Mobile network gear maker Ericsson said it had detected signs of improvement after posting a steeper than expected quarterly loss.

This sent its languishing shares up as much as 5%. 

Once the world's top maker of mobile network equipment, Sweden's Ericsson faces a declining market for older network 2G, 3G and 4G gear while needing to step up investments in next-generation 5G equipment to retain market share. 

After replacing management in 2016, Ericsson has embarked on a restructuring programme to exit unprofitable network services deals and reverse course after an ill-timed bid to diversify beyond core telecom markets. 

"We see a stabilised performance in a challenging market. We also see signs of improvements in our performance," the company's chief executive Boerje Ekholm said. 

"Yes, there is still a long way to go ... but we are also seeing signs that we are stabilizing our performance and that we are getting control of our projects and products," Ekholm said.

The Swedish company posted its fourth consecutive money-losing quarter, with an operating loss of 4.8 billion Swedish crowns ($588.7m) that was 37% worse than the average loss estimated by analysts. 

Third-quarter sales of 47.8 billion crowns were down 3% in constant currencies and the company warned its usual year-end sales bounce would not be as big as in previous years.

Competition from China's Huawei and Finland's Nokia, as well as weak emerging markets and falling spending by telecoms operators, has hurt Ericsson, while demand for next-generation 5G technology is still several years away. 

While it cut 3,000 jobs during the third quarter, it added 1,100 recruits in research and development in order to be ready to meet eventual demand for 5G networks.

The company is also in the process of cutting about 130 jobs at its Irish operations. 

Ericsson said that sales were stable in North America while growing in Brazil and the Middle East, but these positive trends were offset by a decline in China. 

In the current quarter, it said network sales would not grow as fast because Chinese network operators are slashing spending on higher speed 4G mobile networks after a massive building spree in recent years. 

Ericsson said it had increased its share of 4G networks in China, which was vital to ensure it wins repeat business in future 5G network there. China will put pressure on overall fourth-quarter margins in its network business, it said. 

It is also renegotiating or exiting unprofitable service contracts in its networks unit as it aims to double its operating margin to 12% after 2018, a target analysts see as unlikely. 

It has exited or renegotiated 13 out of 42 contracts it considers problematic, improving profits. 

Restructuring weighed on the quarter as the company repeated it aimed to reduce costs by at least 10 billion crowns, or around $1.2 billion, from the middle of next year.