Investing.com -- Nokia's (HE:NOKIA) renewal of a patent licensing contract with Apple (NASDAQ:AAPL) should help boost the market's outlook for the Finnish telecoms company, according to analysts at Citi.
In a note to clients, the Citi analysts said that the agreement, which was announced late last week, should make Apple the "single biggest" contributor to Nokia's intellectual property rights revenue stream.
The deal also lends support to Nokia's long-term guidance of €1.4 billion to €1.5B billion in annual patent licensing revenue, the analysts argued. The unit missed estimates in the first quarter, which chief executive officer Pekka Lundmark said was due to an ongoing legal fight with Chinese smartphone makers Oppo and Vivo.
Although the terms of the agreement between Nokia and Apple were not revealed, the license covers "inventions in 5G and other technologies," according to a statement from Nokia. The deal will replace the current license that is due to expire at the end of this year.
Nokia added that it expects to recognize revenue related to the new patent license starting in January 2024.
The company said its patent portfolio is "built on more than €140 billion" invested in research and development since 2000 and is composed of around 20,000 patent families, including more than 5,500 declared essential to 5G.
Helsinki-listed shares in Nokia rose by more than 2% on Monday.