Nokia will miss previously stated full-year 2023 results due to delayed license renewals for some of its intellectual property, but remains convinced that its network business rebounded toward the end of what was a calamitous year.

The Finnish vendor has been in a long-standing patent row with China-based handset makers Oppo and Vivo. These have revolved around specific 5G technology patents.

Nokia said it now expects those ongoing license renewal negotiations will drag into the new year. This will cause a shortfall in what had been previously expected 2023 revenues for its technologies division.

“While there have been intense negotiations between the relevant parties, and courts around the world have found in Nokia’s favor, the company will prioritize protecting the value of its patent portfolio versus achieving certain timelines for resolution,” the vendor noted in a statement. “Given this development, combined with continued customer spending constraint in the quarter, Nokia now expects it will not achieve its financial outlook for the full year 2023 in relation to net sales, comparable operating margin and free cash flow.”

Nokia CEO Pekka Lundmark referenced these negotiations during the vendor’s progress update event last month. He stated Nokia has received favorable court rulings in Germany, the United Kingdom, Brazil and The Netherlands, and also a ruling was made in China that Nokia’s licensing rates were fair.

“With everything that we are seeing, we remain confident of our position in the overall dispute and are hoping to resolve the matter soon,” Lundmark said.

Nokia this year signed long-term patent license agreements with device powerhouses Apple and Samsung. These cross-license agreements covered Nokia’s 5G technology patents.

“Both of these deals … provide long-term stability for our licensing business,” Lundmark said. “They are one of the longest deals; licensing deals that were made in our history. And most importantly, these were both concluded without need to resort to litigation, which of course highlights once again the strength of our industry-leading patent portfolio.”

Nokia also reiterated that its network business units continued to rebound during the final three months of 2023, with net sales “expected to demonstrate a significant improvement sequentially.” The vendor’s network business includes network infrastructure, mobile networks, and cloud and network services.

“The quarter has proved somewhat more challenging than expected given ongoing customer spending constraint and the recently communicated customer purchasing decision,” the vendor explained, referencing AT&T’s decision to move away from Nokia for the first part of the carrier’s multi-billion-dollar open radio access network (RAN) plans. “Profitability in Nokia’s networks businesses is, however, expected to remain solidly within the comparable operating margin assumptions the company had previously communicated.”

Nokia is scheduled to release its fourth-quarter and full-year 2023 results on January 25.

Lundmark has downplayed the impact AT&T’s decision would have on the vendor, stating the carrier accounted for only a single-digit percentage of its 2023 sales, but the executive is instituting new cost-cutting measures to counter the financial drag. This includes slashing costs so that Nokia’s mobile networks division can maintain previously announced margin goals with $1.6 billion less in sales revenues.

“It is pretty straightforward math when you take those margin targets and then certain volume assumptions, and we believe that it is entirely doable,” Lundmark said. “But, of course, it would not be possible without the cost-cutting actions that we are taking.”

Nokia last month also announced plans to sell its device management and service management platform businesses to Toronto-based Lumine Group for around $200 million. The deal includes approximately 500 current Nokia employees moving to Lumine as part of the deal.

The device management business includes software designed to help communication service providers remotely manage home broadband access devices and IoT sensors. The service management platform business is a device customer care product that is used in more than 150 deployments covering more than 1 billion devices.

Nokia stated the deal furthers its recently established move toward “active portfolio management.” This deal is specific to Nokia’s cloud network services unit, which is where the two units being sold were held.