Finnish analyst: #Nokia to annually receive around €500 million in royalties from #Apple

Yesterday, Nokia surprised us all with the announcement that they settled all litigation with Apple, and signed a patent licencing and Business collaboration agreement with Apple. Nokia announced that Apple will pay an up-front cash amount to Nokia, royalties, and agreed to continue selling Nokia health products and decided to buy Nokia’s networking equipment and services.

In 2011, after a multi-year conflict, Apple agreed to pay €800 million to Nokia as a one-time payment, and agreed to pay royalties for Standrad&Essential patents, while continuing negotiations about licensing Nokia’s non-SE patents. Nokia disclosed that about €150 million Apple had been paying to Nokia annually from 2012 to 2016, while refusing to reach the deal for non-SE patents, thus leading the companies into second patent war.

The assumption about how much Apple will pay to Nokia annually now, Finnish analyst Hannu Rauhala who works for OP Equities said:

“For Nokia, it’s good news they got this out of the way, but we still have to wait for details about the financial impact,”

adding that:

“The previous annual rate was 150 million euros, so I assume this to be more, around 500 million euros.”

Rauhala also said that Apple might have been willing to settle with Nokia as the US company’s patent battle with Qualcomm has recently escalated, with Qualcomm asking for a ban on iPhone sales in US. As said, Nokia received €150 million from Apple for SE patents, and now with the inclusion of non-SE patents, that amount will certainly go up. Another factor is that now there is no need for cross-licensing, so Apple has no leverage in reducing the price. For example, in fiscal year 2016, only 0.1% of Apple’s iPhone revenue went for paying Nokia’s patent licence, while almost 1.5% of iPhone revenues goes to Qualcomm for their license. It seems a little too much the half a billion euro number, but I’m no analyst.

One of the interesting segments of the new Apple-Nokia deal is that Nokia will sell network gear and services to Apple. Inderes analyst Mikael Rautanen said that Nokia’s aim is to expand its sales of network equipment  beyond telecom operators to global internet and technology giants, and that also could have played a part in the resolution of the dispute. On the same day, Apple applied for a permission to begin testing 5G technologies. If we connect the dots, we can clearly see that Nokia will have a hand in Apple’s 5G ambitions, and Nokia will also support and deploy gear for Apple’s upcoming datacenters.

All in all, not only did Nokia get a better price for its patents, pre analysts’ opinions, but also signed contracts for network gear deployment and put Nokia Health Products back on Apple Store shelves.

Thanks Marty for the tip. 🙂