Elisa Oyj Ord A

Good morning everyone and welcome to ELISA's third quarter 2025 analyst meeting and conference call. I'm Vesa Sahivirta, head of investor relations and here together with me is a very familiar team CEO Topi Manner and now for the last time CFO Jari Kinnunen who will leave us in the end of the year. We have also our incoming CFO, Christian Pullola here, but now he's in the audience still. Next week, by the way, we are in a roadshow together with Christian and Jari. But now going to the agenda of the day and following the normal practice, we start the presentation followed by Q&A. And now I give word to Topi, please go ahead.

Thank you, Veza, and good day, everybody here in the room and those of you who are joining remotely. Welcome to this earnings call also on my behalf. I understand that there are quite many quarterly reports today in the Nordics as well as throughout Europe, so let's jump right into business and try to be relatively condensed with the presentation so that there will be time for a Q&A. In terms of the highlights of the quarter, the revenue of ELISA increased with 4.6%. That was very much driven by the international software services as well as mobile service revenue. The mobile service revenue landed at 3.3%. That was supported... very much by the 5G upselling and also the introduction of security features to our mobile plans. And then pointing to other direction was especially the competition in the 4G category of mobile subscriptions. In international software services, our revenue increased with 53%, roughly. The comparable organic growth was 3%, impacted by some project delays related to the tariff-related uncertainties in the global market. EBITDA was up with 3.7%, solid as such. What was very good to see is that the comparable cash flow grew with more than 12% from the Q2 level, which was already an all-time high level. This was on the back of the increasing EBITDA, strict capex discipline, and also the networking capital management. In Finland, the post-pay churn increased to 22% or a bit more than 22%, indicating that the competition was quite intense during the quarter. Post-paid subscriptions decreased by 20,000, a bit more. Of that, close to 6,000 were related to machine-to-machine and IoT subscriptions. There is some quarterly fluctuation. In this one, in Q2, we won quite a bit of post-paid subscriptions, especially in the corporate side of the business, and therefore it is useful to take a little bit longer perspective on this. The fixed broadband subscription base increased by close to 5,000, and the fiber-related revenue starts gradually to pick up. So if we look at our revenue in total, it was indeed supported by the international software services and mobile service revenue. What was also good to see is that the fixed service revenue turned to growth during the quarter period. That was impacted by some customer wins in the corporate networks in that side of the business. And then, as mentioned, also the fiber-related revenue is starting to pick up and then being visible this quarter. EBITDA landed at 214 million euros. Mobile service revenue, as mentioned, was 3.3% in terms of growth, supported by the introduction of the mentioned security features. And that particular change, that offering change, has been well received by customers. We have now enrolled something like 600,000 customers customers to this offering, and that was supporting the MSR growth. The churn number was especially, as mentioned, impacted by the competition in the 4G category, especially in the low speed tiers of the 4G category, and we saw some campaigning basically throughout the quarter. in this one. So then looking into the various business areas that we are having, the consumer business was impacted by the mentioned mobile competition, revenue up 0.9%, EBITDA up 0.4%, Corporate business on its turn had a strong quarter. Revenue increased with 5.6%, especially boosted by the price increases in the corporate side of the mobile business. The mentioned fixed service revenue contributed positively also interconnection and roaming. And EBITDA grew with 3.6% in the corporate business. corporate business. So a good quarter for that segment. In international software services, our EBITDA during the quarter improved with 5 million euros. And if we look at the first nine months of the year, profitability-wise, we are now effectively in break-even for the first nine months in that business in terms of EBITDA. And that is ahead of the fourth quarter that typically is the strongest quarter in software business in terms of revenue and in terms of EBITDA. Then this morning we announced that we are introducing a transformation program to accelerate the implementation of our faster profitable growth strategy. So coming back to our strategy, the one that we communicated in our Capital Markets Day in March, Simplicity and productivity is very much a fundament of that strategy. Simplicity and productivity is enabling the growth in our four growth pillars, namely 5G and fiber, home services, corporate IT and cyber, and international software services. We have been working with simplicity and productivity with continuous improvement measures in the past, and now we are accelerating the implementation of that with the aim to simplify our operations, improve agility, and speed of decision-making in the company, and with that, enable growth. And at the same time, we are taking swift action to improve the cost competitiveness of our business in the current market environment. With the transformation program, we are aiming for 40 million euros of annual cost savings during the calendar year of 26. And with these measures, we ensure that we will achieve our mid-term revenue and EBITDA targets, the ones that we set for ourselves in the CMD. So when we look at what the transformation program includes, it will be about organizational streamlining, de-layering the organization. It will be very much about process simplification, process optimization, also cross-functionally within the organization. It will be also about scrutinizing our outsource services, most notably the use of IT consultants in the organization, renewing our software development model. And then we are resetting our procurement effectively and finding efficiencies in the procurement space of the company. In the organizational streamlining, in the changes related to the way of working, we will be utilizing more and more automation and AI, and that is an element that is embedded in the transformation program. But as stated, the bottom line is that this is in line with our communicated strategy, accelerating the implementation of the strategy. When we look at the mobile business in a bit more detail, the 5G upselling continues with the trend that we have seen in the past. The mentioned upgrades related to security features are supportive of the mobile service revenue. As stated, we have now enrolled something like 600,000 customers, and that enrollment rollout process will continue in phases in cohorts during the course of this year, but especially going into 26. We have been also launching new types of security features, scam call blocking for foreign numbers being one of the examples, and that has been now well received by customers. and the initial take-up rate is encouraging. We also had a nice opening with private 5G standalone networks with slicing technology in one of the ports in Finland, where we are able to serve our customers with the kind of technology, standalone slicing technology, that our local competitors do not have at this point of time. a good reference case for similar opportunities in the future. When we look at the fiber business, as mentioned, we are starting to see strong revenue momentum in that part of the business. And our accelerated network construction is being continued as we speak. All within the 12% capex to sales envelope that we are having. Then just quickly looking into the digital services, in the home services space, we introduced a new original service called Icebreaker, and the international distribution actually for that one has started well in a number of European countries. In terms of home services, in energy solutions for households, Our home battery solution now has a coverage of 70% in Finland. We are in very initial stages of the rollout, but we have clearly proven the product market fits, and therefore an encouraging outlook for this solution for 26 and onwards. In corporate IT and cyber, we are clearly very competitive on the market in terms of our cyber offering. And one of the examples is that in cybersecurity, one of the biggest retailers in Nordics, Kesko, chose us as their cybersecurity provider in Finland, Sweden, Denmark, Norway, the Baltic countries, as well as Poland. So yet again, a good reference case for the future. In international software services, in that side of the business, our aim has been to grow more than 10% organically. There are the tariff-related concerns have resulted in some delays of customer projects that have been impacting especially the license and service revenue parts of the business. And therefore, when we look into the Q4, when we look into the likely realization of the project, we expect for a full year, an organic comparable growth between 5 and 10 percent in this part of the business. However, an important indicator in software business, of course, is the recurring revenue. And the recurring revenue during the quarter grew with 13%, double digits, and the year-to-date number is 15%. The share of recurring revenue is increasing all the time in the total revenue of ISS. An interesting individual reference point is in our energy flexibility solution called Griddle, previously called Distributed Energy Storage, and there we signed a first grid scale battery solution with an energy company of the city of Vantaa for 10 megawatts. an interesting reference point, opportunity to scale for the future. And then finally, when we look at our outlook and guidance for this year, we will keep our guidance in terms of revenue and EBITDA intact. The bottom line being that with the transformation program, we will be accelerating the implementation of our strategy. And with that, I will be handing over to Jari.

Thank you, Topi. Let's first look at the profit and loss. Q3 continued with good trends, growth trends, solid growth in revenue, as well as in EBITDA revenue, 25 million increase, 4.6% growth in Q3. If you look at behind the... revenue growth levers overall good development in in service revenues 5.8 percent growth in in service revenues mobile services increasing with nine million both consumer and corporate customer segment growing 5g customer base increasing and changes in the service offering, security features and price changes. in that change all contributing to that 3.3% mobile service revenue in Q3. Fixed services growing 3 million, fixed broadband, especially fibre. Broadband connections are growing. Also in the corporate segment, corporate networks and related security services are contributing to growth. Negative impact in traditional fixed voice Domestic digital increase was 2 million. IT services in corporate segment contributing slight decline in consumer segment digital services. International software services increased with 12 million. acquisitions and set up the first consolidation impacting approximately 11 million acquisitions impact and comparable growth at 3%. Equipment sales flat like was the interconnection and roaming and All in all, organic growth totally was at 3%. Epida, 3.7% growth to 213.5 million. Epida margin was strong 38%. 1%. EBIT 1.9% growth to 138.6 million. EBIT margin was 24.7%. EPS was growing 2.3% to 64 euro cents. In Estonia, improvement both in revenue growth as well as in profitability and revenue was growing 2% mobile and fixed services, developing positively and negative impact in equipment sales. EBITDA increase was strong, 9% driven by service revenue growth, as well as cost efficiency measures. In mobile, postpaid subscriptions, slight decline, 1,200. Prepaid base, minus 200. churn came slightly up from Q2, still relatively low at 9.4%. CapEx, reported CapEx was 81 million, excluding licenses, lease agreements and acquisitions, the guided CapEx at 60 5 million and in line both Q3 and year-to-date. Guided capex in line with 12% from sales. Main investments continuing in 5G network as well as fiber network and IT investments. In Q3, cash flow continued good development, like has been in the previous quarters. Comparable cash flow was growing 12% as a result of higher EBITDA, lower CAPEX, as well as lower paid interest. Networking capital change was positive. However, slightly less positive than a year ago. Year-to-date comparable cash flow growth is at 10% through higher EPIDA, positive net working capital change and lower investments and negative impact through financial expenses. Gas flow conversion was improving, and EPIDA gas flow conversion at 70% in Q3. Then if you look at the balance sheet and capital structure, in line with the medium term targets, net debt to EBITDA decreased from Q2 to 1.7 times, equity ratio increased from Q2 to 35 point 7% and return ratios continued to improve. Return on equity was at 30.7%. Return on investments improved to 18.6%. And in terms of financing, average interest for interest bearing debt continues same level as was in the previous quarter to up to 2.5%. And now I give word to Vesa, please.