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Nokia Taps into Debt Market to Replenish Its Cash Stockpile

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Nokia issues bond maturing in 2026

In March, Nokia (NOK) raised ~$855 million through bond sales in Europe. The company sold senior unsecured notes that will mature in 2026.

Since last year, Nokia and Ericsson (ERIC) have raised hundreds of millions of dollars in additional capital from banks and debt investors. In August last year, Nokia secured a $570 million loan from the European Investment Bank to support its research work—particularly 5G research. In December, the company secured close to $290 million in a credit financing commitment from Nordic Investment Bank to support its work on 5G research. Ericsson secured about $290 million in credit financing commitment for its 5G research work from the European Investment Bank.

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Nokia’s $7.2 billion cash stockpile

Nokia exited 2018 with $7.2 billion in cash. Ericsson closed the year with ~$3.8 billion in cash. The proceeds from the latest bond sale should add to Nokia’s cash stockpile and give it more financial flexibility as it executes its growth plan.

Nokia’s big focus on 5G research stems from its strategy to monetize the technology from multiple fronts. In addition to selling 5G network equipment, Nokia is also pursuing 5G royalty revenues. Nokia has secured patent license agreements with several large phone makers. Samsung (SSNLF), the world’s top smartphone company, is one of Nokia’s patent clients. Samsung has contracts to build 5G phones for Verizon (VZ) and AT&T (T).

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