Ericsson swung back to a profit during the fourth quarter of 2019 despite a 4% year-over-year slowdown in 5G activity in North America.

CEO Börje Ekholm said 5G is progressing in North America, but uncertainty over the outcome of T-Mobile US and Sprint’s long-delayed attempt to merge prompted one U.S. carrier to reduce sales during the final quarter of 2019. “The negative growth in North America was more than offset by growth in Asia and the Middle East,” he said in a prepared statement.

Network equipment sales in North America decreased 9% compared to the previous quarter, underlining how important the U.S. market is for the vendor particularly in the early wave of 5G deployments. North America contributed the “lowest share of total sales for some time,” Ekholm said.

During an earnings call with analysts, Ekholm said Ericsson is less interested in the T-Mobile-Sprint outcome as much as it wants to see an outcome reached so the operators can get back to planning and spending as either a standalone or a combined entity. “Whichever way it goes, we believe that reduced uncertainty will actually lead to spending because there is a need to do that,” he said, according to a Seeking Alpha transcript. “Of course the investments will vary depending on the outcome, so that’s why it’s very hard to speculate about it.”

The company also warned analysts that it forecasts higher costs associated with 5G this year compared to 2019. Executives said the increased costs would not jeopardize its financial targets, but the warning still sent company stock down almost 7% in early morning trading.

“We are in the beginning of a technology shift, and our investment to lead in 5G is now starting to yield results,” Ekholm said. “Today, we are a leader in 5G with 78 commercial 5G agreements with unique operators and 24 live 5G networks on four continents.”

The company largely pinned increased costs on its Kathrein acquisition, further investments in digital transformation efforts, security, and more resources for its ethics and compliance program. During the quarter, Ericsson reached a $1.06 billion settlement with the Department of Justice and U.S. Securities and Exchange Commission (SEC) for bribing high-ranking government officials and falsifying financial documents for a 17-year period across six countries.

Ericsson also remains confident that it will earn some 5G contracts in China, but it expects initial margins to be tight. “It is still too early to assess possible volumes and price levels for the expected deployment of 5G in China, and we expect that the initial challenging margins will shift to positive margins over the lifespan of the contracts,” Ekholm said.

The company’s “ambition is to grow faster than the market and we continue to see faster growth,” he said during the earnings call. “We’re winning contracts here based on technology merits.”

Ericsson’s networks business captured 66.8% of the company’s total revenue during the quarter with total equipment sales jumping 6.7% from the year-ago period and nearly 13% from the previous quarter. The vendor banked $470 million in net profit on $6.93 billion in revenue during the quarter.