(Bloomberg) -- Ericsson AB shares rose to their highest in two years after the telecom equipment company’s deal with AT&T Inc. helped push third-quarter earnings above analysts’ estimates.

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Adjusted earnings before interest and taxes were 7.3 billion kronor ($699 million), the Stockholm-based company said in a statement on Tuesday. That compared to an average of 5.6 billion kronor forecast by analysts surveyed by Bloomberg.

Shares rose 7.5% to 84.16 kronor at 11:13 a.m. in Stockholm on Tuesday, the highest since April 2022.

North American sales grew by 55% year over year, “helped by strong deliveries related to our recent AT&T contract win,” Chief Executive Officer Börje Ekholm said in an investor call. Sales in Europe were also growing amid an otherwise “very challenged” market for network technology, he added. “So in that context, it’s critical that we focus on what we can impact.”

Ericsson has weathered a difficult telecom equipment market for the past several quarters as operators scaled back or delayed their network investments. The company responded with aggressive cost-cutting measures, including slashing thousands of jobs, which, along with securing a $14 billion contract with AT&T last December, has won investor confidence.

Ericsson previously said that the AT&T contract to roll out OpenRAN, a technology that gives operators flexibility to choose the vendors that supply its antennas and infrastructure, would boost revenue during the second half of this year.

The company’s Chief Financial Officer Lars Sandström said in an interview that sales this quarter were “exceptionally high” after “exceptionally low” sales at the start of the year. He expects them to stabilize over the next few quarters.

Still, demand for equipment from some major markets has declined. India, which had one of the fastest 5G rollouts in 2022, has slowed spending while many US operators have stockpiles of equipment. Telecom operator spending fell 10% in the first half of 2024 from a year earlier and will continue dropping for the rest of the year, according to Dell’Oro Group, which tracks the industry.

“The end market remains tough broadly speaking, but the US is helping lead Ericsson back to strong profitability and its cost actions further support the improving bottom line,” Citi analysts Andrew Gardiner and Daniel Schafei wrote in a note.

A recently announced joint venture with 12 other telecom operators to create a single point for app developers to access all their mobile networks will continue to generate “new opportunities for network monetization,” Ekholm added.

“Ericsson gives a statement of strength on a broad front,” Christer Gardell, founder of activist investor Cevian Capital, said in an email. “Now we see the result of recent restructuring, above all in improved gross margin and cash flow. The conditions for Ericsson to grow profits in the future look good.”

Ericsson’s Nordic rival, Nokia Oyj, reports its third-quarter earnings on Thursday.

--With assistance from Rafaela Lindeberg.

(Updates with shares, CEO and analyst comments)

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