Ray Le Maistre, TelecomTV (00:05):
Building and running the world's AI superhighways to connect the growing number of data centers being lit up is a key role being played by the world's fiber infrastructure operators, one of which is Arelion. I'm talking today with Arelion, CEO, Daniel Kurgan, to get an update on the company's strategy and its take on the market. So Daniel, thanks so much for joining us today. Great to see you. So maybe to start, can you give us a brief overview of Arelion and its role in the communications networking ecosystem?

Daniel Kurgan, Arelion (00:40):
Sure. And thank you for having me again. So as many of you know, Arelion is the former Telia Carrier. It used to be. So the international business of Lia was carved out in 2020 and acquired by Infrastructure Fund for Infra. That itself belongs to state owned Swedish Pension Fund. We are the world number one IP backbone, which is of course our pride. And we have a network of about 77,000 kilometers of mostly terrestrial fiber, but also submarine cables and 350 points of presence. I used to say we are very much a northern hemisphere business with a big half of the business in Europe and an increasing part in North America extending to Mexico and in the northern part of Asia. That's about us in the nutshell.

Ray Le Maistre, TelecomTV (01:54):
Okay. And what kind of customers do you have? Who are you providing services to?

Daniel Kurgan, Arelion (02:00):
So Arelion is originally a big wholesale provider, and that is still what we do a lot. Now when we are talking about wholesale, we are extending this to many different segments from the pure traditional telcos and BroadB providers to hyperscalers, CDNs and the likes. But we are also delivering services to large enterprises across US and Europe.

Ray Le Maistre, TelecomTV (02:35):
Now, Arelion has been in this market a long time and is well known for identifying and quantifying industry trends. What, if anything, has changed in the data transport services sector since you became the company CEO in late 2023? I mean, for example, are you seeing any evidence that AI workloads are moving the needle on data traffic volumes?

Daniel Kurgan, Arelion (03:01):
Yes, we do see that. Well, we see different things. First of all, the growth of IP traffic doesn't diminish, and that is also partly a consequence of AI workloads increasing. But what we see, like many of our peers in the industry is an unprecedented demand for data center to data center connectivity, and even more in North America than in Europe. But Europe hopefully is catching up and not only the demand is increasing, but we also see some of our customers asking for bandwidth that is completely unprecedented, including, of course, dark fibers and number of fiber repairs that have never been seen and nobody would've imagined five years ago. So yes, it's a big change.

Ray Le Maistre, TelecomTV (04:08):
Now, sovereignty is a massive topic in the industry right now. How does Arelion play a role in enabling sovereign strategies and what business opportunities does the growing interest in digital sovereignty bring to Arelion?

Daniel Kurgan, Arelion (04:25):
I think we can claim that one of the only, if not the only pan-European global connectivity provider that is 100% owned by EU shareholders. And I think these days it is becoming increasingly important and it is now being acknowledged that we can definitely play a role in building indeed sovereign cloud, sovereign AI factories where we see ourselves as I would say, a potentially preferred connectivity partner. That is one thing. On the other hand, we are also, as originally a Nordic company and we own a very dense network in Scandinavia with our own ducts and fibers and well, Scandinavia is a cool place, but a hotspot for data center and the building of new data centers. And that is also where we are convinced we can definitely play an increasing role. There is also an increasing interest in places like Baltics and some parts of Eastern Europe that are naturally connected to Scandinavia. And as you may have seen, we recently announced that we are building a new route across the Baltics, connecting Scandinavia to Poland across the Baltics and all the important Baltic cities. And we do this partly with the financial support of the eu.

Ray Le Maistre, TelecomTV (06:19):
Now you mentioned the Baltics there, and that brings up the topic of security. How is Arelion dealing with the multiple physical and cybersecurity challenges facing long distance network operators currently, especially in areas such as the Baltics?

Daniel Kurgan, Arelion (06:39):
Well, thank you for the question, Ray. It's a good and important question and timely question, I guess. Well, it has been made public that, well, some submarine cables had several incidents in the Baltics recently. Some of them we are involved in or whatever belongs to us. I think it's important to remind the audience then when such things happen. We have very standard procedures. People need to know that there are more than 500 cable cuts all over the world. Submarine cable cuts all over the world every year. And when this happens, I mean the first priority is to make sure that the traffic is restored and that the impact for customers is minimal. And we communicate with our customers. Now in the specific situation in the Baltic, in the Baltics, there are of course serious assumptions that some of these cuts have been of a voluntary nature.

(07:45):
And it is a very good thing that now all the countries around the Baltics are joining efforts to monitor the region and using new technologies that will definitely help. And where, I mean, the private operators with of will of course support and collaborate, but this is something that needs to be addressed by countries and government. Private companies cannot monitor ac. So I guess that's the most important for us, once again, is to at all times ensure diversity, redundancy and minimal service impact for customers while cooperating with government and the several authorities that are now taking, I mean, a lot of very good initiatives to make the Baltic safer.

Ray Le Maistre, TelecomTV (08:44):
Yes, absolutely. And then in terms of cybersecurity for a company like Arelion, is the threat of potential incursions are growing as it is for enterprises? And is this something that you've had to focus a bit more on in the last couple of years?

Daniel Kurgan, Arelion (09:06):
Yes. Like every company and well, unlike every company we have, I mean a security department that we made more robust, robust, and that we equipped with more tools, and we have a whole governance around this whereby we hope that everything we can do to protect, to protect the network has been done. And there is a very big difference between network security and IT security. Right? Again, we've also ensured that, I mean, there are all the necessary segregations and backup. Now, are we completely immune? I would say no because nobody is. But yes, it is increasingly important. Yes, we have increased our capability and our robustness with latest tools and technology and an associated governments.

Ray Le Maistre, TelecomTV (10:11):
Now finally, the long distance fiber network sector is known for its pretty thin margins and intense competition. How can a railing grow its revenues and margins in the future?

Daniel Kurgan, Arelion (10:26):
Well, that's a very good question. Thank you. Well, I guess when it comes to Arelion, we have a strategy of what we call selective expansion. We cannot and don't want to be everywhere. So we are very much focused, of course, on our core Nordic region where we own very strong network assets. We are very much focused on North America, extending to Mexico, and then some parts towards the mode of the east of Europe. We stay away from what is called the flux, where I mean, many of our very distinguished competitors are, but the competition is cutthroat, and we believe that how can we grow? Well, again, Arelion is a bit of a specific animal, I would say, in the space, given the fact that our revenues are coming from both the IP layer with IP transit, where we are world number one, and from the transport layer with the waves and ethernet. So we've got the transport and we've got the service, and we have one leg in Europe and one leg in America. So we believe that this, I would say what I call double de-risking still provides reasonable growth opportunities in the future.

Ray Le Maistre, TelecomTV (12:04):
Okay. Well, it'll be interesting to see how the AI infrastructure development continues in the next few years. Whether the investments talked about actually come to fruition and end up in that infrastructure and how digital sovereignty plays out and impacts the potential of companies like Arelion. So Daniel, thanks so much for joining us today. Great to talk to you and look forward to catching up in 2026 to find out how the market is developing.

Daniel Kurgan, Arelion (12:36):
Yes, for sure. Thanks for having me, and definitely looking forward to the next conversation. Thank you.