Nokia announced its financial statements for the fourth quarter of 2017 and showed better results when compared to initial predictions. Nokia reported operating profit of USD 1,2 billion.
The amount is higher than the predicted profit of about USD 1,01 billion. The profit is reportedly derived from a long-term patent licensing agreement, amounting to nine percent, signed by Nokia and Huawei.
The agreement of these two companies contributed USD 260,4 million, with more than expected earnings during their second contract.
Getting good results, Nokia's network business profits decreased by 25 percent from a year earlier.
By comparison, Nokia's network of business profits in 2017 amounted to USD 802,28 million, lower than its profit in 2016 of USD 1,064 billion.
The profit decline is expected to continue throughout 2018 unless North American operators decide to use their networks, which will improve the situation.
In addition, the decline is also expected to be even greater because Nokia decided not to buy another network giant Alcatel-Lucent for USD16, 6 billion in 2016 ago.
This financial slowdown is caused by 4G cycles that are nearing its end time, while internet network providers are not yet ready for the 5G equipment spending. Competitors Nokia, Huawei, and Ericsson also felt a similar impact, with Ericsson reporting financially diffused in the fifth consecutive quarter.
However, predicted in 2019 and 2020, market conditions will grow significantly, driven by the deployment of 5G networks on a full scale. It is estimated that Nokia will gain an operating profit of 12 percent by 2020.
The profit increase is also expected to come from licensing agreements with Xiaomi and Apple signed by Nokia in 2017. Over the past year, Nokia's net profit was reported at USD19.84 million
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