Ericsson’s Q2 2013 sales and operating income may have missed analyst targets, but Jan Frykhammar (pictured), chief financial officer, maintains the Swedish firm is still well-placed for growth.

“The fundamentals of our business remain, which is mobile broadband and data traffic growth fuelled by video,” he told Mobile World Live.

Ericsson posted revenues of SEK55.3 billion ($8.4 billion) during the second quarter, roughly the same as Q2 2012. Analysts, however, predicted SEK56 billion (the average of estimates compiled by Bloomberg).

Year-on-year operating income (including joint ventures) rose from SEK2.1 billion to SEK2.5 billion over the same period, but still fell well short of a mean forecast of SEK4.3 billion in a Reuters poll of analysts.

Net income was SEK1.5 billion, up from SEK1.2 billion, although this included a SEK0.9 billion one-off charge for divestments.

In a statement, chief executive Hans Vestberg said the “macroeconomic situation in Europe remains challenging” and that political uncertainty had increased in the Middle East.

Neither is the strengthening of the Swedish Kroner helping Ericsson. Strip out unfavourable currency exchange movements and second-quarter sales, year-on-year, jumped 7 per cent.

More encouragingly, gross margins increased – albeit slightly – from 32 per cent to 32.4 per cent. This, in part, is due to a shift in the business mix from lower-margin coverage projects to higher-margin capacity upgrades.

For over two years, Ericsson has talked about sacrificing margins for market share through so-called network modernisation projects using multi-standard radio base stations to support 2G, 3G and – when the operator is ready – 4G.

Although Ericsson priced modernisation projects aggressively to secure contracts (and gain market share), the strategy appears to be working in that LTE and other capacity upgrades are starting to come through in Europe and elsewhere.

“We see modernisation projects gradually coming to an end this year,” said Frykhammar. “And once these projects do end, we can then engage with our customers about capacity upgrades and LTE. We’re already starting to see this shift in Europe and places where we’ve had multi-standard radio for some time, such as North America and Japan.”

Indeed, using its own measurements, Ericsson claims it has regained number one position in Europe when it comes to mobile infrastructure market share.

But short-term growth in North America – Ericsson’s biggest market with sales of SEK15.3 billion in Q2 2013 (up 18 per cent year on year) – is unlikely to be as strong as it has been recently. The Swedish firms says two major mobile broadband coverage projects peaked in the first half of 2013.

“There will be higher uncertainty in North America during the second half,” conceded Frykhammar.

But there are major growth opportunities as well, given that 4G licences have yet to be awarded in Russia and China.

Frykhammar would not be drawn, however, into answering questions about whether or not investigations into Chinese suppliers’ activity in Europe might harm the chances of western suppliers gaining 4G contracts in China.

In Ericsson’s networks unit, sales increased 8 per cent to SEK28.1 billion when currency exchange movements are factored out (only 1 per cent when they are factored in). LTE and HSPA deployments, particularly in North America and Latin America, helped growth. Sharp falls in GSMA and CMDA sales, in China and North America respectively, nonetheless continue.

The Swedish firm says it’s also seeing lower business activity in South Korea due to delays in releasing additional LTE spectrum.

Ericsson’s global services unit saw reported a sales rise of 3 per cent, to SEK24.9 billion.

Revenue at support solutions tumbled by 33 per cent, to SEK2.3 billion. Ericson attributes the decline at support solutions to an exceptionally strong first half of 2012 (particularly IPTV) as well as a decline in BSS sales in Latin America and the Middle East.

Ericsson also used its financial results to emphasise its continued push into TV and media, highlighting earlier announcements of its intention to acquire Microsoft’s Mediaroom and Red Bee Media.

“We believe fundamentally in the convergence between TV and telecom,” said Frykhammar.