Nokia makes a global comeback to the phone market

Nokia, on Wednesday, announced plans that will see its global comeback to the mobile phone and tablet market by licensing its brand to a newly-created Finnish company.  The announcement comes on a day when Foxconn subsidiary FIH Mobile Limited (FIH) decided to acquire the remainder of Microsoft’s feature phone business assets. Microsoft announced it would sell its entry-level phone assets to Foxconn's subsidiary FIH Mobile and HMD for $350 million.

“Under a strategic agreement covering branding rights and intellectual property licensing, Nokia Technologies will grant HMD global Oy (HMD), a newly-founded company based in Finland, an exclusive global license to create Nokia-branded mobile phones and tablets for the next ten years,” Nokia said in a statement.

Ramzi Haidamus, president of Nokia Technologies, said, “Instead of Nokia returning to manufacturing mobile phones itself, HMD plans to produce mobile phones and tablets that can leverage and grow the value of the Nokia brand in global markets. Working with HMD and FIH will let us participate in one of the largest consumer electronics markets in the world while staying true to our licensing business model.”

“Nokia Technologies will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights,” Haidamus added.

Nokia was the world's top mobile phone maker between 1998 and 2011 but was overtaken by Samsung after failing to respond to the rapid rise of smartphones. The Finnish company sold its handset unit to Microsoft in 2014 for some $7.2 billion which dropped using the Nokia name on its Lumia smartphones.

The conditional deal between Microsoft and Nokia's new brand licensing partners is expected to close in the second half of 2016. Nokia said the new Finnish company, HMD Global, is a private venture in which Nokia will not hold equity.

Besides, HMD announced that it has conditionally agreed to acquire from Microsoft the rights to use the Nokia brand on feature phones, and certain related design rights. Together these agreements would make HMD the sole global licensee for all types of Nokia-branded mobile phones and tablets. HMD intends to invest over $500 million over the next three years to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business, the release said.

HMD and Nokia Technologies have signed an agreement giving HMD full operational control of sales, marketing and distribution of Nokia-branded mobile phones and tablets, with exclusive access to the pre-eminent global sales and distribution network to be acquired from Microsoft by FIH, access to FIH’s world-leading device manufacturing, supply chain and engineering capabilities, and to its growing suite of proprietary mobile technologies and components.

The Nokia brand, especially feature phones, is still very popular across the world, especially in markets like India. HMD will continue to market them as part of an integrated portfolio alongside a new range of Android smartphones and tablets.