Ericsson reported stable revenue but a healthy increase in profit as higher-margin mobile broadband capacity projects had a positive impact, along with growth in the Middle East, China and India.

The company reported sales of SEK54.8 billion ($8.04 billion), down 1 per cent year-on-year but 15 per cent up on the previous quarter. Net profit was SEK2.58 billion, up 76 per cent from the same quarter in 2013 (and up 57 per cent quarter-on-quarter).

“What is important is the strong growth in the company compared to the first quarter,” Jan Frykhammar (pictured), Ericsson’s CFO, told Mobile World Live, adding that the lack of revenue growth over the past year is not a major issue.

Capacity projects in advanced LTE markets have been particularly beneficial to the company’s financial performance.

Ericsson’s gross margin was 36.4 per cent in the second quarter, compared with 32.4 per cent a year earlier. Lower restructuring charges and increased patent income also played a part in this.

“The business mix is very much around mobile broadband capacity. With that kind of business comes higher margins,” Frykhammar said.

Continued capacity business in North America saw revenue for the region increase 24 per cent compared to the previous quarter, although it was down 1 per cent year-on-year due to large mobile broadband projects in the region peaking in 2013.

But the executive added that coverage projects will become more of a factor in the second half of the year as work starts on LTE projects in China and Taiwan, as well as the five-year contract to upgrade 2G and 3G networks and roll out 4G as part of Vodafone Group’s Project Spring initiative.

While boosting revenue, this work will offer smaller margins: “The deliverables are more hardware-centric, more services type of work,” Frykhammar explained.

Ericsson president and CEO Hans Vestberg said the investment climate in India is improving, following spectrum auctions held in May. Revenue from India during the second quarter was SEK1.6 billion, up 29 per cent year-on-year.

“India has been very slow with the network side for years and now we start to see investment,” Frykhammar noted.

The Middle East also saw healthy growth, generating SEK4.5 billion in sales, a 13 per cent year-on-year increase.

As for Europe, Frykhammar said investment has already started to pick up: “Now what is happening is operators are putting more investment into current networks.” Sales in Western and Central Europe for the second quarter totalled SEK4.6 billion, up 1 per cent year-on-year.

Vestberg added that the company had increased R&D investment in intellectual property and the addition of modems and the Mediaroom IPTV platform to the business. The company is also executing on profit improvement activities, according to its CEO.