Improvement in several segments, but Norway weighs
Eltel reported Q3 net sales of EUR 210m and an adj. EBITA of EUR 8.2m, well above our estimate of EUR 5.0m, for a margin of 3.9% (ABGSCe 2.4%, Q3'23 2.8%). The company saw broad-based profitability improvements in several segments, but most notably in Finland, which reported an EBITA margin of 7.2%, driven largely by increasing fibre-to-the-home activity. Norway is currently the main problem area, where investments among telecom operators remains low, forcing Eltel to size down its operations in the country and take a one-off restructuring expense of EUR 3.8m. Cash flow was soft due to build-up of working capital, causing lease adj. net debt to increase to EUR 92m (76m in Q2). However, Q4 is typically a stronger cash flow quarter with substantial working capital release, so we expect to see a reversal in Q4.
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