Earnings call transcript: Elisa Q2 2026 profit holds up as stock falls 5%

Earnings call transcript: Elisa Q2 2026 profit holds up as stock falls 5%

US launches new military strikes on Iran Elisa reported a modest rise in second-quarter profit as cost cuts helped offset flat revenue, but investors appeared focused on slower near-term growth and pushed the stock down 5.07% in premarket trading to $35.22. The Finnish telecom and software company said comparable EPS came in at EUR 0.59, just below the EUR 0.5979 forecast, while revenue was EUR 551 million, roughly unchanged from a year earlier. Comparable EBITDA rose 1.4% to EUR 201 million, and the EBITDA margin improved to 36.5%.

Key Takeaways - Comparable EPS rose to EUR 0.59 from EUR 0.57 a year earlier, but came in slightly below the EUR 0.5979 forecast. - Revenue was flat at EUR 551 million as mobile service pressure and the end of PSTN revenue offset gains in fixed services and equipment sales. -

Comparable EBITDA increased 1.4% to EUR 201 million, helped by cost savings and tighter spending. - Elisa said mobile market conditions have normalized, but the revenue benefit should be more visible in Q4 than in Q3. - The company signed its first large-scale data center connectivity deals, opening a new long-term growth area.

Company Performance Elisa delivered a mixed quarter. Profitability improved, but sales did not. The company said comparable EBITDA increased despite flat revenue because of disciplined cost control and a transformation program that has already delivered about EUR 40 million in savings across CapEx and OpEx.

Mobile service revenue remained under pressure from earlier competition, while the shutdown of the public switched telephone network also weighed on sales. Those headwinds were partly offset by fixed service revenue growth of 2.2%, equipment sales support, and contributions from energy software services. The company’s core telecom business remained stable in market share terms, and management said pricing and churn have normalized after a difficult period in late 2025.

Even so, the call made clear that the full benefit of better mobile pricing will take time to show up in revenue. Financial Highlights - Revenue: EUR 551 million, flat year over year. - Comparable EBITDA: EUR 201 million, up 1.4% from a year earlier.

- EBITDA margin: 36.5%, up from 35.8%. - Comparable EPS: EUR 0.59, up from EUR 0.57, or about 3.5%. - Comparable cash flow: EUR 71 million, down 37% from EUR 130 million.

- CapEx: EUR 72 million, down from EUR 76 million a year earlier. - Net debt to comparable EBITDA: 1.8x, within the company’s target range. - Equity ratio: 39.1%, above the minimum target of 35%.

- Mobile post-paid subscriptions: up 21,000 in the quarter, including 15,000 IoT and M2M connections. - Fixed broadband subscriptions: up 3,500 in the quarter. Earnings vs. Forecast Elisa’s comparable EPS of EUR 0.59 fell short of the EUR 0.5979 forecast by EUR 0.0079, or about 1.3%.

That is a small miss and close enough to be viewed as broadly in line, but it was not enough to satisfy investors looking for a stronger beat. The company did not provide a revenue forecast in the same format for direct comparison, but reported revenue was essentially flat at EUR 551 million. That suggests the quarter was more about margin defense than top-line growth.

Compared with the prior year, EPS improved from EUR 0.57 to EUR 0.59, which shows that the business is still growing earnings even in a slow revenue environment. The result was not a dramatic surprise, but in a market that was already cautious, the slight EPS miss and flat revenue likely added to the negative tone. Market Reaction Elisa shares fell 5.07% to $35.22 in premarket trading, down from the previous close of $37.10.

That means the stock lost about $1.88 per share before the opening bell. The decline pushed the stock close to the bottom of its 52-week range of $34.49 to $49.10. At the current price, the shares are only about $0.73 above the 52-week low and roughly 28.3% below the high.

The move suggests investors were more concerned about the pace of future growth than about the quarter’s profitability. Elisa’s results showed stable margins and better cost control, but the company also said the improvement in mobile revenue will likely be delayed, with the strongest effect expected in Q4. That timing may have disappointed traders looking for a quicker rebound.

Outlook & Guidance Elisa kept its full-year 2026 guidance unchanged. The company expects revenue to be at roughly the same level as 2025 or slightly higher, and it continues to guide for comparable EBITDA of EUR 815 million to EUR 845 million. Management said telecom service revenue should grow 0% to 2% in 2026, with the strongest improvement likely to show up later in the year as fixed-term contracts roll over at higher prices.

The company also expects Q4 to be stronger than Q3, which is unusual for Elisa’s normal seasonal pattern. For Elisa Industriq, the company’s international software unit, management expects 2026 revenue growth of 5% to 10%. The unit saw only 0.6% organic growth in Q2, but Elisa said deals were postponed rather than lost.

The company also highlighted a new growth area in data center connectivity. Elisa said its first large-scale deals were signed in the quarter and that the business could have a positive EPS impact over time. CapEx tied to those projects will be handled outside the company’s normal 12% of sales envelope.

Executive Commentary “During Q2, revenue was effectively flat. Comparable EBITDA was up by 1.4%, especially driven by successful execution of cost measures,” CEO Topi Manner said. The comment summed up the quarter: better profitability, but limited sales momentum.

“This quarter marks the start of our large-scale data center connectivity business,” Manner said. He described the segment as long-term in nature, with contracts that can run for as long as 15 years after construction. Kristian Pullola, the chief financial officer, said Elisa’s balance sheet remains strong and that leverage is comfortably within targets.

He added that the company is well positioned to keep investing, paying dividends, and maintaining solid returns. Risks and Challenges - Mobile revenue timing: Elisa said the benefit from better pricing and normalized market conditions will arrive with a lag, which could keep near-term revenue under pressure. - Flat revenue growth: The quarter showed that cost control can support earnings, but it also highlighted how hard it is for the company to grow sales.

- Cash flow decline: Comparable cash flow fell sharply from a year earlier, which may concern investors even if the company says working capital remains under control. - Competitive telecom market: Management said the Finnish mobile market remains competitive, and future pricing behavior by rivals could affect recovery. - Software unit volatility: Elisa Industriq faces delayed customer spending and uneven license revenue, making the division less predictable than the telecom business.

Q&A Analysts focused on three main issues: the timing of mobile revenue recovery, the outlook for the software unit, and the new data center opportunity. Several questions centered on why mobile service revenue improvement would not show up more quickly after the tough promotions of late 2025. Management said the rise in fixed-term contracts has lengthened the lag between new pricing and revenue recognition, making Q4 more important than Q3.

Analysts also pressed the company on Elisa Industriq, asking whether weak growth was structural or tied to macroeconomic caution. Management said the delays were practical and temporary, not the result of lost deals or AI-related disruption. A third area of focus was data centers.

Analysts asked about contract structure, financing, and timing. Elisa said the business is attractive because connectivity is critical for operators, while its share of total project spending is relatively small. The company declined to give detailed timing or hurdle rates, but said the economics look favorable.

Questions on dividends and working capital also drew attention. Elisa said its dividend policy remains intact and that cash flow remains a priority, even if cash generation has not fully covered payouts in recent years. According to InvestingPro Tips, the company has maintained dividend payments for 22 consecutive years and raised its dividend for 11 consecutive years, underscoring its commitment to shareholder returns.

Investors seeking deeper analysis can access 7 additional ProTips and comprehensive metrics through InvestingPro, including a detailed Pro Research Report that transforms complex financial data into clear, actionable intelligence for this and over 1,400 other US equities. Full transcript - Elisa Oyj (0I8Y) Q2 2026: Vesa Sahivirta, Head of Investor Relations, Elisa:

Hello everyone, welcome to Elisa’s Q2 2026 analyst conference call. I’m Vesa Sahivirta, head of investor relations, and here we have a very familiar team, CEO Topi Manner and CFO Kristian Pullola. We also follow the normal practice.

We start with the presentation followed by the Q&A. Topi will go through the highlights of the report. Kristian will elaborate more on financials. Now we are ready to start, so I give word to Topi.

Please go ahead. Topi Manner, CEO, Elisa: Thank you, Vesa. Welcome everybody to this Elisa Q2 earnings call.

Let’s go right down to the main points of our Q2. During Q2, revenue was effectively flat. Comparable EBITDA was up by 1.4%, especially driven by successful execution of cost measures.

We were still weighed down by last year’s competition in terms of mobile service revenue. That was partly offset by a good progress in fixed service revenue, which grew 2.2%. The overall telecom service revenue decreased 0.77%.

In international software services, the comparable organic revenue increased by 0.6%. This was largely due to the fact that customers were cautious in proceeding in their projects given the geopolitical uncertainties and higher energy prices. With that, we saw some license deals being postponed further to H2.

What you should also note that in Industriq, we sold earlier a small business in Brazil impacting the comparable numbers. In comparable cash flow, the comparison quarter was exceptionally strong. During this quarter, the cash flow was solid at EUR 71 million, decreasing due to higher financial expenses and less favorable working capital development.

We were happy to note that the post-paid churn normalized during the quarter, further decreasing from Q1 levels and landed at 16.7%, in line with our long-term average for Q2 churn. In mobile post-paid subscriptions, we increased with 21,000, of which 15,000 subs were related to IoT and M2M. With these numbers, our market share in terms of mobile subs remained stable during the quarter as we wanted it to be. The fixed broadband subscription base is increasing nicely in this quarter with 3,500 subscriptions.

We do experience good demand, improving demand in terms of fiber business. As mentioned, our cost measures were successful during the quarter, indicating also clearly that our transformation program is proceeding according to plan. At the start of the year, we moved to quarterly dividend.

Following that, the board of directors now decided for the second installment of the dividend, namely EUR 0.60, and that will be paid to shareholders on the 29th of July. Looking into the revenue development, the revenue landed at EUR 551 million. As stated, mobile services weighed down given the last year’s competition.

Also, divestment of Epic TV is something to note in this one. During the quarter, we also ramped down and discontinued our public switched telephone network, impacting the revenue a bit. Fixed services, as stated.

Equipment sales were supporting the revenue growth during the quarter. We’re happy to note that EBITDA margin improved during the quarter to 36.5%, and the whole EBITDA landed at EUR 201 million. This was driven by efficiency measures, the transformation program, as stated, and then in part also by reduced sales and marketing cost.

In terms of telecom service revenue, I already mentioned that we were weighed down by last year’s competition in terms of mobile service revenue. It is important to note, though, that the mobile service revenue started to grow on quarterly basis in comparing with Q1. It is also noteworthy that in Q2 last year, we started the rollout of the so-called security features hard bundled with our mobile subs, and we started that rollout with a large cohort of backbook price changes, and that was supporting the Q2 2025 comparison quarter in terms of mobile service revenue.

In line with the quarterly growth in MSR, the ARPU started to increase a bit during the quarter and landed at EUR 24. When we look at our mobile KPIs now, the key message is that they returned to normalized levels. In Q2 this year, the new sales prices actually continued to increase from Q1 and exceeded the level of Q2 last year.

This was a positive development on the market. However, we need to note that on the market, the share of fixed-term mobile contracts has increased significantly, and that means that there is a longer time lag than previously in terms of the new sales prices moving to book. This means that, for example, if we acquire today a customer from our competitor, that customer might be moving into our book with the delay of three to four months, depending on when the customer’s fixed-term contract ends with the previous service provider.

This also means that the new sales prices impact to service revenue will come in with a delay, and it will be more visible in Q4 in particular. Churn, as stated, decreased from Q1 levels and landed at 16.7%, which is a tad below our 10-year average of Q2 churn, which is 16.99%. The mobile sales and marketing costs, including the voucher costs, have been normalizing during the quarter, and there was a bit of a decrease from Q1 levels.

All in all, good to see normalized levels in the mobile business in the forward-looking indicators. In the past, with these levels, we have been able to deliver solid MSR growth. As stated, that growth will follow with the time lag, assuming that the market stays on these normalized levels.

When we look at our business segment by segment in consumer business, the revenue was impacted by the divestment and the mentioned phenomenon in terms of mobile business. It was good to see support coming from fixed services and equipment sales. The cost measures were successful in consumer business, and the segment EBITDA improved with 2.1%, EBITDA margin hitting 43%.

In corporate customers overall, a very solid quarter revenue weighed down a bit by equipment sales and also the discontinuation of the PSTN network supported by fixed services and in digital services and in particular by high-margin hybrid cloud services and data services, which was encouraging to see. The cost management was successful in this segment, and EBITDA improved with a very solid 4.2% for that segment. In international software services in turn, a more challenging quarter.

Comparable revenue growth was 0.6%. Here we need to remember that Q2 is seasonally typically the weakest in Elisa Industriq business and overall in software industry. We did see some license deals being postponed to H2 during the quarter.

It is important to note that we did not lose any deals. Nevertheless, with the new CEO, Mikko Soirola, we will be starting now specific measures to improve the profitability of Elisa Industriq business. Looking into sales, looking into boosting revenue, as well as capturing synergies on the cost side of things.

In Estonian market, we saw solid progress, revenue increasing 3% on the back of mobile and fixed services. Some support from equipment sales. EBITDA increased by 13%, driven by the mentioned service revenue growth and also an accounting alignment internally in Elisa.

Good work, solid progress in Estonia. We continue to be focused on implementing our strategy and now especially in terms of 5G and fiber. As stated in 5G and mobile services, we see normalized mobile indicators improving the outlook.

With fiber business, we are seeing good organic demand in fiber to the home, as well as fiber to the building. Then as a new category of fiber business, the data center connectivity comes in offering longer-term revenue support. I will come back to that in a minute.

In Elisa Industriq, as stated, we will be starting specific measures to boost the revenue take-home synergies to boost profitability. In simplicity and productivity, the cost measures have been successful. Transformation program is proceeding according to the plan.

We will be staying focused to implementing our initiatives related to all of these focus areas. In mobile business, 5G penetration grew during this quarter more than normally during the quarter. This was on the back of a focused sales activity.

We should not expect this 5G penetration to increase at this rate on quarters to come. As stated, in fiber business, we are seeing some good momentum. The fiber subscription base continues to grow.

At the beginning of July, we acquired in Lapland area in Finland a fiber network provider with some 8,000 customers, a bolt-on acquisition in that space. Then related to the fiber to the building we announced a customer win, a partner win from DNA. The largest rental housing company, Lumo Plc, having 44,000 apartments in Finland chose us as their fiber to the building provider.

Good to see that progress in the fiber business. Related to the overall fixed services during the quarter, we ramped down successfully our PSTN network. That network has been serving us well for 140 years.

Now customers have been moving to new technologies. For our fixed service business this also means that now the drag of decreasing PSTN revenue will cease to exist. With that, we will be having a clean sheet for fixed service revenue growth going forward.

This quarter marks the start of our large-scale data center connectivity business. During the quarter, we signed first large-scale data center connectivity deals. When we talk about large-scale data centers, we talk about newly constructed above 100 megawatt data centers.

On the overall in Finland, the data center market is growing. We see more and more projects materializing. The ultimate size of the market will depend on many variables.

One of them is the overall AI super cycle development and the investments of especially the hyperscalers. Electricity availability and electricity costs will be impacting the investment levels. So will the regulatory environment.

It is very clear that Finland is an attractive place for data center operators. We have an optimal climate, seismically stable land, one of the most reliable and best electricity grids in the world, low electricity prices and very developed telecom infrastructure. We as Elisa, we have clear competitive advantages in this market.

We have a strongest and widest backbone network in Finland and to and from Finland. We are the market leader with excellent capabilities to build fiber connections on time. Timely delivery is really important for the data center operators.

Of course, we also have a strong track record in operating networks efficiently and reliably. Clear strengths on this category of business. When we look at the data center connectivity business characteristics, the way that business is emerging, as stated, the market is emerging, but it holds significant future potential for us.

At the same time, it is important to note that we are focusing on data center connectivity business. Meaning, the fiber connections to the data center potentially supplemented by optics in some cases. That means that connectivity bit is only a small part of the overall data center investments that the data center operators are looking at.

Based on the deals that we have now signed and based on the deals that we are now in discussions of, we see attractive capital returns and importantly, we see attractive cash flow characteristics. We think that this will represent a notable positive EPS impact to Elisa over time. It is important to understand that this is a long-term business.

When we enter into a deal, the construction periods vary. Smaller deals might involve a construction period of some months, and the larger deals include a construction period up to 24 months. A very long-term business in nature.

The CapEx needs that will arise from these deals will be handled outside of our 12% CapEx to sales envelope. Let me re-emphasize that what we see is that the cash flow characteristics of the business are attractive. Going forward, we do not plan to disclose individual deals in this category of business.

As stated, an emerging business opportunity that has now reached an important milestone with first large-scale data center connectivity deals being signed during the quarter. Looking into other aspects of our business, in home services during the quarter, we reached a new agreement with MTV, a Finnish commercial TV company, after lengthy negotiations which also included a blackout period for our customers. Nevertheless, it’s now good to see that this agreement is in place.

We will be deepening the collaboration with MTV over time, also developing our offering to customers together with MTV. When we go into the corporate space, we clearly see an increased need for security solutions. During the quarter, we entered into a pilot agreement with Finnish Border Guard and a drone company called Sensofusion.

Testing a drone monitoring and drone jamming solution, which is an important and intriguing entry to mission-critical defense business related to drones. As stated, in international software business in Elisa Industriq, the revenue and profitability was below our expectations due to the delays that we saw on the market. It is important to note that the order intake developed positively and the order backlog as such was strengthened.

In this part of the business going forward, during this calendar year, we now expect to see revenue growth in the range of 5%-10%. As mentioned, we will be doing the specific measures to improve profitability and secure improving profitability from last year’s levels. We also had a good customer win during the quarter in Spain, MasOrange, a big telco, chose our software solutions, and that demonstrates the quality and the competitiveness of the solutions that we are having in the telco space.

In terms of sustainability, Time Magazine and Statista once again selected us to the list of 100 most sustainable companies in the world. This time around, we ended up on the 61st place. This was indeed third time in a row demonstrating our long-term commitment to sustainability work.

When we go into outlook and guidance, our guidance for this year remains unchanged. Revenue we expect to be at the same level or slightly higher than in 2025. Comparable EBITDA we expect to be within the range of EUR 815 million-EUR 845 million.

The midpoint there being EUR 830 million. In terms of assumptions related to the guidance, we now expect the telecom service revenue to grow within the range of 0%-2%. Please note that this is related to the outlook for calendar year of 2026.

We do see the mobile indicators normalizing, and with those indicators in the past, we have been delivering solid mobile service revenue growth, but it comes in with a delay being especially visible in Q4. The same postponement phenomenon is visible in Elisa Industriq. At the same time, the totality of this means that our cost measures are progressing well.

What is noteworthy also is that the data center connectivity opportunity will offer long-term support for the telecom service revenue development. With that, I will hand over to Kristian to cover the rest of Q2. Thank you.

Kristian Pullola, CFO, Elisa: Thank you, Topi, and good day also from my behalf. In Q2, group revenue was essentially flat year-over-year at EUR 551 million. Within that, we saw expected mix effects.

Mobile services, the Epic TV divestment, consumer digital services, as well as the traditional fixed PSTN continued to weigh on the top line, while fixed services, equipment sales, and energy software services supported revenue. Despite the slight decline in revenue, comparable EBIT increased by EUR 3 million to EUR 201 million, and the EBITDA margin improved to 36.5% from the 35.8% in last year. The main driver here was really the operating cost savings, which came both from the ongoing transformation program as well as from disciplined cost controls more broadly.

Comparable EPS increased to EUR 0.59 from EUR 0.57. All in all, we delivered solid profitability and better EBITDA margins, even with the slight revenue decline. When it comes to the second half development, we did see positive development in the mobile indicators in Q2, as Topi discussed.

However, as said, the financial impact will be coming in with a lag and will be especially visible only in Q4. This will have an impact on the normal seasonality that we have seen over the years. Where Q3 EBITDA has been stronger than Q4, this is not going to be expected this year.

Q4 is expected to be stronger this year. CapEx for the quarter was EUR 72 million, down from EUR 76 million last year. The allocation was very consistent with our strategy.

Main investment areas remaining 5G coverage expansion, fiber build-out, and IT systems that support simplification, customer experience, and productivity. Some part of the fiber CapEx was implemented through the JV that we established last year. You might recall from Q1 that we emphasized strict CapEx discipline and focus on technology leadership.

That approach continues. We are investing where we see clear long-term value and attractive returns while avoiding discretionary and low return spend, especially lowering CapEx for older technologies and older systems. All in all, we are maintaining disciplined investment levels while funding infrastructure and IT that underpin the future growth.

Comparable cash flow in Q2 was solid at EUR 71 million, down from an exceptionally strong EUR 130 million in the prior year quarter, which represents a 37% decline. There are three main drivers behind this. First, lower CapEx compared to last year was a positive for cash flow.

Second, higher paid interest costs weighed on cash flow, reflecting both higher interest rate environment as well as the fact that we this year paid a larger portion of the whole year interest costs in Q2. And then thirdly, and most importantly, networking capital development was less favorable than in Q2 2025. And that quarter benefited from very strong positive networking capital movements, especially on payables.

In Q1, we highlighted that networking capital had developed positively for five consecutive quarters. In Q2, we saw flat development. We continue to focus on working capital efficiency and managing interest costs to support cash flow in the second half and beyond.

All in all, solid cash conversion in a tougher comparison quarter, with room to improve in working capital and a normalized cash interest impact going forward. Our capital structure remains efficient and clearly within our target ranges. Net debt at the end of the quarter was slightly down from the year-end.

Net debt to comparable EBITDA was at 1.8 times, which is well inside our target range of 1.5 to 2 times. Equity ratio was 39.1%, above our minimum target of 35. We have a well-balanced maturity profile with bonds, loans, and undrawn revolving credit facilities.

As indicated earlier this year, we are focusing on proactively refinancing our 2027 maturities to maintain cost-efficient and diversified funding. Both S&P and Moody’s reconfirmed our strong investment-grade ratings during Q2. Return ratios remain at good levels.

Return on equity and return on invested capital are both running in the high teens, consistent with our ambition to deliver industry-leading returns through strict CapEx discipline and strong focus on cash flow. All in all, Elisa’s balance sheet is strong, our leverage is comfortably within targets, and we are well-positioned to continue investing in growth, paying dividends, and maintaining solid returns to shareholders. With that, I hand back the call to Vesa for Q&A. Vesa Sahivirta, Head of Investor Relations, Elisa: Thank you, Kristian.

Now we move on to Q&A part. We ask first question from the conference call lines, please. Operator, Conference Call Operator: Please go ahead.

Andrew, Analyst: Hello, everyone. I had two questions.

Apologies, the first one is a little wordy. Just wanted to dig in on your telecom revenue growth visibility. Just to check, it looks like or it sounds like the downgrade on your guidance for telecom revenue growth this year is due to you seeing a greater degree of these 12-month fixed-term contracts that were signed during the second half of 2025 that mean that first half 2026 improvement in the market you’re seeing just isn’t translating to better growth until those fixed-term contracts end towards the end of 2026.

That’s our understanding at least. The question is, why weren’t you aware of the degree of importance of those 12-month contracts that have been sold during the second half of 2025? How confident are you now that you have a good enough grip on the market dynamics and tariff structures?

If you are now confident, can you tell us if that mobile service revenue growth could come in positively in the third quarter of 2026, or do we have to wait until the fourth quarter? It’s just a question around the visibility that you have on what’s going on in the market and your confidence to now guide to that improvement in the back end of the year. The second question is much shorter.

It’s just on the ISS growth. Are you totally sure that the lower revenue growth you’re seeing is not at all structural in terms of headwinds and is all macro-related? Just wondering if there’s a risk here that you’re just missing out on some AI-related revenues as your customers reallocate spend towards that, and that’s just not being spent with you.

Thank you. Vesa Sahivirta, Head of Investor Relations, Elisa: Thank you, Andrew. If Kristian, you start with the first one, and I follow with the second.

Kristian Pullola, CFO, Elisa: On the TSR. There has been a bigger lag impact from the competitive environment than what we anticipated and modeled at the beginning of the year, and that is why we updated this year’s outlook for revenue growth there. The positive impact from the market stabilization and the price increases that we have seen will be more visible in Q4 and not as much visible in Q3.

Vesa Sahivirta, Head of Investor Relations, Elisa: To add to that, I think that the market phenomenon in this one has been that on the whole market, all players included, it seems that the share of fixed-term contracts has been increasing quite a bit, and that share with competitors is something that they do not disclose and have not disclosed. This has been sort of an unknown factor to all players on the market during the year. Now the empirical evidence points to the share of the fixed-term contracts being clearly increased on the overall market, increasing the time lag that we are seeing in this part of business.

Eventually, with the normalized levels of mobile indicators, the revenue will follow. Added to the industry part of the business, whether the revenue Topi Manner, CEO, Elisa: Slowing down is structural. We are, of course, observing this very closely, and we are listening to our customers very closely in this one.

We do not see AI-related impacts in this one. We are dealing with mission-critical software for our customers, be that telecom software or be that industrial automation software. With that, we have a clear moat in our software business.

The delays that we have now experienced with the license revenue are clearly related to more practical matters like production, customers, projects related to investing in new production facilities being postponed. We do not see deals being lost and that is important to note related to your question. Andrew, Analyst:

Thanks both of you. Can I just a quick follow-up on the kind of surprise at the amount of the fixed-term contracts. Understand that you don’t see the contracts signed by your competitors, but surely you saw the amount of fixed-term contracts that you guys were signing and your commercial officers, et cetera, know what’s going on in the market and where the competition is.

Understand there was a change in market dynamics, but given that there’s been some volatility in market dynamics, how confident are you that you have a firm grip on the tariff structures et cetera, that are being signed by your competitors now, given that so much of the price engagement in Finland is below the counter? Just trying to just gauge that degree of confidence that investors can have in that fourth quarter improvement. Topi Manner, CEO, Elisa: I think that if we go back and look at what has happened in the last 12 months since last summer in the Finnish mobile market, clearly the phenomenon of the share of fixed-term contracts increasing significantly starting from summer last year, has been impacting the way revenue comes in for all players.

That is clear as such. What we do see now is that the important indicators in mobile business are normalizing, as you saw from our presentation. Therefore, we do have a line of sight to clearly improving MSR going forward.

Andrew, Analyst: Thank you. Topi Manner, CEO, Elisa: Q4. Andrew, Analyst: Thanks.

Operator, Conference Call Operator: The next question comes from Paul Sidney from Berenberg. Please go ahead. Paul Sidney, Analyst, Berenberg: Oh, that’s great.

Thank you. Good morning, everyone. I also have two questions, please.

First one really following up from Andrew’s question on Finnish Mobile. You’ve made it clear in the past few quarters that it’s not acceptable for you to lose market share. I just wondered, have you seen the competition back off because of this stance over the past few quarters?

Is that why the market environment has improved? Because you’ve taken this stance and pushed back on promotional activity? Do you intend this stance from Elisa to continue going forward, or would you consider giving the market a bit more room to breathe?

Is the first question. Then just secondly, I was intrigued by the fiber acquisition that you’ve announced in Lapland. It’s obviously very small, 8,000 customers, but are you seeing the regional fiber players starting to really struggle given that they really lack scale?

Is there opportunities going forward to make more of these bolt-on acquisitions that are obviously very value-creating? Thank you. Topi Manner, CEO, Elisa:

Yeah. If I start from the fiber part, I think that the regional fiber players are open to discussions related to consolidation, and we see fiber assets at play on the market. We have strict conditions for value creation and for geographical location.

If we see assets on the market that are meeting our strict criteria, then we are willing to do similar bolt-on acquisitions that we did in Lapland in this case. Then could you please repeat the mobile service questions so that I’m completely sure that what was your main point related to that? Paul Sidney, Analyst, Berenberg:

Yeah, sure. It’s just that you’ve made it very clear that you’re not prepared to lose market share and heavily push back in the second half of last year on the competition that you faced. I was just wondering, do you think that the improvement we’re seeing is because you’ve pushed back, and is that a stance you expect to continue going forward?

Topi Manner, CEO, Elisa: Yeah. I think that, of course, the overall market dynamic is an equation of all the actions that all players are taking on the market.

I think that what is worthwhile to note in this regard is that we do not see the mobile virtual network operators having a big impact on the market. The competitive dynamic has been especially a dynamic between the three established players on the market. When it comes to market shares, when you look at the post-paid mobile subs during this quarter, consumer and corporate included, our market shares were stable.

We are keeping our market shares. Clearly, the market has returned to normalized levels. At least in our case, we have not seen competitors disclosing their numbers of Q2 yet.

The bottom line is that when we look at our mobile indicators, no matter whether we look at new sales price, whether we look at churn, or whether we look at sales and marketing cost, whether we look at the net adds, we see normalized levels. Of course, that is very encouraging. Paul Sidney, Analyst, Berenberg: That’s great.

Thank you. Could I just have a quick follow-up, please? You mentioned returns when you’re talking about acquisitions, and clearly the data center projects have got to make an acceptable return.

Have you disclosed or could you give us an idea about what the hurdle rate is for these projects and acquisitions? Topi Manner, CEO, Elisa: We will make sure that the capital returns are attractive and cash flow profile is attractive. Nothing more to add there.

Paul Sidney, Analyst, Berenberg: Perfect. Appreciate your time. Thank you.

Operator, Conference Call Operator: The next question comes from Ondrej Cabejsek from UBS. Please go ahead. Ondrej Cabejsek, Analyst, UBS:

Yes, good morning, everyone. Thank you for the presentation. I have also got two questions, please.

One also on the especially mobile service revenues, but coming from, I guess, a bit of the opposite angle. What we know is that last year, the competitive environment started deteriorating in the third quarter, then was the worst in the fourth quarter. What we also know is that a lot of the people who got on promotions at that time had these promotions for 12 months, and after 12 months, they should be kind of rolling off of these discounts onto regular pricing.

I think previously you expected something like a three-month lag in terms of the kind of full pricing to ARPU translation due to these contractual issues that you pointed out. You seem to be more in line with the peers saying that’s going to be a bit longer than that, and I think all of that is clear. At the same time, you’re flagging that there is an expected improvement in 4Q 2026, and this is where I struggle to understand the situation a bit.

Because if the worst promotions were given in 4Q 2025, and there is, as you say, something like a four-month delay in terms of when you sign the contract up until when the pricing is actually effective, shouldn’t it mean that 3Q 2026 is when things deteriorate further, given this lag? The impact of those 12-month promotions actually lasts for a year, and only mid-2027 is when ARPUs start to really pick up again as people roll off of these promotions.

I guess I’m just confused with kind of trying to put all of those pieces of information together, if you can help me out, please. Topi Manner, CEO, Elisa: Yeah.

If we decompose that a bit, first of all, if we look at the price levels of new sales as of now, we are on significantly higher levels than we were during the most fierce campaigning in Q3 and Q last year. There’s a big difference. That, of course, if that moves even partly to the price level of those fixed-term contracts being renewed during the fall of this year, that will be very supportive of Q4 mobile service revenue.

That is something that we need to keep in mind. I think that the time lag especially comes from this one-time effect of our share of fixed-term contracts, as well as competitor share of fixed-term contracts rapidly increasing during the fall of last year. That also means that the overall volume of number transfers between competitors on the Finnish market during the first half has been little lower, and therefore the weight is smaller in terms of impacting the MSR when it comes to new sales.

Ondrej Cabejsek, Analyst, UBS: Thank you, Topi. I guess what you’re saying is that the step down from the promotional activity will be in the base kind of 3Q, then the underlying trends, which are still the healthy kind of 4G to 5G upsell and so forth, will eventually kind of be the higher impact and overall a positive one, combining those two things together starting 4Q. Then as we progress in 2027, potentially, best case scenario, you continue to have the positive underlying trends.

As people roll off these kind of 12 months discounts With that for whatever months delay, there should be a double positive starting say mid or 2Q 2027 or something mid 2027. Is that roughly the correct understanding? Kristian Pullola, CFO, Elisa: Maybe rather than confirming your thinking, but maybe the way to think about this is that the lag on transfers is actually longer than the lag on renewals.

That’s in a way maybe the dynamic to reflect here. When it comes to renewing the one-year contracts that were entered into last year, there will not be a similar lag there as there was when we had transfers to us, some of which were fixed-term contract transfers. They didn’t kick in at sales.

They only kicked in when those contracts ended. That’s what is creating this dynamic where we are feeling the headwind now and there will be a tailwind then going into the second half, especially visible in Q4. Ondrej Cabejsek, Analyst, UBS:

Okay. Thank you. If I may, second question.

Just on the flow through of the cost savings, I think we’re seeing that on a growth basis. If I break things out, obviously, in the past two quarters you had high single-digit million savings year-over-year in employee costs and I guess some underlying cost savings in other areas, including the commercial costs. The net translation into positive EBITDA growth on a stable top line is still pretty limited.

I was just trying to understand if that is primarily the responsibility of the top line in terms of the dilution of these efficiency gains, or is there something else going on maybe under the hood in terms of reinvestment, et cetera, that we cannot really appreciate from the outside? Kristian Pullola, CFO, Elisa: Maybe a couple of dynamics. First of all, when we talked about EUR 40 million cost savings, that was across the board, kind of CapEx and OpEx.

Clearly the OpEx is more visible in the P&L. Yes, there is an element of reinvestment here also, and the flow through to EBITDA from those cost savings is impacted by the headwinds that we are seeing from the revenue line. It is in a way a mixture of all of the above that you listed.

The program is on track. Most of the savings are in and in that sense, that has been a great help when it comes to being able to grow EBITDA both in Q1 and Q2, even in this revenue environment. Ondrej Cabejsek, Analyst, UBS: I appreciate that.

Thank you. Operator, Conference Call Operator: The next question comes from Fredrik Lithell from Handelsbanken. Please go ahead.

Fredrik Lithell, Analyst, Handelsbanken: Thanks very much. Thank you for taking my questions. I have a few small detailed questions.

The PSTN that you’re closing down, do you foresee any further costs relating to that in coming quarters, or do you have everything behind you now in terms of cost? Or do you have any write-offs or something to do on old equipment? Would be interesting to hear.

The second question on data centers and your investments, I appreciate you are careful on sort of the return metrics and all that stuff, but can you give us some timeline on when you do your CapEx work and when you foresee your positive cash flow to contribute to the group? What’s the time lag between those two? Thank you.

Kristian Pullola, CFO, Elisa: On the PSTN, this is now kind of materially behind us, so it will not be a drag to our revenue compare anymore in a similar way as it has during the ramp-up period. The material parts of the costs have been booked. We are now against those kind of provisions, dismantling some of the air cables and so on.

I do think that don’t expect us to refer a lot to that anymore as we go forward. When it comes to the data centers, I will not give you much more detail. I will only repeat what we said earlier, that the overall capital returns and the cash flow profile from those deals is attractive.

Again, when we say that, we look at both inflows and outflows. We made a separate statement that the outflows, when it relates to CapEx, will be done outside of the 12% CapEx envelope that we have. The cash flow attractive comment refers to both inflows and outflows.

Fredrik Lithell, Analyst, Handelsbanken: Okay, perfect. Take care.

Thank you. Operator, Conference Call Operator: The next question comes from Artem Beletski from SEB. Please go ahead.

Artem Beletski, Analyst, SEB: Yes, good afternoon, and thank you for taking my questions. I will actually ask one by one. Maybe the first one I just wanted to double check comment that was made actually by Kristian earlier to call.

Do you really expect that the EBITDA in Q4 will be higher compared to Q3 this year? Because I think looking at the historical seasonality, so the difference has been opposite roughly by close to EUR 10 million. Q3 always been better.

Is this year really so much Q4 loaded in terms of growth outlook? Kristian Pullola, CFO, Elisa: Yeah.

Remarks, that is what I said. That was the intention of the communication. Topi Manner, CEO, Elisa: Q4 is as we see it- Artem Beletski, Analyst, SEB: Okay

Topi Manner, CEO, Elisa: as we see it, given the dynamics this year, going to be better than Q3, and in the past it’s been the other way around. Artem Beletski, Analyst, SEB: Okay. Very good.

Maybe then the second question was relating to some nice first deals what you have done around data centers and maybe in terms of business opportunity could you somehow frame it? You mentioned about deals covering at least 100 MW capacity data center investments. How much this type of projects could contribute to your revenues, or what is the business opportunity?

Maybe the other general phenomena what we see on Finnish data center market is that many of these mega projects are actually built over long period of time and in many phases. How it works in terms of connectivity CapEx being done? Is everything done basically upfront or are those investments also gradual over longer time period in this bigger project?

Topi Manner, CEO, Elisa: If I start with the overall business dynamics, then Kristian, you can come in with the CapEx timing. What we do need to acknowledge is that this market related to data center is emerging. As stated, it holds significant future potential for us.

The business is very long-term of nature. We see long deals on the market up to 15 years of contracts after a construction period. The long-term nature of the business really needs to be acknowledged.

Therefore, our bottom line in the communication is that when we frame it, we see attractive capital returns. We see attractive cash flow characteristics, and over time, we see notable EPS support for Elisa. That is where we are in this one.

We will have more deals, when we learn more about the market, certainly we will be specifying our view in this one. This quarter marks the start of this large-scale data center connectivity business for us with the first deals being signed. Kristian Pullola, CFO, Elisa: I think just on the CapEx profile of each deal, as Topi said, early days, I’m sure every deal will be somewhat different.

We actually don’t have enough data points to be able to say what will this typically look like other than, as said, we think these are deals that are attractive both from capital returns and cash flow point of view. Maybe with that, let’s move on, and I would like to ask people to limit themselves to one question only that we get through the queue on time here. Artem Beletski, Analyst, SEB: Thank you.

Operator, Conference Call Operator: The next question comes from Felix Henriksson from Nordea. Please go ahead. Felix Henriksson, Analyst, Nordea: Hi, guys.

Thanks for taking my question. I will use my one question on cost efficiency matters. I think on top of the EUR 40 million savings program, you also communicated that you see incremental opportunities to improve efficiency relating to AI.

Can you provide an update on how that progress is going and how successfully have you been implementing AI into your operations and hence gain additional potential cost savings avenues? Thank you. Topi Manner, CEO, Elisa: Kristian can follow on the operations bit.

Generally related to the AI, I would like to emphasize that the way we look at AI is that we see a growth opportunity. We can leverage AI in digital services, in software business, in connectivity business to generate profitable growth. Certainly, we will look into all the usual suspects related to improving productivity, automating processes, looking into AI-assisted coding.

We are already a technology front-runner globally in network automation, and we are moving forward toward autonomous networks gradually with the help of sophisticated AI tools. The long-term picture is that we do see upside in this one. Kristian Pullola, CFO, Elisa: I think when it comes to maturity, we are at different maturity levels in different parts of the organization.

When it comes to leveraging AI for running the networks efficiently, we are very much mature. When it comes to some process areas it’s early days, and we have put in fundamental building blocks to be able to leverage that going forward. In that sense, I don’t think it’s that different from what you see in the market in general.

I do see that this is a big opportunity that will give Elisa a lever over the long term, and we are working on it in a focused manner. Felix Henriksson, Analyst, Nordea: Very good. Thank you.

Operator, Conference Call Operator: The next question comes from Andreas Joelsson from DNB Carnegie. Please go ahead. Andreas

Joelsson, Analyst, DNB Carnegie: Good afternoon. Thank you for taking my question. Back to these fixed contracts, I would like to know what makes you confident that when these fixed contracts that was taken last year in the competition bonanza, when they expire, how confident are you that that will not trigger new increased competition and higher churn?

Just understanding, because there is little room now for you to be able to reach the more long-term target of revenue growth above 4%. Just trying to understand how you model this going forward. Thank you.

Topi Manner, CEO, Elisa: As stated, the mobile indicators have normalized already. When you look at the forward-looking indicators, there has been a notable change on the market already. When we look at the new sales levels as of now in Q2 and compared to last fall, there is a big difference as one of our investor presentation slides indicates.

This competition bonanza, as you referred to last fall, was a market phenomenon. That means that all of the players on the market have a lot of fixed-term contracts to renew. Everybody will be busy first and foremost, taking care of their own customer base.

Then I think that when we look at the market now, we see a stable environment in terms of competition dynamics. That is reassuring related to your question. Andreas

Joelsson, Analyst, DNB Carnegie: Okay. Thank you.

Operator, Conference Call Operator: The next question comes from Sami Sarkamies from Danske Bank Markets. Please go ahead. Sami Sarkamies, Analyst, Danske Bank Markets: Hi.

My question would be on the dispute with MTV. What financial impacts should we assume from this? I’m thinking impacts on future revenues, costs, and then customer churn.

Topi Manner, CEO, Elisa: The one-word answer would be neutral. We are happy to have that renewed contract with MTV as of now. We will be deepening our collaboration with them.

We will be coming forward with new offerings to customers over time. That’s where we are currently. When you look at the financial impact during the course of this year and beyond, it will be neutral.

We did receive customer feedback during the blackout. I’m sure MTV did as well. When we look at our churn numbers in our entertainment services and so forth, we do not see a big impact.

Neutral is the answer. Sami Sarkamies, Analyst, Danske Bank Markets: Okay, thanks. Operator, Conference Call Operator: The next question comes from Ajay Soni from JP Morgan.

Please go ahead. Ajay Soni, Analyst, JP Morgan: Hi, guys. Thanks for taking the question.

Just a quick one on ISS EBITDA growth. I think as people have mentioned previously, maybe structurally the double-digit growth is becoming more challenging. I think, does this make it more difficult to materially step up your EBITDA here?

When I look at H1 OpEx, for ISS, it was up 6% and revenues are lagging this. Just wanted to understand your outlook here for EBITDA growth in this business. Topi Manner, CEO, Elisa: What we will need to remember related to the software business, that software business with the license income is inherently more volatile than our classic telco business.

That’s one aspect to keep in mind. Another one is that Q2, typically in software business, is seasonally the weakest. We do see a way forward to improve our EBITDA gradually in the Industriq business.

On the back of the bolt-on acquisitions that we have been doing in the past, we do have synergies that we can capture, cost synergies that we can capture in this part of the business. As mentioned, we will be doing specific measures to boost the revenue in Industriq as well as take home synergies in terms of cost. Ajay Soni, Analyst, JP Morgan:

Great. Thank you. Operator, Conference Call Operator: The next question comes from Ulrich Rathe from Bernstein.

Please go ahead. Ulrich Rathe, Analyst, Bernstein: Yeah, thanks very much.

I want to go back to the data center investments there. These are very big projects for the people building them. I would assume that they are quite keen to get some help with the financing.

Is there anything unusual in the contract structures that you’re negotiating in terms of risk sharing, in terms of payment schedules, anything of that sort that would make the connectivity business in the data center sort of fundamentally different to connecting a new building or anything of that sort? Is there anything that you’re faced with in these negotiations that is actually different from "the normal connectivity business?" Thank you.

Kristian Pullola, CFO, Elisa: Yes. I would maybe say rather the opposite. What I mean with that is that the data center investments for the investor and the operator are huge investments.

For those, I’m sure they are having financing discussions with the vendors that provide the majority of the CapEx going in. The connectivity part is relatively small, but it’s super critical for being able to operate the data center. Because of that, they want a vendor who is reliable, who can deliver on time, and thus our strengths actually come through there.

I think that is also then visible in the kind of asks that we have been seeing when it comes to contract terms and so on. I think we are in a good position here because they need us, they see our strengths, and our portion out of the totality is a relatively small portion. Ulrich Rathe, Analyst, Bernstein: Very clear.

Thanks. Operator, Conference Call Operator: The next question comes from Abhilash Mohapatra from BNP Paribas. Please go ahead.

Abhilash Mohapatra, Analyst, BNP Paribas: Yes. Hello, good morning, thanks for taking my question.

I had a question around dividends and cash flows, please. I guess if you look at recent years and if you see your comparable cash flow, then sort of strip out positive working capital impact, you’ve not really covered your dividend payments in recent years. This year, again, in H1, you mentioned the working cap headwind, but again, ex working capital, cash flow is basically flat year-on-year if we compare H1 this year versus H1 last year.

Cash flow hasn’t really grown on an underlying basis. In this context, we’d just be interested to hear your thoughts on how you think about your dividend growth going forward. Are you just sort of comfortable not covering dividends with cash flow and continuing to link it with earnings per share, or do you think it’s important to have the dividend sort of covered by underlying cash generation?

Thank you. Kristian Pullola, CFO, Elisa: Again, I think we have a strong focus on driving cash flow.

The reason why we have been able to pay somewhat higher dividends than what the earnings would have allowed for is because of the strong cash flow. I don’t see that there is any change in that dynamics. That’s how we’re going to continue to manage the business and also generate the ability to continue to pay dividends.

I’m not sure I fully understand where you’re coming from with the question. Operator, Conference Call Operator: Yeah. Kristian Pullola, CFO, Elisa: Just to- Abhilash Mohapatra, Analyst, BNP Paribas:

Yeah. Kristian Pullola, CFO, Elisa: Reconfirm, our dividend policy is intact, and we see also levers in our disposal to positively impact cash flow. Abhilash Mohapatra, Analyst, BNP Paribas:

Okay. Thank you. Just to clarify, can you maybe give us any color around working capital, please?

I mean, obviously last year it was quite a big positive boost, I think around EUR 45 million for the full year, which was more than 10% of your final sort of cash flow for last year. This year we’ve seen a reversal during Q2. How do you sort of see that evolving through the second half of the year, please, when it comes to working cap?

Kristian Pullola, CFO, Elisa: First of all, we didn’t see a reversal in net working capital during Q2. We saw flat development in Q2. We didn’t get the exceptional benefit that we saw in Q2 last year, but development was still stable.

I’ve talked about this now each quarter that we’ve done a lot of work on inventories. That’s from where the majority of benefits have been coming from. I do see further opportunities for us to improve on both the payables as well as on the receivables side.

In that sense, we’ll continue to work on those levers. When it comes to the operating cash flow, when it comes to releasing capital from the business, that’s another story where we are also actively looking at all the levers that we have, and that builds to Topi’s answer, that we have levers within our control that we can drive better cash and capital performance going forward. That supports, in a way, the ability to pay dividends.

Abhilash Mohapatra, Analyst, BNP Paribas: Okay. Thank you very much.

Operator, Conference Call Operator: The next question comes from Max Findlay from Rothschild & Co. Please go ahead. Max Findlay, Analyst, Rothschild & Co: Hi.

Thank you for taking the time to speak to us today. My question’s regarding ISS. I wonder whether M&A has contributed to the deterioration organic performance, and if too much M&A has left the division a bit unwieldy and unsuitable.

At the front of my mind are the acquisitions made in 2024, especially the large sedApta acquisition. Any color you can provide on the performance of these businesses acquired in 2024 would be really useful, as they were quite material to the growth of the division. Would you also be open to further disposals of non-core ISS assets?

I guess the non-telco operations of ISS. Thank you. Topi Manner, CEO, Elisa: When we look at the M&A in general in ISS, and sedApta acquisition in particular, we do not see causality between those deals and the current postponement of deals that is driven by geopolitical and economic uncertainties.

We are happy with the acquisitions, and we are well on our way in terms of integrating them. That’s where we are related to that question. Then your latter part of your question was pointing to whether we would be open to bolt-on acquisitions in ISS space going forward.

The answer would be yes. If we have a clear strategic fit, and we see a value creation possibility, then we are ready to allocate some capital to bolt-on acquisitions in ISS. But we are clearly in the bolt-on category in that space.

Kristian Pullola, CFO, Elisa: Maybe just tackling your question on, are we kind of pruning the portfolio? I would say that that is the mandate of Mikko to see that, okay, it’s always optimal. There might be certain elements that don’t belong there, and there might be certain needs to do bolt-ons.

It kind of goes both ways. But the bulk is correct and something for us to leverage in a more synergistic manner going forward. Topi Manner, CEO, Elisa: Yes.

Max Findlay, Analyst, Rothschild & Co: Brent, thank you very much. Operator, Conference Call Operator: There are no more questions at this time. I hand the conference back to the speakers.

Vesa Sahivirta, Head of Investor Relations, Elisa: Yes. Thank you, and thank you for all your questions. Unfortunately, we couldn’t take more questions during the Q&A session because of the time restrictions here.

Now we wish you all a very nice summertime and until the next event. Thank you. Bye-bye.

Kristian Pullola, CFO, Elisa: Thank you. Bye-bye.