Eltel Q1'26 preview: Execution in focus as macro turbulence return

Source: Inderes

Eltel will publish its Q1’26 report on Thursday, April 30, 2026, and the earnings presentation can be followed here at 10:00 am CEST. We expect the report to show a continuation of the company’s positive margin trend, marking what would be the eleventh consecutive quarter of year-on-year profitability improvement. While Q1 is seasonally the quietest period for Eltel due to weather conditions affecting construction activity, we anticipate that strong momentum in the Swedish market and growth in new business areas, such as data centers and solar PV, will support modest top-line growth. In the report, we will focus on the sustainability of Norway’s turnaround, development within new business segments, as well as qualitative comments regarding market outlook following a turbulent geopolitical landscape during the quarter.

Sweden momentum and Power segment to drive top-line growth

We forecast Eltel’s Q1 revenue to reach 174 MEUR, representing a year-on-year growth of 2.7%. Although Q1 is seasonally weak, we expect the growth engine to remain in Sweden (5% y/y), which surprised on the upside in the previous quarter with 20% organic growth driven by public infrastructure and market share gains in classic telecommunication. We also note that the strengthening SEK against EUR provides a translational tailwind to reported revenue, representing an upside risk to our current estimates. In Finland (3% y/y), we anticipate that strong activity in the Power segment, specifically solar PV and data center projects, will offset the structural softness in the traditional Communication and fiber-to-the-home (FTTH) markets. We also expect the negative revenue trend in Norway (Q1’26e: 0% y/y) to gradually reverse as the unit faces easier comparison periods, though the traditional telecom market there likely remains subdued. Furthermore, we are monitoring the contribution from "new" business areas, which grew to ~12% of FY25 revenue, as these segments are central to not only Eltel's growth strategy, but also important levers in reaching its 5% EBITA margin target.

Stricter pricing discipline underpins Q1 margin uplift

We estimate an adjusted EBITA of 2.1 MEUR for the first quarter, corresponding to a margin of 1.2% (Q1’25: 0.9 MEUR, 0.5%). While absolute profitability is low in Q1 due to seasonal under-utilization of resources and a project cycle skewed toward later quarters, our expected year-on-year improvement reflects Eltel’s ongoing transition toward higher-margin contracts and stricter pricing discipline. Profitability is also expected to be supported by "commercial excellence" initiatives, where e.g. older, low-margin frame agreements are gradually replaced by terms that include better indexation and cost-sharing mechanisms. We believe an important factor for the Q1 result will be the performance of the Norwegian unit.  After returning to profitability in late 2025, sustaining near-breakeven figures in Norway despite seasonally low volumes would lend further credibility to the margin improvement trajectory into 2026.

Better positioned than in 2022, but geopolitical risks bear watching

The ongoing US-Iran conflict and rapid price increases in commodities such as oil serve as a reminder of the inflationary pressures that heavily burdened Eltel in 2022. However, we believe the company is significantly more resilient today. Since late 2022, Eltel has renegotiated most of its major contracts to include indexation clauses for fuel and input costs. While these clauses do not provide an immediate recovery due to general time lags (monthly, quarterly, or annual updates), the structural protection is firmly in place. Accordingly, our assessment is that even in a scenario where fuel prices remain elevated, any margin impact should prove more contained and temporary than in previous cycles.

We also acknowledge that prolonged geopolitical instability could weigh on customer decision-making, potentially deferring investment commitments and dampening Eltel's growth trajectory through 2026. That said, we believe the effects observed to date remain limited, and the ultimate magnitude will depend on the duration of the conflict which, encouragingly, appears to be trending in the right direction after Q1.

Against this backdrop, we will be attentive to any management commentary on the operational impact of the conflict so far and its implications for the near-term growth trajectory. Beyond the macro, and given the absence of numerical guidance, our primary focus remains on management's confidence in the 5% adjusted EBITA margin target. In the Q4’25 report, management specified a timeline of 12–18 months to reach this level, and we will look for updates on the operational efficiency gains required to bridge the remaining gap from our current 2026e/2027e forecast of 3.3%/3.6%.