Page 1

“New ways of thinking.” Swedish state-owned Vattenfall is Europe’s fourth largest generator of electricity, and the largest generator of heat energy. Eltel Networks is a key partner with Vattenfall in a project to replace traditional electricity meters for the company’s 375 000 clients in Finland with Automatic Meter Reading (AMR) devices. We spoke with Tapani Liuhala, Head of Distribution Finland for Vattenfall’s Nordic Distribution business unit, about Eltel’s contribution to this important project. “In the past, we performed meter changeouts internally, but this project is so massive that we had to look for outside partners. AMR has many benefits for our clients and for us. It enables us to do accurate invoicing, and have an extremely accurate picture of our network status. We can measure network losses and do better planning for the future. By not having to send meter readers to remote locations, the cost is very competitive compared to traditional metering. We started planning for this project, which can certainly be considered a very big installation project for all of Europe, in 2004. Eltel performed the first rollout in May 2005 for an initial 4 000 clients. Currently, they are working on a very fast track (15 000 new meters a month) in order to complete the 375 000 changeouts onschedule in November 2007.


The total geographic area we are talking about is 55 000 square kilometers in which we have 60 000 kilometers of powerlines. Our clients are mostly in small towns and rural areas, so minimizing the time lost in callbacks or no-shows is extremely important. Eltel developed new IT systems to schedule the work with our clients and to optimize the efficiency of their field technicians. Their Mobile Workforce tool using GSM/GPRS technology and handheld computers is very impressive from my perspective. Eltel is bringing needed new ways of thinking to this industry and to Vattenfall. They are extremely productive, very flexible to work with, and we are pleased with their performance.”

Distribution Network Ltd. is the state-owned subsidiary of Eesti Energia responsible for electricity distribution to 500 000 customers in Estonia. Eltel Networks is one of the key partners in maintaining Estonia’s distribution network, servicing about 35 000 km of lines and 9 000 substations. We recently had the opportunity to interview Margus Uudam, CEO of Distribution Network Ltd., about his perspectives.

“Aptitude and attitude.” “Distribution Network has 1 000 employees. We are a natural monopoly. As such, it is important for us to have competition all around us. This is how we benchmark and improve. There is quite a lot of change taking place in our business. Our first priority is to be more customer-focused. We are increasing investments dramatically, but there is still much to improve in terms of quality (voltage stability) and availability (no unplanned interruptions). About 5-6 years ago, we made the initial steps to outsource the construction and maintenance aspects of our business. We awarded Eltel a large contract for maintaining the Western region network. Our goal is to obtain the best service at the best price. Since I was not in the electricity business before, I had not heard of Eltel until I joined the company. I really didn’t expect


innovation from a supplier, but was surpised by Eltel. They are regularly coming to us with new ideas and ways to improve our internal procedures. A supplier can have the right procedures, quality systems, audits, and controls. But, you can never get the maximum out of a supplier without the right attitude. I see that Eltel’s attitude is perfect for good cooperation. They have even turned out to be a good partner in times of crisis. Only one month into this job, we were hit with a huge storm (Gudrun). Over 100 000 customers were left without electricity. The weather conditions were as bad as you can imagine. Eltel worked side-by-side with our people, day and night, even though they were exhausted. We got all the power restored. In times of crisis, you learn who your real partners are.”

Fingrid is a public limited company responsible for the national grid in Finland. There are 14 000 km of transmission lines and 105 substations in the national grid. We recently spoke with Kari Kuusela, Director of Asset Management about Fingrid’s experience with Eltel.

“A strategic partner.” “We are entering a period of increased investment in the grid in Finland. A very strategic investment now under construction is the transmission line between the Olkiluoto (the site of a 1 600 MW nuclear power plant under construction) and Huittinen. We selected Eltel to do the construction of this 64 km 400 kV line. The building of this line is really challenging since there will be strictly defined outage periods. Our experience with outsourcing has actually been an evolution, rather than a revolution. Our predecessor companies divided their grid business, their maintenance business, and their construction business into separate subsidiaries. They recognized that different competences are required to build and maintain transmission networks. Eltel is one of our strategic suppliers. The latest contract with them is for four of the six areas in our national grid. They have always been in the forefront in developing new things for the overhead line business. For example, we jointly developed a system with handheld computers for the workforce. When Eltel technicians inspect a line, they enter the


information into their PDAs, which goes directly into our database. We now have an extremely good historical database about our equipment. Another example, now that we have common European standards for overhead lines, is that Eltel was the first to design the towers to meet these new standards. We participate in the International Transmission Operations & Maintenance Study (ITOMS) of nearly 30 leading transmission organizations. Every time we have participated in ITOMS, we have been in the top three companies internationally. I think this is because we have good processes and practices – in large part contributed by suppliers like Eltel. Partnership is a fashionable word in business. In some organizations, it doesn’t really mean much – there is no mutual respect and no mutual benefit. But, Eltel has been a strategic partner with Fingrid for many years – in the truest sense of the word.”

“Benefit to have EL and TEL together.” With 29 million customers, TeliaSonera is the leading telecommunications company in the Nordic and Baltic region, and also has strong positions in mobile communications in Eurasia, Turkey, and Russia. Eltel Networks has a long and successful track record with TeliaSonera in Sweden, and has now become a key partner in Finland. Markku Järventausta, Division Director of Contracting for the Group Sourcing organization, talks about the advantages of outsourcing and the relationship with Eltel. “Before joining TeliaSonera, I was involved in customer training, internal development, formation of a Chinese greenfield joint venture, and sourcing at Nokia. At TeliaSonera, we organized a Group sourcing function. Instead of purchasing in a distributed fashion, we make our selections centrally. Today, we have a better view of the total costs and can eliminate non-quality services. After some long-term contracts expired in 2005, we were able to break through and have real competition for network services in Finland. Eltel has partnered with us for many years in Sweden and is now taking advantage of the competitive situation in Finland. They are bringing new capabilities and a new mindset to our business. In certain Finnish regions, Eltel is our face to the customer, providing ADSL connections and last-mile interconnects. Their target is to perform about 25 000 installs for us this year. We


are also very happy with their ramp-up in three new areas for fixed network fault repair. They do construction for our fixed and mobile networks, and maintain the physical sites for our 9 000 base stations. It is a big benefit for us that their technicians have experience in both electricity and telecommunications. We’ve been able to achieve a significant reduction in broadband delivery costs with the help of Eltel. They are working with us in developing a common platform for machine-to-machine interfaces and to harmonize the broadband product delivery to further reduce our costs. What I like about working with Eltel is that we get management attention and extremely fast response. They come to us with ideas and identify opportunities for mutual savings. Of course, we also like the flexibility they offer us in resource loading. I’m very happy with the Eltel mindset. They are devoted to doing what we want to do.”

Hans Lundin Purchasing Manager Svenska Kraftnät

“Eltel is a big partner for overhead line construction and maintenance.” Svenska Kraftnät is a state-owned utility in Sweden that runs the national electrical grid, which in total consists of approximately 16,000 km of 220 kV and 400 kV lines, plus the interconnections to neighboring countries. Linking this network of lines together are approximately 135 substations.

“In 1992, Svenska Kraftnät (SvK) split from Vattenfall to become the company responsible for the national electricity grid in Sweden. I have been with the companies (Vattenfall and SvK) for 35 years. An electrical engineer by training, I have worked in technical design, installations (for the southern half of Sweden), and in the hydropower sector. Currently, I am responsible for purchasing and get involved in the large contracts and turnkey packages for new construction and refurbishments. Sweden was among the first in Nordic to build 400 kV overhead lines. Many of these lines have been in place for 40-50 years now and must be modernized. Eltel Networks has worked with us since our beginning as a company. Many of their people came from Vattenfall and know our company, procedures, and networks very well. Any partner maintaining our lines must be very skilled and have experience with 400 kV networks. They need to know what they are


doing, as we don’t want to be a training ground for inexperienced suppliers. Other important factors are response time (meaning that they must have personnel all throughout the regions they cover) and, of course, a competitive price. Eltel is a big contractor for overhead line maintenance. In addition, they have done considerable new construction for us over the years. They have the manpower and the heavy machinery to install the overhead lines, including top wires (which transmit our own IT signals and protections) and phase wires. We continuously have construction projects on-going in cooperation with Eltel. The volume of building overhead lines is increasing. In addition to cross-border connections, we have to connect the new types of energy production, including wind farms, bioenergy, etc. A modern society needs a secure electricity supply in order to function. Efficiency, safety and long-term planning are three primary aims and maintenance is essential to keep our supply secure.”

TDC Song is a telecommunications operator with a true Nordic network. TDC Song’s competitive advantage is the ability to offer cost-efficient and technically advanced communications solutions (data and telephony) to customers in Sweden, Finland, Norway, and Denmark. We recently spoke with Camilla Sundström, Deputy Managing Director and Technical Director of TDC Song’s Swedish operations about her experience with Eltel.

“Efficient and effective.” “While we offer traditional voice services, our growth is in the data communications area. This is a challenging market area, but we succeed because of our high network capacity and low cost structure. I joined the company in 2003 after a 19-year career with Ericsson. With my technical background, global product management experience, and operational experience in Europe and North America, I was part of the management team brought in to reshape the company. My first priority was to consolidate our position and dramatically improve efficiency. That is where outsourcing comes into the picture. When I came here, TDC Song was using 20-30 different suppliers for field services. Many were local and did not have the geographical presence we needed. You can imagine the management time required to supervise the activities of all these suppliers. So we made the decision to consolidate our field services (installation and maintenance) with one supplier – Eltel Networks. Outsiders may see this as a risk by putting all of our eggs in one basket. But, to me, the risk was the other way – having a fragmented group of suppliers without common processes and


routines. We made the contract with Eltel in late 2003 and were fully operational by 2004. Eltel has the technical skills and geographic presence we need in Sweden – from the North Pole to the top of Europe as we say. We can’t afford to have offices and equipment all over the country, but Eltel can do this efficiently since they serve several clients. We measure Eltel’s performance on a monthly basis. Response times and the decision in meeting delivery dates are critical parameters. We are very pleased with the way that Eltel is performing. They have a humble and willing attitude and are coming to us with new ideas about how they can help us do things more efficiently. We’ve given them added responsibilities, such as fault handling in the field, because of their proactive approach. Eltel can do the field work faster, quicker, and cheaper than we can do it ourselves. They have top competence in the field. Our customers are demanding higher bandwidth and higher quality due to the real-time services such as video-on-demand, VoIP, and IP/ VPN. We’ve been able to grow because we can deliver quality at a lower cost. That is also what we expect and receive from Eltel – high quality at a lower cost.”

Piotr Muszy´nski Executive Director – Sales and Services TP Group

“Stakeholders in our process.” Prior to deregulation, Telekomunikacja Polska (TP) was Poland’s state-owned telecommunications national operator. Today, it is a private company (47.5% owned by France Telecom) with operations serving 9.5 million customers in fixed-line voice, almost 14.2 million mobile customers, and more than 2.1 million broadband internet access users. “TP was not always the innovative company it is today. It had excessively long order cycle times and did not effectively respond to its customers. When I came to the company in 2001, my first task was to create an effective customer service organization. We developed the systems to capture customer information that would help us anticipate customer needs. We quickly developed new services and improved our existing offerings.

contract for nine of our 33 zones in Poland. In December 2007, Eltel added three more zones when it acquired TKC.

As we focused on our customers, we found we could streamline our business and outsource non-core activities. For example, while it is our aim to ensure the quality and availability of our technical infrastructure, we can utilize responsive technical partners such as Eltel.

Eltel is our largest technical partner and maintains almost 40% of our subscriber lines. We are mainly interested in doing business with serious partners – partners who are making investments in modern tools and skilled people. And, partners who view themselves as stakeholders in our overall process to deliver high-quality customer satisfaction.

Our relationship with the companies that today are part of Eltel Networks started in 2002 when we outsourced maintenance and repair activities for our fixed-line network. We selected third-party maintenance companies who also took over approximately 6000 of our employees. After the initial three-year contract, the real competition began. As a result of a tender in 2005, K-TEL (now an Eltel company) won the TELECOMMUNICATIONS SECTOR

Our cooperation today is based upon pure commercial rules and an objective evaluation of Eltel’s performance. We use several benchmarks internationally, nationally, and regionally to measure the quality of service, efficiency of operations, and costs.

While TP owns the overall process and sets the standards for performance, we look to technical partners such as Eltel to help us maintain our competitive advantage in a growing market, which is flourishing as Poland takes its place as one of the newest EU member states.”

“A solid construction partner.” PSE-Operator S.A. was formed in 2004 as the transmission system operator for the Polish power system. It is responsible for ensuring secure and cost-effective operation and maintenance of the national grid and for cross-border exchanges. Eltel Networks has been a key partner in helping PSE-Operator construct and upgrade its transmission network. Jaroslaw Palasz, Director of the Asset Management Division of the Grid Infrastructure Department, talks about the projects undertaken with Eltel. “I joined the Polish Power Grid Company in 1994 after completing my electrical engineering degree. My first job was as a maintenance engineer, before moving to project management, where I was involved in implementing the IT asset management system within our network. In 2003, I was named a Director of the Asset Management Division. Our network consists of some 13 000 km of high-voltage lines (220, 400, and 750 kV) and 94 high-voltage substations. We manage a national and five regional operational control centers within the country of Poland. Currently, we have over 50 active construction investment projects for our transmission lines and substations. These active, and another 70 planned projects, represent an investment of over € 0.9 billion within the next five years. Eltel is currently building a new 80 km 400 kV power line and also upgrading another line from 220 to 400 kV. They are also


modernizing three substations for us (design, replacement equipment, secondaries, and commissioning). In 2005-2006, they performed very well on a cross-border interconnection, where the work had to be done with very short outages. This could show that they have good planning, design, and organizational skills. From its beginning as ZWSE Olsztyn, Eltel Networks has been a solid partner for us. They have the references that show a long tradition and experience. Up to now, they have followed our procedures, fulfilled the processes and have adhered to our insistence on quality. In addition to construction, we cooperate with them in case of emergency situations (such as a hurricane) to do fault repair. As a next challenge, we expect, they will join the group of suppliers having the technologies to perform online ‘live’ work. This means we will not have to switch off lines during maintenance or upgrade work.”

Interview: Customer testimonials for Eltel  

Eltel customer interviews used in Annual Reports. Text and some photos by Ad Hoc Communications.