<a id="bm-comp-bf530844-2abc-47c8-8771-d8ea4e2910ca" name="bm-comp-bf530844-2abc-47c8-8771-d8ea4e2910ca" class="BMCustomAnchor"></a><table><tr><td bm-component-id="bf530844-2abc-47c8-8771-d8ea4e2910ca" style="vertical-align: top; width:100.000000%;"><ul><li>Q2 EBITA EUR 2.5m (ABGSCe EUR 6.9m)</li><li>We cut '25e-'27e adj. EBITA by EUR 10m-5m</li><li>Trading at 11-9x '26e-'27e EV/EBITA</li></ul></td></tr></table><a id="bm-comp-7283af68-dccc-4a8b-b645-f468201f61b5" name="bm-comp-7283af68-dccc-4a8b-b645-f468201f61b5" class="BMCustomAnchor"></a><table><tr><td bm-component-id="7283af68-dccc-4a8b-b645-f468201f61b5" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">All segments better year-on-year</h3><p>Eltel reported Q2 net sales of EUR 201m, down 7% y-o-y, of which -5% was organic growth. Adj. EBITA was EUR 2.5m (ABGSCe EUR 6.9m), for an adj. EBITA margin of 1.2% (0.2%). This excludes EUR -0.5m for restructuring costs in Norway, where management says it is done adjusting the cost base. Although EBITA was lower than we expected, all segments improved profitability y-o-y. Moreover, Q2 marked the eighth consecutive quarter with group-level adj. EBITA improvement y-o-y, and as such we conclude that the trend is positive even though the pace of improvement was slower than we expected.</p><h3 class="bm-h3">We lower adj. EBITA by EUR 10m-5m for '25e-'27e</h3><p>Although we expect the margin expansion trend to continue, Eltel faces tough comps for Q3e specifically (EUR 8.2m adj. EBITA, 3.9% margin), which we think will be difficult to replicate. Moreover, following the Q2 numbers below our expectations, we revise our margin improvement timeline, now expecting '25e, '26e, and '27e adj. EBITA margins of 2.0%, 3.0%, and 3.6%, respectively, down from 3.2%, 3.6%, and 4.1%. This results in our adj. EBITA estimates coming down by EUR 10m-5m.</p><h3 class="bm-h3">Value accretive debt refinancing</h3><p>Eltel issued a EUR 130m senior secured bond during the quarter with a variable interest rate of 3-month EURIBOR +525bp, and used part of the proceeds to buy back and cancel almost all of its outstanding EUR 25m hybrid bond with a fixed interest rate of 13.5%. As such, while the r12m lease adj. net debt/EBITDA comes up to 2.8x (2.1x in Q1) due to accounting specifics (the hybrid bond was booked as equity), this is an improvement of the company's financing framework. The share trades at 11-9x '26e-'27e EV/EBITA.</p></td></tr></table>