It’s not going to convert the triangles to fitted arcs. Where this has been critical to me, I’ve projected to a sketch, created the hole there, removed the hole in the original, and “pulled” a new hole into the object in the same place that’s an actual hole instead of a meshed surface. You could do the same thing with the outside curves, but it’s kind of a hassle.
This is really just a limitation of what STL is meant to represent - it’s supposed to be an output format that’s easy to render, it’s an awful interchange format.