Nokia said it signed a patent licensing deal with Huawei on December 21. It added that it completed the list of agreements with the Chinese handset maker.
Both companies have not revealed the financial terms of agreement. Nokia outlined it would begin booking revenue, including and a one-off catch-up payment, from Q4.
The Finland-based telecommunication company made deals with handset manufacturers including Apple, LG, Samsung Electronics, and Xiaomi.
Nokia gains more than 90 percent of revenue from telecoms network equipment. However, the licensing payments generate high profits amid the declining network business. After the deal, Nokia’s shares increased 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 Mikael Rautanen, analyst from research firm Inderes, which has a “buy” rating on the stock.
Rautanen outlined that revenue generated from the Huawei deal would be less than of generated from Apple. The revenue estimated from Huawei is around 250 million euros ($297 million) each year.
“The (Huawei) ballpark (figure) could be somewhere over 100 million euros annually,” he added.
Nokia developed its catalog of patents during its dominance of the mobile handset business. The catalog covers technology which is used for elimination of hardware components in a phone, conserve battery life, raise radio reception, and others. The Finnish company was also the pioneer of GSM technology, which has been used widely in many devices.
The deal adds another feather on the cap of Nokia as it pockets huge amount of cash.