We initiated the coverage of Eltel recently. Eltel is a leading service provider for critical power and communication networks in the Nordics. We view Eltel currently as a turnaround company and, in our opinion, the company’s current strategy is also in line with this. In its current strategy, Eltel is working to replace commoditized type service sales with a more individualized business model with an enhanced offering by developing the scope and specification of the services, as well as the pricing model. Furthermore, it seeks to enter more heavily into adjacent and/or new business areas (e.g. green energy) to broaden the customer base. In our opinion, Eltel’s strategic plans are reasonable, and it is moving in the right direction, including the recent divestiture of the historically loss-making Polish business. However, due to the initial situation, we estimate that a sustainable turnaround could take time for processes to be implemented throughout the organization.
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-Aapeli, Analyst
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