Eltel: Improvements gradually materialising - ABG

Adj. EBITA of EUR 8.2m (ABGSCe EUR 5.0m), Finland outperforms
'24e up on Q3 beat, Norway estimates lowered for '25e-'26e
Trading at 11-8x EV/EBITA for '25e-'26e


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.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/eltel/Equity-research/2024/10/eltel---improvements-gradually-materialising/