Nokia’s 2023 Report reveals its relations with HMD Global
Nokia recently published a report about the company’s results in 2023, and it offers interesting tidbits about all of its businesses. Those that interest us the most, currently, are businesses related to the (smart)phone industry.
Nokia Technologies is responsible for managing Nokia’s patent portfolio and monetizing Nokia’s intellectual property including patents, technologies and the Nokia brand. Although experiencing a net sales decline, Nokia Technologies concluded its smartphone patent license renewal cycle in early 2024, which made the department financially stable.
They signed more than 50 deals in 2023, including those with Apple, Lenovo and Samsung, but signed agreements with Honor, OPPO and vivo should be mentioned too. Nokia Technologies also filed patents on more than 2,300 new inventions and continued investing in new focus areas, such as automotive, consumer electronics, and IoT. This all brings the department an annual net sales run-rate of approximately EUR 1.3 billion
Nokia and HMD Global
The result of its responsibilities is the agreement Nokia signed in 2016. Nokia entered into a strategic agreement with HMD Global Oy (HMD) granting HMD an exclusive global license to create Nokia-branded mobile phones and tablets for ten years. Under the agreement, Nokia receives royalty payments from HMD for sales of Nokia-branded mobile phones and tablets, covering both brand and patent licensing.
Nokia has held an ownership interest in HMD since 2020, specifically a 10% stake in the company, which is accounted for as an investment in an associate.
However, the collaboration with HMD has not been the most profitable for Nokia. In 2023, Nokia recorded an impairment loss of EUR 28 million related to its investment in HMD in the share of result of associates and joint ventures.
In August 2023, Nokia and HMD amended the licensing agreement so that HMD’s exclusive license to create Nokia-branded devices will expire by March 2026.
Shortly after that, in September 2023, HMD announced plans to transition to a multi-brand strategy which will include an HMD original range along with Nokia-branded phones.
The new phone release strategy of HMD is now clear. Although we’ll never know the details of the Nokia-HMD agreement, the year 2023 was crucial for both companies and the future of Nokia devices. It remains to be seen whether Nokia will exit the phone business completely or if feature phones will still be present in the market. Also, what will happen with Nokia’s 10% stake in HMD.
Additionally, by late 2024 or 2025, we should know if someone new will take on the Nokia brand and produce licensed devices.
The source is the Nokia annual report which has more than 200 pages. Enjoy.
