Helsinki: Telecoms network equipment maker Nokia Oyj and Chinese smartphone maker Xiaomi Corp. have signed a patent licencing agreement, the companies said on Wednesday.

The companies did not provide financial details of the agreement, saying it includes a cross licence to each company’s cellular standard patents.

Nokia will also provide network infrastructure equipment to Xiaomi.

“Xiaomi is one of the world’s leading smartphone manufacturers and we are delighted to have reached an agreement with them," Nokia chief executive Rajeev Suri said in a statement.

Nokia has licence deals with leading handset makers Apple Inc. and Samsung Electronics Co. Ltd, but the agreement with Xiaomi is the Finnish company’s first with a Chinese phone maker.

“Financially, I don’t think it’s very substantial for Nokia. But it’s a good head start to negotiations with other Chinese manufacturers," said OP Equities analyst Hannu Rauhala.

Patent royalties represent a sliver of Nokia’s overall revenue, more than 90% of which comes from telecoms network equipment. But licensing payments are highly profitable and the network business is suffering an industry-wide slump.

Nokia built up its catalogue of patents in the days when the company dominated the mobile handset business. It covers technology that reduces the need for hardware components in a phone, conserves battery life and increases radio reception, among other features. Reuters

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