Elisa released its third-quarter earnings report today, and that is why I am joined by the company's CEO, Topi Manner. Greetings, Topi. Hello, hello. If we start quite traditionally, could you tell us briefly what the highlights of the quarter were and where there might have been room for improvement?

Well, yes, so our mobile market situation continued to improve moderately in this quarter. That was a positive thing. In the fiber business, we saw clear strengthening during the quarter. Over 20,000 new fiber connections. Data centers are a significant new growth area for us, and we also returned to a growth path in the international software business. The quarter's organic revenue growth was 11%, with great new customer wins there. So those were the strong points.

Then, as for where there was room for improvement, we had a somewhat difficult quarter on the corporate side, and some of those larger deals that we had secured at the same time last year failed to materialize. And then, of course, the competitive situation seasonally as well. In quarter-on-quarter comparisons, the mobile market tightened slightly.

Right, you mentioned those data center connections, and the order intake there is nearly one hundred million. Now my numbers are getting mixed up in my head again, which of course is a really strong figure, but the revenue impacts will only start to show up from 2028 onwards. What kind of investments does this necessitate? The construction of these connections by you in the coming years, and how does the profitability of that business compare, for example, if we talk about the telecom business?

The profitability of the business compares actually entirely to the telecom business. And indeed, this 100 million order book that we have now built up, that has practically happened in a few months. The vast majority of those orders were secured during the third quarter, so that also tells how quickly this data center boom has started to show in these services, and we are in a strong position. Google, among others, chose us as their main partner in this area.

As you stated, the revenue will actually only start to accumulate once the construction phase for these connections has been completed. So mainly revenue will start to accumulate from 2028 onwards. Investments are already being made now. They were made in the third quarter, but the cash flow will be very positive from this, because we expect the net cash position for this year. Regarding these data center connections, to be positive, because customers pay for construction as prepayments.

So cash flow will still be received from there even during this year already.

Exactly.

Well then, if we talk a bit about those international software services, there was indeed good growth of 11 percent. But of course you also renewed Elisa IndustrIQ's operating model and are streamlining operations there, so is it basically the case that IndustrIQ's previous profitability levels have been a bit of a disappointment for you? And what is now expected of this new two-business-area structure going forward?

Well yes, IndustrIQ's profitability level is low, and it is not sufficient for us that EBITDA has come in at a few million euros, and that has been natural for this growth phase when we have practically grown that business through acquisitions and by combining it with our organic capabilities. But now we are moving to a new phase there, and we want to improve profitability. We want to fully integrate these acquired software companies into one. Elisa IndustrIQ business and at the same time streamline operations and create a platform for future faster growth.

And that is what we have set out to pursue with this operational model revision, and that process has now been set in motion. It is proceeding according to plan, and that plan includes that in the software business we have two business areas. One is the Manufacturing business area, meaning manufacturing industry software, and the other is critical infrastructure software, which also includes software offered to telecom operators.

The report stated that new sales prices have been higher than the comparison period, year on year, but the effects will be seen with a delay in mobile services.

Yes, yes.

When will these price hikes start to bear fruit in telecom revenue and perhaps turn the trend positive? Is it?

We do see it in such a way that if we talk about telecom revenue, which consists of mobile services revenue and fixed network revenue, we are heading towards a situation where our starting point for 2027 will be better than it was for 2026. That is, the price of mobile services is nevertheless moving moderately in the right direction. On the fixed network side, we see demand all the time. From detached houses we have won a lot of housing companies, and a lot of new fiber connections are obtained from there. And then on top of that comes this opportunity related to data center connections. So there will sort of be a foundation for a better starting point when we look at 2027.

Indeed. Well, you have also been active on the innovation front again, and in September you announced that you are building future IT services for Kempower, meaning AI-relying ticketless IT support, which sounds like a pretty bold promise. Absolutely. How scalable is this concept for you in international growth?

Yes, ticketless IT service is indeed a bold promise, because all of us know how frustrating it is from time to time to call IT services. But it also tells that we believe we have a lot to offer to our customers regarding our AI capabilities. And Kempower is a good example of a Finnish rapidly internationalizing company, and we can serve companies of this type with this service.

That international scalability is then a question for the future. So at this stage we have now started with Kempower, and we still have a lot of scalability with Finnish companies, and let's focus on that now.

Then you also presented together with Nokia and Scailarc a call that does not need to be answered. Yes, it sounds pretty fun. With what revenue model and timeline will this be commercialized into new B2B revenue? Especially when considering that it scales partially. It depends of course on device manufacturers and other operators too.

It is in itself an interesting product concept with the Scailarc startup and with Nokia, which shows that even such an established thing as a call can be thought of in a completely new way. And we all have situations where calls come in that you cannot answer. The dentist calls and wants to book an appointment, but you are not able to answer, or the post office is delivering a parcel or some other delivery service is delivering a parcel, you should answer whether it is left at the doorstep or somewhere else.

Yes. This service sort of offers an alternative where you can choose from your phone screen to leave the package at the door, without actually answering the call. Right. An interesting product concept that can be commercialized, but right now it is still at the concept level rather than an existing product. But we are right at the starting line of commercialization.

That sounds really interesting. Well, quite recently Financial Times reported that Europe's largest telecom operators Deutsche Telekom, Orange, Telefónica, and Vodafone are joining forces to challenge Starlink by applying for satellite frequencies and building their own infrastructure. What is your strategy here? Are you aiming to join this consortium to secure European self-sufficiency, or do you plan to implement direct-to-device satellite connections purely through commercial partnerships?

Well. First of all, I see that this European consortium for applying for satellite frequencies is a positive thing. That is, Europe needs self-sufficiency regarding satellites. We have seen on the frontlines in Ukraine what the significance of satellites is for defense and security, and Europe needs to consider this.

It is definitely a good thing. From our perspective, we are closely monitoring what is happening in this satellite field and evaluating our options. Generally speaking, we see that satellites are a complementary solution to terrestrial networks, meaning mobile networks and fixed networks. Satellites will be needed, for example, as backup connections or in sparsely populated areas, and also for defense and security use cases. But mobile networks, for example, have tremendous strengths compared to satellite connections when considering capacity, indoor coverage, and operations in high-density areas such as cities. So satellites will not replace terrestrial connections and mobile networks; instead, satellites will become a complementary solution to terrestrial networks. And one natural way forward for us is simply to seek partners and thereby also avoid major investments.

Exactly. And finally, traditionally we also ask about the guidance, which remained unchanged. But what factors give you the confidence that revenue will reach at least last year's level or might even slightly exceed it?

Well, if we look at the last quarter, the fourth quarter of last year, it was a quarter of very heavy competition, so unlike the third quarter of last year which was very strong and therefore a difficult comparison point for us this quarter, we have somewhat more moderate comparison figures ahead from Q4 of last year, and we believe that mobile service telecom revenue will gradually begin to reflect this. We clearly have good momentum going in Elisa IndustrIQ right now, and we have some other business opportunities that we are actively working on currently, and on these grounds the guidance remains unchanged.

Great! Thank you very much, Topi, and good luck for the rest of the year!

Thank you.