HELSINKI (Reuters) - Nokia (NOKIA.HE) will start to book additional revenue from the current quarter after a ruling by an arbitration court on payments from South Korea’s LG Electronics (066570.KS) for using its smartphone patents.
The Finnish company said it would also get a one-off payment, although it did not disclose any of the sums involved. The companies had started the arbitration in 2015.
“We believe that this award confirms the quality of Nokia’s patent portfolio. We continue to see potential for additional licensing opportunities,” said Nokia Chief Legal Officer Maria Varsellona in a statement.
The ruling was made by the International Court of Arbitration of the International Chamber of Commerce.
Nokia’s patent unit had sales of 616 million euros (541.47 million pounds) in the first half of the year — just 6 percent of the group’s total revenue. However, licensing payments are highly profitable while Nokia’s core business, telecom networks, is suffering an industry-wide slump.
“Nokia has been quicker than expected to clinch deals in the patent side... The next interesting scalp will be Huawei [HWT.UL],” said analyst Mikael Rautanen from research firm Inderes, with an “accumulate” rating on the stock.
He said, however, that the revenue of the LG deal will be clearly smaller than that from the Apple agreement, which he estimated to bring around 250 million euros ($298 million)annually.
Shares in the company rose 0.6 percent by 0737 GMT.
Nokia sold its once-dominant phone business to Microsoft (MSFT.O) in 2014 but retained its patent catalog covering technology that reduces the need for hardware components in a phone, conserves battery life and increases radio reception, among other features.
LG has a global market share of around 4 percent in smartphones, according to Strategy Analytics.
Reporting by Jussi Rosendahl; editing by Jason Neely/Keith Weir