Ericsson reported a sales surge in China during the third quarter of 2020, boosting its year-over-year revenue in the region by 39%. The company’s resolve to win or expand contracts in China “contributed positively to profits in Q3 and are expected to improve further,” CEO Börje Ekholm said in a statement.

The global COVID-19 pandemic has forced more than 80% of the company’s workforce to work from home, but network equipment sales activity was high enough in China, North America, and Southeast Asia to offset varying declines in Europe, Latin America, and Africa, according to Ericsson. 

“While the pandemic has hurt revenues for several of our customers, and in some cases this has led to a reduction of capex, we have not seen any negative impact on our business, largely due to footprint gains,” Ekholm said. 

Those gains, he noted during the earnings call, particularly in Europe where Ericsson is replacing Huawei equipment in multiple networks, were mostly derived from deals it won out against non-Chinese vendors. 

Indeed, tightening restrictions against Huawei in many countries around the world, present a $27 billion annual opportunity for networking equipment vendors that successfully displace the Chinese juggernaut, according to Rosenblatt Securities. 

Ericsson, which has “the most competitive channels and products in Huawei markets,” could land up to 50% of the displacement opportunity on radio access network (RAN) equipment sales, wrote Ryan Koontz, analyst at the firm.

The Swedish vendor’s ability to win business away from other vendors, likely Nokia in many cases, presents additional upside outside of those deals it might win as a result of Huawei’s woes. 

Ericsson’s total revenue increased 1% year-over-year as the company swung into profitable territory. The vendor ended the quarter with 112 commercial 5G agreements and 65 live 5G networks. 

The company also said it expects its $1.1 billion acquisition of Cradlepoint, which it announced last month, to close in the next few weeks. Ekholm reiterated Ericsson’s plans for the cellular-based WAN provider, framing it as part of a strategy to build an enterprise business. Cradlepoint will join Ericsson as a standalone subsidiary and improve Ericsson’s ability to grow in 5G enterprise, he said. 

Ericsson’s networks division sales jumped 6.1% year-over-year to $4.78 billion. Digital services declined 12% to $1 billion, pointing to lower than expected sales in the company’s legacy portfolio of products. 

“Sales in our legacy portfolio is declining faster than predicted. In the short term, this shortfall will not be compensated by the growth in new offerings and therefore our sales volume is lower than expected,” Ekholm said. 

Managed services slid 14% to about $631 million, due largely to a sales drop in North America, and Ericsson’s emerging business group posted a 3% year-over-year decline to $183 million. 

The company banked $642 million in profit on almost $6.6 billion in revenue during the quarter.