uploads///

Nokia Expects Royalties of as Much as $3.5 for Every 5G Phone

By

Sep. 6 2018, Updated 6:32 a.m. ET

Nokia holds a huge patent portfolio

Beyond selling 5G (fifth-generation) telecommunications equipment, vendors such as Nokia (NOK), Ericsson (ERIC), and Huawei are also expecting to make money from the arrival of 5G network technology by licensing patents for 5G mobile phones. Handset makers such as Apple turn to innovators such as Nokia to license technologies that allow them to build mobile phones that work properly.

Nokia has a huge portfolio of so-called standard essential patents, which handset makers will need to be able to build 5G mobile phones. Last month, Nokia published its patent licensing rate for 5G mobile phones. The company said that it would charge handset manufacturers royalties at a maximum of $3.5 for every 5G phone applying its patent.

Article continues below advertisement

Nokia sets its patent rate below the competition

Nokia’s licensing rate suggests that the company may be looking to beat other patent holders in the race to license 5G phone makers. Last year, Ericsson said that it would charge maximum royalties of $5.0 for every 5G phone that applies its technology. Qualcomm (QCOM) said that it could charge up to $16.25 in royalties for every 5G phone that applies its patent. Qualcomm is a leading chip and technology supplier to the mobile phone industry.

Nokia’s licensing business made $338.8 million in profit

Patent licensing is Nokia’s most profitable business, generating an operating profit of $338.8 million on revenue of $418.9 million in the second quarter. Nokia’s licensing arm is known as Nokia Technologies.

IBM (IBM) and BlackBerry (BB) are also in the patent licensing business. In July, IBM was awarded $83 million in a patent case against Groupon (GRPN). BlackBerry has also sued Facebook and Snap for alleged patent infringements.

Advertisement

More From Market Realist