Nokia reached some semblance of stability during the final months of 2019 after suffering challenges related to costs and heightened competition amid the first wave of 5G deployments.

The Finnish equipment and software vendor’s first-generation 5G equipment carry high costs that have impacted its profit margin and the company says a new generation of 5G shipments got underway during Q4. Nokia’s 5G radio access network (RAN) equipment, which features a new system-on-a-chip (SoC), comprised 10% of its 5G product shipments during the quarter, according to the vendor.

The company, which expects the second-generation equipment to deliver greater performance at lower costs, said the new hardware will comprise 35% of 5G shipments by the end of 2020, 70% by the end of 2021, and all 5G products it delivers by the end of 2022.

“We have faced challenges in mobile access and in cash generation,” Nokia President and CEO Rajeev Suri said in a prepared statement. “We will have a sharp focus on these two areas over the course of 2020, which we believe to be a year of progressive improvement as the actions we have underway start to deliver results.”

He noted that increased shipments of Nokia’s second-generation 5G portfolio of products will carry lower costs and improved performance and management of network services. “While I believe that 2020 will present its share of challenges, I am confident that we are taking the right steps to deliver progressive improvement over the course of this year and to position us for a stronger 2021,” Suri said.

During the previous quarter, Nokia slashed its profit outlook through 2020 and shares remain nearly 20% lower than late October 2019. The company has shed 32% in total value during the last 12 months.

Nokia also reiterated to investors that 2020 will be relatively flat compared to 2019 and that efforts to increase its market share in China will continue to impact profitability.

The company also discontinued its COO role during the quarter and Joerg Erlemeier, who previously held that position, left the company at the end of 2019. Nokia’s sagging financial performance is also driving its ongoing goal to reduce costs by $556 million by the end of 2020. The vendor last month announced plans to cut about 180 jobs in its home country and hinted at more to come in other countries.

Nokia signed 15 commercial 5G contracts during the quarter, bringing its total to 66 5G commercial deals. It also claims to be winning deals for all of its 5G commercial proposals outside of China. Total sales in China were down 26% year-over-year, while sales in North America and Europe dipped 5% and 2%, respectively, during the same period.

Nokia’s closest and longtime competitor Ericsson closed the quarter with 78 commercial 5G contracts.

North America remained Nokia’s largest market during the quarter, driving $2.27 billion in sales and capturing 30% of total sales. Nokia’s networks division grew 1% from a year ago, reaching $5.97 billion during the quarter, representing 79% of its entire business. Nokia’s software and technologies divisions declined 9% and 11%, respectively, on an annual basis.

Network operators comprised 84% of Nokia’s customer base during the quarter, and enterprises, which grew 33% year-over-year, represented 7% of its customer base. Revenues were flat year over year at $7.57 billion and profit jumped 45% to $881.5 million.