Nokia signs patent licensing deal with Huawei, shares rise

Nokia signs patent licensing deal with Huawei, shares rise
A Nokia logo is seen at the company's headquarters in Espoo, Finland, May 5, 2017. REUTERS/Ints Kalnins
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HELSINKI (Reuters) – Nokia <NOKIA.HE> said on Thursday it had signed a multi-year smartphone patent licence deal with China’s Huawei [HWT.UL], completing its list of agreements with the world’s largest handset makers.

The companies did not provide financial details of the agreement, but Nokia said it would start booking revenue, including and a one-off catch-up payment, from the fourth quarter.

Nokia has recently struck licensing deals with handset makers including Apple <AAPL.O>, Samsung Electronics <005930.KS>, LG <066570.KS> and Xiaomi.

More than 90 percent of Nokia’s revenue comes from telecoms network equipment, but the licensing payments are highly profitable amid an industry-wide slump in the network business.

Nokia’s shares rose 2.7 percent by 0858 GMT.

“It’s a significant deal because Nokia now has agreements with all the big phonemakers…The network market will remain tough, but the growing patent revenue will compensate for it,” said analyst Mikael Rautanen from research firm Inderes, which holds a “buy” rating on the stock.

He said revenue from the Huawei deal would be smaller than from Apple, which he estimated to be around 250 million euros ($297 million) annually.

“The (Huawei) ballpark (figure) could be somewhere over 100 million euros annually,” he said.

Nokia built up its catalog of patents in the days when the company dominated the mobile handset business. It covers technology that reduces the need for hardware components in a phone, conserves battery life and increases radio reception, among other features.

(Reporting by Tuomas Forsell and Gwladys Fouche; editing by Jason Neely and Jussi Rosendahl)

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