Nokia has signed a multiyear smartphone patent licence deal with China’s Huawei – its arch rival in the networks business – giving it royalty agreements with all of the world’s largest handset makers.
The Finnish company said on Thursday it would start booking revenue, including a one-off catch-up payment, from the fourth quarter. The two companies did not provide further financial details of the agreement.
Nokia has recently struck licensing deals with handset makers including Apple, Samsung Electronics, LG and Xiaomi. Nokia’s patent catalogue covers technology that reduces the need for hardware components in a phone, conserves battery life and increases radio reception, among other features.
More than 90 per cent of Nokia’s revenue comes from telecoms network equipment, but the licensing payments are highly profitable which is especially welcome as the network business is suffering an industry-wide slump.
“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.