually a few follow-up questions here, too. Can you give us a sense of the size of the combined start-up costs for Telenor, KONSTANT, and Vattenfall, and how they are spread between Q4 and the first half?
No. No, we cannot, Christoffer.
No. Let me just double-check that we do not have any other questions coming in. One last question, sorry. How do you expect working capital to develop as you start up a couple of new large contracts in 2027? Maybe we have covered that actually.
Yeah.
I believe we have. Yes. Thank you. I believe that was the end of our questions. The full report, obviously, as well as the recording of this webcast and the presentation, of course, are available on Eltel's website. Of course, feel free to reach out to us at any time if you have any further questions. Just want to remind you, as Håkan mentioned already, we hope that you will like to join Eltel's Capital Markets Day on the 17th of November. When it comes to our next report, we will present our Q4 report on the 12th of February, and we hope that you will join us then as well. Thank you so much, Håkan, and thank you, Tarja.
Thank you.
Thanks to—
Thank you.
Thank you.
Thank you.
Thanks to all of you participating in today's call.