Hexatronic Group AB (publ)

Thank you very much and welcome to this presentation of the Q4 2024 results. So you will be listening to myself, our CFO, Pernilla Lindén, and also our Deputy CEO, Martin Åberg. And the agenda for the presentation, first we will have a look at Xatronica at a glance, some highlights from Q4, a financial overview, business overview, and then we have a summary and market outlook and with a Q&A session. So first, Xatronica at a glance. So when we look at the markets we operate in, they are driven by a low number of homes connected with the fiber optic networks, and that's in several of our growth markets. They have a low penetration. We also see that 5G deployments drive the need for more fiber optic networks. 5G is totally dependent on fiber networks. We also see that there is an increasing use of data intensive technologies and that creates more need for fiber connectivity in companies and enterprises and large scale data centers. We also see a shift in the industry from copper based solutions to fiber and that's in harsh environments such as oil and gas, sensing, defense, oceanographic, and subsea applications. And on top when it comes to fiber solutions, we see also some significant government initiative to support fiber expansion that's primarily in rural areas. Sustainability, it's high on our agenda and we have listed three of our priority targets. We want to have climate neutral loan operations by 2030, 100% e-pay and minimum 40% gender equality among all employees. And we have gathered our sustainability activities in three areas, planet, people, and ethics. And as most companies now, we work hard with the CSRD reporting that puts a lot of requirements on the company. Looking into fiber to the home, which is one part of our business, this is a graph we usually show. Not a lot has happened with this graph since our Q3 report. The US figure is updated. There we have a new figure. So in the US, roughly 27% of all homes are connected with fiber. I think it was previously last year 24%, so a small increase. And as you can see, our strategic growth market when it comes to fiber solutions, Germany, UK, and US are still on a low level when it comes to connecting homes with fiber. On the right, you see some of the big subsidy programs, government initiatives, the biggest one being the US B program, which is 42.5 billion, but you have them also in the UK and Germany. So still a lot to do when it comes to fiber to the home. This is a new slide and it's based, we've got this CRU that is a firm doing a lot of analysis and reporting on the cable and fiber industry. They have looked into the US fiber demand in the US market and it's up to 2030. And we see that they expect the market to have an annual growth of roughly 10%. You also see the split, how they see it. The blue part is private funding. And on top of that, the gray one is the governmental funding. So what's interesting to see is the absolute majority is really private funding. That's what is the big driver for fiber demand in the US market. My own conclusion looking at it, I think when you look at the government funding, which, for instance, in 25 and 26 is 17 and 26% of the total demand, I think that will most probably be smoothed out over more than 30 years. But I think the takeaway is big private investments in fiber networks and on top of that governmental funding. But that's the lesser part. In total, then, 2024, when we look at Hexatronic, revenues of 7.6 billion. We had the yearly growth over the last five years of 33%. And we ended last year with an EBITDA margin of 10.6%. And at EBITDA level, we have had a 43% annual growth over the last five years. And we are roughly 2000 employees in the group. Then looking into some highlights of Q4. So when we look at Q4, we see it's a stable quarter. We had a strong cash flow. Net sales decreased by 2%. So a little bit more than 1.8 billion SEC. And we saw the decline primarily in harsh environment that had a record quarter in Q4 last year. Fiber solution, back on growth, we had a 2% increase in sales revenue. And that's primarily due to higher sales in Europe, but also in the Pacific area. Harsh environment and data center, they were in line with Q3 revenue-wise. And sequentially, sales and earnings decreased compared to Q3. And that's partly due to the return of seasonality in fiber solutions. You might remember that we mentioned that in Q3 that we are back to seasonality effects in fiber solutions, meaning Q4 and Q1 market demand is a bit softer. EBITDA amounted to 182 million and a margin of 10% compared to same quarter last year, 9.1%. But we had an adjusted EBITDA in Q4 last year of 10.7%. You might recall that we took some restructuring costs in Q4 last year. Cash flow from operating activities, 286 million. And that corresponds to a cash conversion of 150%, a strong figure. The interest-bearing net debt excluding IFRS 16 reduced by roughly 14 million during the quarter. And our interest-bearing net debt amounted to close to 1.9 billion. The leverage ratio decreased from 2 to 1.9 during the quarter. And we have an order book that corresponds to roughly 2.5 months of sales. And we see that as a normalized level. It's normally between 2 and 3 months. And the board proposed no dividend to be distributed. Events during the quarter. On 1st of October, we completed the acquisition of parts of the Icelandic company Endor. And this acquisition broadens our offering in the data center market. And we add new expertise to that team. And it strengthens our customer base and presence in Iceland, Sweden, and Germany. And then on October 15, we opened up our new data center. Our new duct plant in Ogdenjuta. They will manufacture HDPE pipes for both telecom and power cables. And they are primarily serving customers in the western part of the US. And it's our fourth duct plant in the US. And we start up production small scale and plan to build it out in line with it when the demand increases. And then on January 22, we announced that Richard Fröberg will be the new president and CEO of Hexatronic. And he will succeed myself. And I announced my departure in September last year. Richard will join 1st of March. So I leave today. So Martin Auber, our deputy CEO, will be acting CEO until Richard joins. We also announced recently on February the 4th that we will introduce new segment reporting. And some small changes to the executive management team. And this is very much due to increased focus on the three business areas we have. And we also give more transparency than the investor market. And a few words about the new segment reporting that it will start in Q1 2025. So this year. So our current focus areas will become three business areas. Fiber solutions, harsh environment and data center. And we focus our growth strategy for the coming years on these areas. And as I said before, it will also contribute to more clarity and transparency. Changes to the executive management team. Not a lot. And we have announced that what happened there. When we look at the three business areas in the executive management team. Fiber solutions will be headed by Richard Fröberg, the incoming CEO. Harsh environment by Jakob Skogh. And data center by Martin Auber. We will have a digital investor presentation on March 28th. To present the business areas in more detail. And that will start at 1pm Central European time. So please, if you are interested, join that meeting. And then looking at our three growth areas, focus areas. When we look at Q4, 72% of revenues came out of fiber solutions. 15% from harsh environment. And 13% from data center. Coming back to the figures and looking over the last five years. You can see the development of net sales. I mentioned already the 33% average growth. And the development of 43% growth over the last five years. And then the earnings per share. And as you have seen, we have had a decline, an organic decline in 24 compared to 23. Where the first half in 23 was very, very strong. It was record porters. Now I will hand over the voice and slides to our CFO, Pernilla Lindén.

Thank you, Henrik. So we had took the net sales of 1.8 billion SEK in Q4. That is an overall decline of 2%. Organically we had a decline of 4%, which is primarily due to a focused area harsh environment. We had a record quarter last year. In Q4 2023 we delivered a large order to the defense industry. We had 1% acquisition driven growth from Mconnect. And a recent acquisition Endor within our data center business. The rest of Europe had a growth of 6%. Even if the market continues to be weak and under price pressure. We secured new business in Germany, UK and in Austria. Sales in North America decreased with 13%, primarily due to lower sales in Rochester cable or harsh environment. APAC increased with 19%, mainly due to Australia and large order to Micronesia. Sweden decreased with 12%, due to last year delivered a large submarine cable. Fiber solutions overall had a growth of 2% and that is mainly related to growth in rest of Europe and in APAC. Harsh environment overall had a decrease of 20%, which is explained by the Rochester record quarter last year. And data center was growing with 1% and that is related to the acquisition. We had 1% positive effect on exchange rates this quarter, mainly attributed to stronger US dollar. Our gross margin were at 41.4%, 1% point above last year. And that is mainly related to higher manufacturing efficiency. If we are looking at our operating expenses, that is .2% of sales. It is increasing in percent compared to Q3, mainly due to increased freight cost and startup cost related to the Juta factory. In line with last year in absolute numbers overall. Depreciation has increased compared to last year due to the capacity investment that we have done over the last years. In percent of sales it has increased with .4% compared to last year. We had overall an EBITDA of 182 million SEK or 10%. And that is compared to .1% or as Henrik said the adjusted EBITDA of 10.7%. And the difference from .1% to .7% last year is related to the one time cost linked to initiating or launch cost saving program. We had another quarter of solar operating cash flow. Cash flow from our operating activities before changes in working capital of 190 million. A positive effect from working capital of 95 million SEK. Our accounts receivable has been reduced during the quarter but we have also reduced our inventory which has been partly offset by increase of accounts payable. The total cash flow from operating activities amounted to 286 million SEK corresponding to a cash conversion of 150% in the quarter. Total CapEx investment in Q4 of 85 million SEK or .7% of sales. Year to date is 308 million SEK or the full year of 2024 which corresponds to .3% of sales. The investments in the quarter are mainly driven by capacity investments in US. And the investments in new manufacturing facility in Utah for duct manufacturing. And we've said it before but after two investment heavy years in 2022 and 2023 and after completing the investment program in the duct factory in Utah. We believe that we will be able to grow for several years without extensive investments in fiber solutions. And as early communicated we estimate our investments on what will amount approximately -4% of sales yearly. Of which approximately -2% are expected to be maintenance investments. 35 million SEK is related to business acquisitions. Group financing activities amounted to 220 million SEK mainly amortization of loans and RCF utilization. Overall we continue to have a solid cash conversion. Interest bearing net debt which corresponds to net debt excluding lease liabilities amounted to approximately 1.9 billion SEK at the end of the quarter. Which is reduced with 42 million SEK compared to last quarter. And interest bearing net debt in relation to perform IBTD over a rolling 12 month basis. The IFTTT has a key ratio that reflects our existing bank covenant has decreased from 2 to 1.9 during the quarter. Including IFRS 16 it corresponds to a decrease from 2.3 to 2.2. At the end of Q4 we had 633 million SEK of cash and an unutilized backup facility of approximately 1.3 billion SEK. Which gives a liquidity of approximately 1.9 billion SEK. We continue to have a solid financial position.

Thank you very much Pernilla. So now we will move into a more business overview. And we'll start with an overall picture showing the development in our focus areas. So we'll start with five solutions. As we have already said we return to growth. And that was mainly due to higher sales in Europe and APAC and Pacific more specifically. You have the 2% growth in the quarter. But you also see the development year over year. So it's a sharp decline of 17%. 2024 versus 2023. In the US sales were in line with Q4 last year. And as we mentioned before we started up the production small scale in the Utah plot. And now we cover all of the US when it comes to duct supply. Which was in line with our strategy. When we look at the market development. It's clear that digitalization is driving demand for more stable and secure fiber optic infrastructure. And that's all over the world I would say. We also see that the lower interest rates and now normalized inventory levels. And lower cost of capital. They are expected to improve market conditions gradually. And demand should increase. But we also mentioned that we are back to seasonality in fiber solutions. Meaning Q4 and Q1 market demand is softer. And we have these governmental initiatives that will have a positive impact on the market over the coming years. When we look at harsh environment. There we are capitalizing on the trends especially in defense and energy. Quarter over quarter we had a decline of 20%. That's as Panila mentioned primarily due to large defense order we delivered in the US. Lost in Q4 2023. We have a 51% growth full year 2024 versus full year 2023. A lot driven by acquisitions. We had continued stable development regarding sales in line with previous quarters. So Q3, Q4 very similar. If we look at the market we continue to see a strong demand in defense and also energy markets. And we expect that to remain for several years to come. What we deliver in this market is highly specialized products. We have long term customer relations. Very experienced team. And the market is growing. We also expect more expansion of the existing sea based infrastructure. And especially when it comes to renewable offshore energy production. When it comes to data center it's very much AI that is driving the expansion of the data center market. If you look at the figures we had a 1% increase Q4 versus Q4 last year. And year over year a 19% growth of revenues. The 1% growth in the quarter was driven by the small acquisitions we did in October in the UK. And that's part of Endor that we acquired. And we have successfully implemented that into our ideas business in the UK. When it comes to the market AI as we mentioned before is the big driver. Internet of things and cloud computing. This requires a lot of bandwidth and a lot of investments in data centers. And we should say also that we see that the expansion of data center that also links into the market. And that leads to fiber solutions where it drives more investment in fiber optic links. So middle mile and long distant networks. Q4 is a little bit weaker quarter for data center and that's due to the holiday period. Then if we look into the geographies and here we talk about the total business of Exatronic. So Europe excluded in Sweden that was last year 45% of our total revenues. We see that we return to growth in fiber solutions. Sales increased in total 6% in the fourth quarter and that was driven by higher sales in fiber solutions but also in harsh environment. During the quarter we successfully secured new businesses in Germany, Austria and the UK. And we have a continued solid performance within harsh environment and that's mainly fiber on cables. Data center was slightly behind last year but that's due to timing of project deliveries. The market development for Europe excluded in Sweden. We saw in the quarters stabilization of the markets when it comes to fiber solution. We still see a weak demand and the price pressure that we started to see last year is still there. But both new focus areas harsh environment and data center they show strong demand. And that's very much due to defense and energy markets. And also the implementation of AI. If we look at North America representing 37% of our total revenues. We had lower sales in Q4 and that was due to strong comparable figures in especially harsh environment. Sales decreased 13% and as we mentioned before it's primarily due to Rochester in 2009. And in 2013 Q4 delivering a large defense order. FTTH sales in the US or North America slightly behind last year and it's primarily due to Canada. We had timing of deliveries and it was related to a large customer working on inventory reduction in the end of the year. Our ducked sales for Blue Diamond industries. We had a high volume of sales in line with last year. We saw higher volumes but lower pricing. And then as we mentioned before the new Ogden Jute plant opened. And we had the last capex investment regarding that in Q4 and production started small scales. Looking at the market development we see signs of improved market conditions for fiber solutions in the US. And we expect the BID program to come into effect for us in the second half of this year or 2025. Sweden, 8% of our total revenue. We saw a 12% decrease in Q4 compared to Q4 last year. But Q4 in 2023 there we had the delivery of a large submarine cable project. If we exclude that we had a good growth of our fiber solutions business in Sweden. And here we see the market is now driven a lot by investments in fiber optic backbone networks. And also investments for 5G upgrading towers for 5G. And we also see several government initiatives to subsidize the build-up of the 5G network. And we also see an improvement of fiber optic infrastructure in Sweden. And that includes also submarine cables in the Baltic Sea. Finally then APEC. We had a strong performance. It's 9% of our total revenue. Sales increased 19% and that was driven by a large order we had in Micronesia but also higher sales in Australia. In general when it comes to market development we saw a stabilization. And here the same driver digitalization is driving the demand for fiber optic infrastructure. Then finally a summary and market outlook. So a summary. I will just repeat what we have said a couple of times. We had a stable ending of 2024. Net sales decreased by 2% in Q4. And that was primarily due to this large order in harsh environment in Q4 last year. The EBITDA margin of 10% that was up from 9.1 in Q4 2023. But then when we look at the adjusted EBITDA margin in 2023 it was 10.7%. Internal efficiency improvements and good cost control. So I have offset higher freight costs and the startup costs related to the new facility in Ogden. Cash flow from operating activities so 286 million and that corresponds to the cash conversion of 150%. Strong financial position with a leverage of 1.9 at the end of December. And order book at approximately 2.5 months of sales which is a normalized level for us. We have an interesting pipeline of potential and the potential of the new facility. And that is primarily in data center and in harsh environment. And finally Rickard Fröberg is appointed the new CEO. Succeeding me who leave Hexatronic after 10 years. Market outlook then. And we say we are cautiously optimistic about the 2025 fiber solutions market. We see signs of increased activity in several markets. We see that the price pressure that we saw in 2024 it will likely remain until really market demand picks up bigger. There is some uncertainty due to geopolitical factors. If the US administration decide to implement tariffs against Europe for instance. Our exposure is very limited. The very big majority of what we sell in the US is actually produced in the US. So we see very limited risk here. We see the return to seasonal variations in fiber solution. And that means that we expect a softer market demand in for instance now Q1 2025. And the BID program in the US we expect to see that reaching the market in the second half of this year. In the long term we see underlying structure trends that support the continued expansion of fiber optic infrastructure globally. And we see a strong market for our new focus areas harsh environment and data center. And we expect that to remain for many years to come. And that's mainly driven by investments in defense, energy and AI. So that was the end of the presentation. We will very soon head over into Q&A.

If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. Please limit your questions to a maximum of 2. If you have additional questions, feel free to rejoin the queue. The next question comes from Max Bako from SEB. Please go ahead.

Good morning. Thank you for taking my questions. Well, two questions from my side then. Perhaps starting with looking at your US peer care field that reported yesterday. They stated that they expect some market growth in the US of 12.5%. And that they are not excluding any potential bid impact. From your point of view, does that seem like a fairly reasonable assessment of market growth in the US market? I guess by looking at your graph here with the US market expected growth going ahead, it looks quite similar. Anything to add on that?

I agree that what they said is very much in line with what they said. I agree with the graph we showed from CRU. We see signs of more activity in the US market. It's probably the market where we see most signs of market growth. And you can also see that, for instance, AT&T, their CEO was outstating a huge build out of fiber to the home. Verizon is in the process of acquiring Frontier and also expanding their fiber to the home. So we start to see signs that the market demand in the US is increasing. Then I don't want to comment on percentages, but we start to see signs.

The second question also relating to fiber solution sales in the US. As you stated here during the presentation, for you, what is the market demand in the US? The market is flat year over year. Which seems to be a bit of underperformance versus peers. I think Corning plus 25% within their broadband exposure. ClearFeed yesterday plus 4% and so on. Any thoughts on that underperformance in your view? Is it product mix and customer mix or is it something else that explains it?

First, a comment on Corning that had a very strong report in their optical segment. But they also stated it was very much linked to the data center and enterprise business.

But for the broadband business, explicitly it was plus 25%. So excluding the data center business, I think. I

think they also include middle mile projects for the data center expansion. We see that that market is increasing. We are there, but not to a large extent. I would say what we saw last year, we saw a growth of our HexUS business. 2024 versus 2023. So that was growing. Our duct business declined. BDI business.

Understood. That's perfect. That was all from me. Thank you very much. Very well done here during the last decade, Henrik. And good luck with your future endeavors.

Thank you very much, Max. Thank

you. Thank you. The next question comes from Adrian Galani from ABG Sundal Collier. Please go ahead.

Yes, hello. I'd just like to start off with one question on the outlook statement. You decide to not give any concrete outlook for Q1 sales in relation to Q4, as you sort of did in the last quarter. But the fact that you mentioned seasonal weakness both in Q4 and Q1, should we take that as you expecting roughly similar sales levels in Q1 to Q4?

I would say that they are softer, these two quarters. I think the Q4, it's a really short month. In December, many customers close early. They try to reduce inventories and so on. So maybe a little bit better in Q1, but I wouldn't say a lot.

Okay, that's very clear. And a more general question on tariffs. I mean, you say that the exposure for you is fairly limited. But I'm more interested in just how it impacts the competitive landscape in the US. Are your competitors importing significant volumes from Canada or Mexico? I mean, the market leader on Dux Duralign, they're listed in Mexico, but what's their production set up like?

If you take Duralign for corn, wheat and pipe, they have a lot of plants in the US. I don't think they have any imports really from Canada and Mexico. They are probably self-sufficient, just like we. We produce for Blue Diamond everything in the US. I think when it comes to connectivity products in fiber solutions and also data center, and to some extent harsh environment, we know that Mexico is a big country for that kind of production. And I believe some of our competitors are probably moving production to the US to avoid tariffs. And also you have that it has to be built in the US, produced in the US if you want to participate to beat. I think it's probably a protection of the US market, so it's good for the players who are producing in the US market. And most products that we sell in the US market we produce in the US market. It's fiber optic cables when it comes to fiber solutions that we produce in Sweden. But we will produce that at least part of it in the US in the future.

Okay, understood. And if I can get away with a follow up, if the tariffs on Mexico that are right now passed, if they materialize, would that impact your view on price pressure continuing at least for the connectivity solutions part?

No, I don't think it will be a major thing.

Okay, understood. In that case, that's all from me, so thank you.

Thank you.

Hi, Henrik, Martin and Penieland. Thanks for taking my questions. I missed a few of the questions earlier, so if I repeat myself here, then please correct me. But just a question on price pressure. This has been a theme for a long time. Even at the last conference call, you said that we should expect price pressure to persist until maybe bid funding or the new interest rate curve is seen in demand, right? But what are you essentially saying here? Should we expect price pressure to persist for H1? Could it improve by H2? Or is it a longer play? That's the first one.

I think we will see that this price pressure remains until we see a more robust increase in demand. Then we will start to see prices going up. It's difficult to predict when that comes. We said we are cautiously optimistic about 2025. In that sense, we don't say robust. I think it will remain for some time.

Okay. Great. Then my second question. Just looking on Rochester, the harsh environment business area, you obviously had a very large order last year, right? That you talked about. Is it fair to say that that order was somewhere in the magnitude of 100 million or something like that? What can you say there?

It was below that. But it was significant. In a harsh environment, we will see that kind of business. It can be a big project that comes one quarter and not the other. It's that kind of business.

Maybe just a follow-up there. How often can we expect those going forward if you can add any color on that? Is it once a year? Or how is the cycle? Very

difficult to predict, actually. But I'm sure you will hear about things like this in the future in the harsh environment area also.

Great. Thank you so much for your answers, Henrik. Thank you for the last years here and your work. Good luck ahead.

Thank you very much, Jakob.

Hi, thank you. I want to start with the fiber cable production in the US. You've been discussing that opportunity for a while. But what led you to proceed with the move?

I think there are several reasons. Both that we see that we can increase the service level. We can decrease the working capital because now we are shipping and we have to have quite a lot of stock to be able to serve our customers. Our model in the US is to a large extent also being a distributor. We sell directly to our customers but we need to keep the big stocks. There you have one element. You have also, if there are tariffs, it's a protection. We also see that when we want to expand our fiber solutions business, we might come into customers who want to go for bead funding. Then you have to be what they call BABA compliant producing it there. We have some unique products also that we have in our offering and that we see an advantage of producing locally. Also security. Then we have production in two sites for these cables. We know that some larger customers, they are hesitant when you only have one site producing fiber optic cables. So several reasons that made the decision that we will start up production of fiber optic cables in the US.

Okay, that's clear. Regarding the Utah plant, should we expect any more starting costs and have you started to see any positive impact when competing for Pan American deals or deals in the Western US?

I think and I've said this before, we have several BDI customers that are nationwide who have wanted us to be present also in the Western part of the US. And I think now they will view us more positively that we can support them all over the US and that I hope to see in future deals. So that's a positive thing. I think you had another question in your question and that was if there was more startup costs in... I mean the CapEx is done and then I think we will have some in a startup phase especially with low production. It will affect negatively a little bit more before we start to see a profitable business in that plant.

Okay, great. Thank you very much and good luck going forward Henrik.

Thank you very much, Fredrik.

The next question comes from Max Bako from SCB. Please go ahead.

Welcome back.

Yes, I'm back. If that's all right. Two quite short questions. One perhaps to Martin. I mean you highlighted here in the report once again that you have a quite interesting M&A pipeline within Harsh environment and data center. And it seems like you consider your balance sheet to be in pretty good conditions. So do you aim to do something here in 2025 already or do you expect it to be more of a 2026 thing returning to M&A?

Yes, I mean as you mentioned we believe we have a strong pipeline and that is for both data center and the Harsh environment. And that has been strengthened throughout 2024 and we have good activities early 2025 as well. So our clear ambition is to make acquisitions this order this year absolutely.

Okay, understood. And then the second one looking into 2025 on the topic of bigger order deliveries and so on like the one that you had in Q4 last year for Roshas the Cable. Is it something we should be aware of when looking at 2025 numbers? Any of the quarters during 2024 that contain something similar that one should be aware of?

Not really what we can see now. I think we talk about larger projects in harsh environments so Roshas the Fybrohamn there we could see it. Additionally, as we have stated before, in some quarters there could be large submarine cable projects delivered. But we cannot say when and if at this stage.

But nothing major in the comparable period. I mean during 2024 something that will give the picture when looking at the year over year development in 2025 if you understand.

I don't think there will be any major things. Like if you mean that like the one we had in Roshas in Q4 2023. There might be a large submarine cable delivered in one quarter last year but not that big as the Roshas the thing.

Okay, understood. Thank you again.

Thank you very much. We'll just see if we have any written questions. There are

no more questions at this time so I hand the conference back to the speakers for written questions and any closing comments.

So we are just checking.

What are your competitive advantages product wise and market wise? Yeah, for your customers.

And it didn't specify what kind of product. But if I comment on fiber solutions and our solutions they are primarily fiber to the home. I think we know we have a very strong offering. We have the complete system. We have designed our solutions and the system together. We know that it's fast, easy, problem free to install. And here I think we have a competitive advantage. And we also link them to close customer interdicies where we have field support, engineers, technical people that are out helping our customers to make sure that it's a successful implementation when needed. And also training abilities. So this I don't see any competitors having like we have. And why is it important? It's because if you build a fiber to the home network, typically 85% of the cost is related to the installation itself. Deploying network, roughly 15% is the cost for the material where we are. So our motto is really to make sure to have a solution that is quick, fast and problem free to install in order to reduce the time of install. That I would say is our main competitive advantage in fiber solutions. Another question.

Yes. Who are your major competitors in the US and Europe?

I guess you mean your fiber solutions also. And you have some big players. If you talk about the US market. I mean in fiber solutions, the market leaders are the big ones like Corning, Conscope, OFS, AFL. Very strong position, especially Corning Conscope in that market. And then there are a number of smaller players, we being one of them. If you look at Europe, it varies quite a lot country by country. And you have the big ones that I mentioned before. Also Prismion is a big one, globally big. But Europe, I would say in each country, you have several small local or regional competitors of us. And they could be specialized in connectivity products, in fiber optic cables and micro ducts. So much more competitors in Europe. And it varies from market to market.

Okay. Thank you. Do you have any plans on expanding the business to South and Central America? Or are you already present in those markets?

We are not present. And in our strategy, we look three years ahead. They are not on the radar. I would say it could happen. But then probably if we see an interesting acquisition, but like Greenfield organically, they are not in the plan currently.

Do you see Starlink as a competitor?

I see it more as a complement. Starlink cannot provide the speeds and the low latency of fiber optic networks. But I think in rural areas where it becomes much too expensive to build fiber optic networks, there Starlink really has a place. So I see it much more as a complement.

How do... I should translate this one. What risk do you see if Trump withdraws the Biden... The

beat? Yes. I mean, first, you can elaborate, is it a risk? I mean, we see that there are new things coming out every day, so it's difficult to predict. But I think with the experts we are talking to, they all state that the beat program is extremely well seen by the governors in these states. And you have a lot of red states, Republican dominated states, with a large rural community with no or low connectivity. So it's very popular among the governors. So I think actually the risk is limited of stopping it. We also understand from our contacts that the Republicans want to speed up beat actually and take out quite a lot of red tape that they feel is slowing down the project. If it doesn't happen, I think we and others have built up capacity to also service beat. So there will probably be an excess capacity in the US market. And you have several players who have moved production to the US due to this. So we might end up with an excess capacity. Actually what we are living with right now. So, yeah.

When do you expect to move the fiber cable production to the US? And how much will it cost approximately?

It's actually not a big investment with the plan we have. I would say a small investment. We have some of the lines already. And then it will probably take bit more than a year before we are up and running. I think that was the last question. So we will end this Komfgård. And I just want to say thank you very much for your participation and interest. And also goodbye or farewell from myself after 10 years. So this is my last day. So next time you will be listening to Richard Fröberg who joins 1st of March. So please listen in then. Thank you very much.