Matt Shimao - Head, IR Rajeev Suri - President and CEO Timo Ihamuotila - EVP and Group CFO

Kulbinder Garcha - Credit Suisse Gareth Jenkins - UBS Alexander Peterc - Exane BNP Sandeep Deshpande - JPMorgan Kai Korschelt - Merrill Lynch Andrew Gardiner - Barclays Francois Meunier - Morgan Stanley Stuart Jeffrey - Nomura Richard Kramer - Arete Mark Sue - RBC Capital Markets Pierre Ferragu - Bernstein Ehud Gelblum - Citigroup Tim Long - Capital Markets Joanne Zuo - Deutsche Bank

Good day. My name is Stephanie and I will be your conference operator today. At this time, I would like to welcome everyone to the Nokia Fourth Quarter and Full Year 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Matt Shimao, Head of Investor Relations. Mr. Shimao, you may begin.

Ladies and gentlemen, welcome to Nokia's fourth quarter 2014 conference call. I'm Matt Shimao, Head of Nokia Investor Relations. Rajeev Suri, President and CEO; and Timo Ihamuotila, EVP and Group CFO, are here in Espoo with me today. During this call, we'll be making forward-looking statements regarding the future business and financial performance of Nokia and its industry. These statements are predictions that involve risks and uncertainties. Actual results may therefore differ materially from the results we currently expect. Factors that could cause such differences can be both external, such as general economic and industry conditions, as well as internal operating factors. We have identified these in more detail in the risk factors section of our 20-F for 2013 and in our results report for Q4 and full year 2014 issued today. Please note that our results release, the complete interim report with tables and the presentation on our website include non-IFRS results information in addition to the reported results information. Our complete results report with tables available on our website includes a detailed explanation of the content of the non-IFRS information and a reconciliation between the non-IFRS and the reported information. With that Rajeev, over to you.

Thank you Matt and thanks to all of you for joining. In the fourth quarter of 2014 Nokia again showed great performance, with robust profitability and strong year-on-year growth for the second straight quarter across all three of our businesses. At the group level, we delivered net sales in the quarter of €3.8 billion, a 43.5% non-IFRS gross margin and non-IFRS operating profit of €524 million or 13.8% of sales. For 2014, the board of directors is proposing a dividend of €0.14 per share. These results are a great way to cap a truly transformative year for Nokia, one where we finalize the sale of our devices and services business to Microsoft and begin a new chapter in our history. In 2015, Nokia celebrates its 150 year anniversary, as we prepare to do that, I am confident in the strategic choices we have made for our three businesses and believe we have a solid foundation from which we can tap the opportunities of the programmable world. In terms of our businesses, let me start with Networks, which notched another strong quarter and is moving fast to capture opportunities in LTE. Our unique small cells offering and the transition to virtualization and the telco cloud. Net sales were up 8% year-on-year at €3.4 billion and up 14% versus the third quarter. At constant currency, networks net sales would have increased 8% year-on-year and 11% sequentially. For the full year, sales were basically flat compared to 2013. At constant currency, networks net sales would have increased 2% year-on-year and growth would have been 5% year-on-year, excluding the divestment of businesses not consistent with our strategic focus, the exiting of certain customer contracts and countries and foreign exchange fluctuations. Pleasingly in the fourth quarter we were once again able to show growth does not have to come at the cost of profitability. Non-IFRS gross margin reached 38.2% and non-IFRS operating margin was 14%, both very strong. We now have delivered seven consecutive quarters with non-IFRS gross margin over 36% with four straight quarters topping 38% and our non-IFRS operating margin was the second best in the history of the business. During the quarter, our deal momentum in the networks continued and we announced important contracts with customers, such as China Mobile, Mobily in Saudi Arabia and TATA DOCOMO and Bharti Airtel in India. For the year, to total value of business we won grew strongly versus 2013. Our win rate increased, and our overall sales pipeline expanded. Our business mix during the quarter was 52% mobile broadband versus 47% for global services, returning to a more normal balance after the spike we saw in mobile broadband in Q3. We have talked in the past about returning global services to growth, and in Q4 we delivered just that. The first year-on-year sales increased since the fourth quarter of 2012 combined with its seventh consecutive quarter of double-digit non-IFRS operating profit. Within services, systems integration was far in a way the best performer, with stellar improvement in sales. It is pleasing to see this from a business which is critically important to our telco cloud and virtualization strategy. I would also note, that we appointed Igor Leprince to run global services at the start of November and he is really already showing his value and his determination to maintain and build on our services momentum. Mobile broadband performed very well in both growth and profitability. Sales rose 13% year-on-year, while the non-IFRS operating margin was 12.5%, up some 500 basis points from the same quarter in 2013. As I look back at the year overall for mobile broadband, I am particularly pleased with two things. The massive transformation that took place during 2014 and our performance in core networks. In terms of transformation, some brief highlights. First, we significantly increased our R&D capacity through our focus on efficiency and effectiveness. This was partly achieved by a massive shift of work from sub-contractors to internal resources, as sub-contractors simply are unable to match our levels of quality and efficiency. Second, we increased our competitiveness by improving the strength of our product portfolio and continuing our momentum in quality. From a LTE to small cells, to LTE Advance, to core networks and beyond, we feel quite good about our position. Third, we improved our agility, allowing us to better respond to customer demands. Automation is key to this, so we can focus people where we need them most and I have just one example, we have massively increased the automated testing of software code over the past several years. Even while making all these changes, the employee engagement scores in mobile broadband remain very strong, among the highest of the large organizations in the company and overall attrition was at a good level, far below what we have seen in previous years. Turning to core networks, revenue growth and gross margin in this area was significantly ahead of the networks business as they hold. Growth was robust in key areas, like customer experience management, operations support systems and liquid core, which is our next generation core product. While much of the attention is on data traffic today, voice services still matter. We saw a ramp up of voice over LTE VoLTE in 2014 and believe it will become more mainstream in the current year. VoLTE delivers 15 times the efficiency of traditional network architecture, allowing call volumes to expand, while reducing total bandwidth demands. Then there is voice over Wi-Fi, which like VoLTE is a new means of providing voice service, in this case, extending the use of Wi-Fi to complement 4G networks. We see opportunities in this space and good momentum buildings, given the new devices in the market that support voice over Wi-Fi capability. Security is also a hot topic and our security group fits within our core networks business line, even it covers other parts of our portfolio. We are taking a holistic approach to the issue and using the same rigorous methodology that we used for our quality program to embed security into all of our products and services. Just like we believe, we have been able to start to differentiate by quality; we see an opportunity or differentiate in the security space. To further this ambition, we opened a mobile broadband security center in Berlin, designed to be a hub of leading expertise focused on ensuring robust telco security. This growing momentum in core networks has led to a number of very exciting new opportunities in North American and other regions that we expect will come to fruition in the future. I have mentioned in previous calls, that we are placing a high priority on partnering, and we are now starting to show some momentum. There is still plenty of work to be done. But we have gone through a detail process to select our top strategic partners and put in place a robust system for our corporation with them. We have progressed with testing of new products to expand into our portfolio and won a number of excellent new customer deals. Then to our regions. All showed sequential growth, with annual growth seen in North America, Europe, Middle East and Africa and Asia Pacific. North America was the absolute standout performer, with sales rising 95% year-on-year, thanks to LTE Network deployments, strong core network performance, services and our recent acquisitions of SAC Wireless. This was truly broad based growth, with an increase in sales to almost all customers, including T-Mobiles, Sprint, Verizon, US Cellular, some other small operators, plus a rise in our Canadian business. Our unique macro parity approach to small cells continue to get traction as we begin deployments for a major customer in a large metropolitan area. We are pleased to be proactively working with Google on the possibilities of opening up the ecosystem around 3.5 gigahertz spectrum for mobile broadband in the United States. Given our expertise in 3.5 gigahertz technologies and our approach to small cells, we believe there is great opportunity to be had using a shared access approach. While we were pleased with the quarter and momentum, we continue to watch North America closely, given the ongoing spectrum options and the developing operator competitive environment. Europe's sales remained strong after a good showing in the third quarter, rising 4% year-on-year, thanks to higher network deployments in Southern and Eastern Europe. In Asia Pacific, net sales were roughly flat year-on-year as network deployments in Vietnam, Myanmar, and India offset lower activity in Japan. Middle East and Africa was up 4% year-on-year and 25% sequentially due to higher network deployments and despite the ongoing challenges related to the political and security environment in several countries. Greater China slipped 3% versus a year ago, due to the timing of major TD LTE projects. I know, some of you maybe surprised to see this, but Q4, 2013 was a time for very large rollouts and I would also note that on a full year basis Greater China was up 16% year-on-year. In Latin America, net sales fell 9% year-on-year, primarily due to lower managed services activity in Brazil, but partially offset by higher network deployments in Colombia. As I said on the last call, we are still not out of the woods in Latin America and our efforts to improve performance there continue. As I think some of you are aware, at the end of the first quarter, we are planning to boost efficiency in our customer operations unit but uniting all our regions under Ashish Chowdhary, who has delivered superbly in Asia, Middle East and Africa and will now bring greater standardization and consistency across the globe. We think this move will allow us to better serve our increasing number of customers with global operations and also anticipate and proactively address long-term market opportunities. Before moving on to HERE, just to comment on the first quarter, while we believe our fourth quarter results show that our business momentum is good, I would also remind you that the first quarter of 2014 was a bit unusual, given the higher than usual software sales that we called out at that time. While the market remains competitive, as in previous quarters, we believe that our continued relentless focus on cost and productivity put us in a strong position to continue to win. In fact, we recently kicked off a program called Smarter that is designed to deliver further improvements to our cost base by addressing fully 90% of our total spend. To sum up, despite the strong performance we are not complacent and we will continue to drive the efficiency, while also making the necessary investments in our priority growth areas. On to HERE. Last quarter, I shared with you the appointment of Sean Fernback to lead HERE, as well as highlighted adjustments we were making to our strategy. I am pleased to say that Sean is now moving fast to execute those changes and put HERE on a path to stronger profitability. It is still early days of growth, but directionally the progress is good. We certainly saw progress in the fourth quarter, the momentum in our automotive business is excellent and we have won strong support from our customers in that segment. During the quarter, we also clearly benefited from a very competitive product offering and the good work of our sales team. In the past months, I've met with a number of my counterpart in leading car companies and increasingly they see us as a far better partner than others to whom they would have to surrender their customer data and relationships. This support is reflected in the company's results in the fourth quarter. For HERE as a whole, sales was strong at €292 million, up 15% year-on-year. Automotive was the biggest driver of this growth, followed by Microsoft becoming a more significant licensee of HERE services. We also had higher sales in our small, but growing enterprise segment and in the quarter we launched a new online self service portal to enable efficient sales to customers, an example of smart innovation as we seek to further expand. From a profitability perspective, HERE delivered a non-IFRS operating margin of 6.8% up from roughly breakeven sequentially, but down year-on-year. Operating expenses were up both sequentially and year-on-year. Both Sean I believe there is more we can do to optimize the business and reduce costs, while still investing to meet the needs of our targeted customers. I would expect to see the benefits of those actions starting to appear over the course of 2015. Timo will cover this in more detail in his prepared comments. Highlights in the quarter for HERE, included an agreement with Baidu, the leading Chinese language internet search provider to power its new desktop and mobile map services outside of China. HERE made its Android beta app available for all compatible android smartphones and made it available for downloads through Google Play. Today we have seen over 3 million downloads and this beta app has been received well by users, scoring an average of 4.4 stars from around 50,000 ratings in the Google Play store. HERE also launched Predictive Traffic, a new traffic forecasting product that can anticipate future traffic conditions in real time. And shortly after the end of the quarter at CES in Las Vegas, HERE and BMW announced their collaboration to create connected driver experiences and demonstrated the first results of their joint work, which is keeping pace with the changes in the first moving electronics industry. All in all, good momentum in the market for HERE. We have plenty of work to do internally, but our focus on execution and cost discipline is rapidly improving. Now, to Nokia Technologies, which had sales of €149 million in the quarter, up 23% year-on-year. As I am sure, some of you will have noted, that operating expenses were also up. This reflects ongoing investments in the business, inline with our long-term strategy and something we highlighted at our Capital Markets Day in November. That said, excluding litigation cost which can be lumpy, we do not expect increases in technologies operating expenses to be of a similar magnitude in future quarters as we are now starting to have more of the needed business infrastructure and development projects in place. We are putting the increased spending to good use. We invested in business activities, including launching our new brand licensing efforts and we exceeded our internal goal for patent filings in 2014. We also increased activities related to anticipated and ongoing patent licensing cases. Our commitment to driving value from our licensing activities has not changed and we see very good, short, medium and long-term opportunities. We are accelerating our efforts in this area in a smart way. The highlight of the quarter was the launch of Nokia N1 Tablet in November. We were pleased by the positive reviews and feedback from consumers and media, alike as well as the reception we saw in China when the N1 started selling earlier this month. We think this reflects the excellent design of the product and gives a taste of the long-term potential of our brand licensing model. Finally, we also good progress in less visible areas, where we continue to innovate, area such as imaging, audio, codec's and sensors, where we are doing some quite interesting things with graphene that could be used in a wide range of applications, particularly in the medical space. Before sharing some concluding remarks, I will now hand the call over to Timo.

Thank you, Rajeev. I would like to start by spending the next few minutes discussing some of the trends within operating expenses. In Q4 continuing operations, non-IFRS OpEx increased by 11% year-over-year and 12% sequentially. This compares to continuing operations net sales growth and 9% and 14% respectively. On a year-on-year basis, the higher OpEx was driven by increases in all three of our businesses. Looking at Nokia Technologies, non-IFRS OpEx increased by 28% sequentially, primarily due to investments in business activities, which target new and significant long-term growth opportunities, including seasonally higher costs related patent filings. For example, we exceeded our annual patent filing target with almost 40% of our annual patent filings made in Q4. In addition, the higher sequential OpEx was also driven by increased activities related to ongoing and anticipated patent licensing cases. For example, we increased our reversed engineering capabilities as we prepare for future patent licensing negotiations. We believe that these investments are key building box in driving longer term value across the technologies business. However, it is important to emphasize that we have a very prudent and disciplined approach in determining how much and where we are investing, all with aim of maximizing the long-term cash generation potential. As I have commented in the past, I believe we have a tremendous opportunity to create value in Nokia Technologies. Moving on to Nokia Networks where non-IFRS OpEx increased by 7% in Q4 compared to the year ago quarter. R&D expenses grew 8% year-on-year. This was primarily driven by our continued investments into our targeted areas, most notably LTE, small cells and telco cloud, while reducing investments in mature technologies. As Rajeev commented, we remain highly focused on driving further cost efficiency within Nokia Networks aimed at further increasing our overall R&D capacity, as well as further improving general and administrative activity. We have already begun to implement new programs and processes aimed at increasing productivity, which we believe will allow us to reinvest more into future growth opportunities. Coupled with our continued focus on quality and innovation, we believe that the unique operating model we have built and are further refining will continue to be a keen enabler of Nokia Networks strategy. Finally on HERE, where Q4 non-IFRS OpEx increased by 21% year-on-year, consistent with its sharpened focus HERE has increased investment levels in targeted areas such as the connected car and enterprise segments. In addition, HERE's Q4 OpEx was also impacted by higher incentive accruals, as well as higher expenses related to the acquisition of Medio. As I commented last quarter, we are focused on improving HERE's overall OpEx efficiency to drive growth and strengthen its financial performance. During Q4, HERE initiate in a cost reduction program intended to improve overall operational efficiency. Related to this program, HERE recorded charges of approximately €30 million and had related cash outflows of approximately €12 million in the fourth quarter. In total, we estimate that the cumulative charges related to the cost reduction program and related cash outflows will amount to approximately €30 million. HERE's progress on reducing costs has resulted in greater visibility to the level of efficiencies that we believe are achievable, when combined with HERE's leading market position, and positive industry trends, we have raised HERE's 2015 non-IFRS operating margin outlook from between 5% and 10% to between 7% and 12%. Overall, I believe that we are making the right investment decisions to support our longer term strategic objectives across all three of our businesses. At the same time, I am committed to ensuring that we remain highly returns oriented and continue to focus on operational excellence. We have not and will not lose sight of this. Turning to foreign exchange and hedging, which has been very topical given the movements in FX rates relative to the euro. At the high level, we are well balanced in terms of our euro net sales and cost exposures. In 2014 approximately 30% of our net sales were euro dominated compared to approximately 35% of our costs. Therefore, everything else being equal, a weakening euro relative to all other foreign exchange exposures is positive for our overall net sales, but negative for our operating costs, with overall impact on our non-IFRS operating profit being relatively small. In terms of the US dollar, we are naturally hedged given that approximately one third of our next sales and costs are US dollar denominated. Our other primary foreign currency exposures are in the Japanese yen and Chinese yuan. In 2014 approximately 10% of our net sales predominantly Nokia Networks were in Japanese yen. This compared to approximately 5% of our costs. Our overall net exposures are typically hedged based on forecasted cash flows up to a 12 month hedging horizon. For the majority of these hedges, hedge accounting is applied to reduce income statement volatility. Turning back to our Q4 2014 results, continuing operations, year-on-year net sales growth of 9% benefited slightly from foreign exchange movements, as the benefit from a stronger dollar was offset by a weaker yen. Sequentially, foreign exchange movements benefited Nokia's reported net sales growth over 14% by approximately 3% driven by general euro weakness, relative to our non-euro denominated sales. All in all, looking ahead, the recent euro weakness should provide some sequential tailwind to our Q1, 2015 net sales development, but have a relatively small impact on our non-IFRS operating profit. Turning to our cash performance during Q4. On a sequential basis, Nokia’s gross cash increased by approximately €80 million with a quarter ending balance of approximately €7.7 billion. Net cash and other liquid assets was approximately flat, with a quarter ending balance of €5 billion. Looking at the primary drivers of the movements in our net cash balance in Q4, cash inflows from operating activities were offset by cash outflows from financing activities. Foreign exchange rate had an approximately €50 million a negative translation impact on net cash. Nokia's adjusted net profit before changes in networking capital was €609 million in the fourth quarter, primarily driven by the strong performance at Nokia Networks. Nokia's net cash from operations was €224 million. In Q4, Nokia's continuing operations had networking capital cash outflows of approximately €60, primarily related to restructuring related cash outflows at Nokia Networks. Excluding this, cash flow from networking capital was relatively stable, as the negative cash impact from increases in receivables was offset by the positive impacts from increases in payables and decreases in inventories. Continuing operations had cash outflows of approximately €40 million related to net financial income and expenses, approximately €100 million primarily related to foreign exchange hedging outflows and approximately €100 million related to taxes. These continuing operations had cash outflows related to networking capital and taxes totaling approximately €80 million. From a financing cash flow perspective, outflows were primarily due to share buybacks, which totaled approximately €210 million in Q4. During the fourth quarter, we repurchased approximately 31 million shares. By the end of fourth quarter, we had completed approximately one third of our 2 year €1.25 billion share buyback program which we continue to expect to be completed by the end of Q2, 2016. Nokia also acquired subsidiary shares from a non-controlling interest holder and by dividend to non-controlling interest holders during the fourth quarter, totaling approximately €50 million. Finally, from an investing cash flow perspective, cash outflows was approximately €90 million related to continuing operations capital expenditures. This was more than offset by discontinued operations inflows of approximately €140 million from proceeds related to the sale of our former devices business to Microsoft. We also expected approximately €5 billion total on net cash impact from the proceeds related to the Microsoft transaction. We can now confirm that we have substantially received the €5 billion by the end of Q4. Finally, I would like to spend a few moments on our guidance and the dividend proposal for 2014. First on Nokia Networks, for Q1, 2015, we expect net sales and non-IFRS operating margin to decline seasonally compared to the fourth quarter 2014. In addition to the drivers listed in today's press release, please note, that Nokia Networks Q4, 2014 non-IFRS operating margin benefited from approximately €25 million of non-recurring IPR income. So there is a equal sequential margin headwind to consider as you model Q1. Second on Nokia Technologies. At our Capital Markets Day last November, we provided our full year 2015 outlook for non-IFRS operating expenses to increase meaningfully on a year-on-year basis. Today we have updated this to mean that we expect Nokia Technologies quarterly non-IFRS operating expenses in 2015 to be approximately inline with the fourth quarter 2014 level which was €69 million. As previously mentioned, these investments are targeted at new and significant long-term growth opportunities, as well as increased activities related to patent licensing cases. For HERE, I already covered the increased non-IFRS operating margin outlook for the full year 2015 in my earlier remarks. Lastly, on the dividend, in line with the board’s previous commitment to pay a dividend of at least $0.11 in 2014, it has proposed to pay a dividend of €0.14. Regarding the thought process that went into the dividend proposal, the board considered the earnings generated in 2014, the current strength of the balance sheet, our existing plans under our ongoing capital structure optimization program and the potential sources and usage of cash in the foreseeable future. In closing, I am pleased with how we end the 2014 and with the progress we have made in all three of our businesses. We plan to continue to invest efficiently and smartly in the right areas where we see the greatest value creation potential. Finally, I also think its worth noting, that in 2014 we returned approximately €1.8 billion to shareholders as part of our capital structure optimization program. And with that I’ll hand over to Matt for Q&A.

Thank you, Timo. For the Q&A session, please limit yourself to one question only. Stephanie please go ahead.

Thank you. [Operator Instructions]. Your first question comes from the line of Kulbinder Garcha with Credit Suisse. Your line is open.

Thanks. My question and it’s for Rajeev on the outlook for the Networks business versus in terms of growth in 2015. You mentioned like very high levels of win rates, winning more business last year than this year. And I am just trying to understand, as you look into 2015, what are the drivers by region that we should maybe think about and because it sounds that you are quite confident in the outlook for the growth. I am trying think, is it just contracts that won't give you that visibility, is it more business you have to win. I am trying to think how strong the revenue growth might be as we go through this year?

Thank you, Kulbinder. So, let me give you some regional color. So the positive drivers that we see are from North America, India, parts of Asia Pacific, particularly Southeast Asia, Middle East and Africa as we are starting to go to new countries and potentially also Latin America. Other markets, like China are expected to continue to have a big build out of LTE rollout in the second phase, but of course we have to remember 2014 was big too. And then, that’s how I see kind of from a regional point of view. And this is all based on two things. One is the total value of business that we won last year, which was substantially higher than 2013, which plays into some confidence. Like I said the win rate has been higher, which means that we targeted certain deal size and we win more of that. And of course, the fact that we had seen this growth a little bit more broad based. So its not just contained to a couple of regions, and we're seeing it also from a portfolio point of view, it being, you know, mobile broadband, global services and within mobile broadband, radio and call more balanced.

Thank you, Kulbinder. Stephanie, we'll take our next question.

Your next question comes from the line of Gareth Jenkins with UBS. Your line is open.

Yes, thanks. A quick on networks margins, through 2015, are you reminding us about the software strengthened Q1, 2014, because you think the margins will be down year-over-year in the first quarter, and obviously your guidance for the full year, how could it shape this 2015? Thanks.

So, Timo, here. Thanks, Gareth for the questions. So for the Q1 margins, we are not implying any particular level, we are simply going through that. We would have such a headwind when you compare to Q1. Last year on the other hand we also said that we would have a bit of tailwind coming from FX. So those were really the two additional points we mentioned besides the other drivers.

Thank you, Gareth. Stephanie next question please.

Your next question comes from the line of Alexander Peterc with Exane BNP. Your line is open.

Yes, hi. And thanks, for taking the question. I was just trying to come back release [ph] on technologies OpEx, here I just like to understand if the high crew [ph] witness is a one-off and with that you're going, you are going to have the base to build revenue growth in this – the reason for next couple of years or will you continue to increase OpEx here as revenue growth in future periods? Thanks.

Thank you, Alexander. Let me just take that and Timo can add on that. So first of all, when I look Nokia as a group, I believe Nokia Technologies presents strong potential for value creation in the long-term. And these are all purposeful thoughtfully considered investment that I have evaluated in detail. And I'll come to the conclusion that they are necessary and important for us to capture the long-term potential of this business. I believe that by investing in continued patent generation, investing in licensing activities and Nokia Technologies, we can drive the IP licensing business further. And I also believe that as we expand our activities in technologies licensing and brand licensing, we can also in turn increase the potential by increasing the defy [ph] for our core IP licensing business.

Yes. And if we look at kind of like further down 2015, so, we are not saying that we would expect a similar trend to continue because we are simply as we've said earlier, managing this in a way that when we find new opportunities which work, we are willing to put more money behind them. If some of these opportunities will not work, we will kill them fast. And that’s why it is difficult for us to say that the OpEx would be in a certain trend, that’s not how we think about the business. This is a lumpy business, which you need to think about on longer term and that’s why we are managing, and that’s why I want to also say that when we are giving this 69 per quarter guidance, kind of or approximately there of course, there can be lower quarters, there can be also higher quarters, but approximately we expect to be on that level.

Thank you, Alex. Stephanie, we'll take our next question please.

Your next question comes from the line of Sandeep Deshpande with JPMorgan. Your line is open.

Thanks, for letting me on. I have a question again on the technology business, when we look at the technology revenues at Nokia, the growth has come entirely from the Microsoft deal, at the same time many of your peers in IP have seen a growth from other players in the handset market who were unlicensed before, you yourself have talked about 7 of or 8 of the players who are major handset vendors in the top 15 who are not licensed. Have you worked on those players at all and how do you see this licensing business growing, are we entirely waiting for some of the creation result or are there other deals which are in the pipeline which we should hopefully hear of in the next 15 to 18 months? Thanks.

Thanks, Sandeep. So, the way we drive the IP licensing part of the business is, is of course to look at a pipeline and there are – there is a pipeline of targets. The way we look at it is, some of them will be pulled based in conjunction with brand licensing and technology licensing, some of them will be achieved through arbitrations, some through litigation. But we are always looking at a range of sort of target companies to work with them, partner with them, it is not just Samsung. So we are building this for the medium and long-term.

Yes. And when we look at some of these investments what we are now doing, they are really to increase capacity, to work on this. So, please remember also that even 6, 7 months ago, technologies was a more of a research unique than a business, which we are now I think very rapidly turning into a business. And yes, we are working with many potential customers, the Nokia Technologies who are using our innovation at the moment and not paying for it. But I want to also remind you about the timeline. So again, as we had discussed earlier, you negotiate first for sometime, you either come to a conclusion or not, you might then go to arbitration which could be a faster route to a resolution or you might even end up with legal means, which then will take, even in the fast process easily from when you start, 9, 12, even at the months to a solution. So that is just the dynamics of the business.

Thank you.

Thank you, Sandeep. Stephanie, we'll take the next question.

Your next question comes from the line of Kai Korschelt with Merrill Lynch. Your line is open.

Yes. Thank you, gents. My first question is just connecting on the IPR licensing opportunity. It looks like Qualcomm is making some progress on essentially establishing licensing framework for standard essential patents in China. So I am just wondering is there something that you will also see as an opportunity this year, because I believe currently is not really collecting anything from the region? Thank you.

Yes. Timo, here. Thanks Kai for questions. I think there have been certain developments lately, both in China, as well as in India, which at least indicate that those market could become bit more receptive to IP holders, both locally, but also to global IP holders. And of course, my intuitive thinking here would be that in China when Chinese companies create more IP themselves, the IPR event will become more inline with the global set. But I would say short term that continues to be a more difficult opportunity for a company like us which has opportunities also on the global arena.

Thanks, Kai. Stephanie, we'll take our next single question, please.

Your next question comes from the line of Andrew Gardiner with Barclays. Your line is open.

Thank you very much. I had another on the technologies area, I am afraid, since the – sort of your discussion of the business that accounts for Markets Day, we've seen a bit of more movement in the mobile, sort of patent space if you will. I mean, the Nortel patent and Rockstar effectively being went down and sold to RPX much less than was paid for coming out of bankruptcy. Ericsson and Apple now entering into litigation of their agreements or inability to reach a new one. I am just wondering on sort of your view that high level of all of this, I mean is this activity imply that the outlook for monetization of the patents is even more challenging than earlier anticipated, I mean, not to say anything about the quality of your portfolio of course, but just that, this is proving even more challenging to monetize? Thank you.

Thanks, Andrew. No, I don’t believe that there was a overall weakening of the IP licensing regime. There always put and takes and one has to work through them. But I believe actually there is very good medium and long-term potential in this business.

Yes. And it’s really something where you have to build a position for the long-term, still repeating what we had said earlier. So we have been building this even it was more on the defensive mode, sine 90s when we had our call it, first discussions with Motorola and in that sense it is not easy to build it up from scratch, especially if you don’t have a R&D unit which is supporting you on the patent filings and all that. So this is really a long-term effort and I think for companies like ourselves and other companies who are really investing a lot in R&D, this is a real opportunity which definitely hasn’t deteriorated.

Thanks, Andrew. Stephanie, next question please.

Your next question comes from the line of Francois Meunier with Morgan Stanley. Your line is open.

Yes. A question about the networks margin guidance for 2015. I think in the past 18 months the guidance for margin has always proved to be quite conservative and I wonder given everything which plays into your favor this year, even the currencies, the US, new contract and everything. How can really margins go down this year, it just feels pretty strange to me?

So, lets again, Timo, here. Thanks, Francois. So lets again repeat what we said when we gave the guidance. So this is our new long-term target guidance at to 11% and we said that this year we would expect to be inline with that guidance. We have also said, that if we execute well, we could be operating around the higher end of the guidance and then if there would be a significant competitive pressure coming to the market, which has happened from time to time in this business, Rajeev of course knows this, what better than I do, having management lift to it than you know, we could see a margin deterioration more towards the lower end of the range.

Thanks a lot.

We'll take our next question, please Stephanie.

Your next question comes from the line of Stuart Jeffrey with Nomura. Your line is open.

Hi, thanks very much. I had a question on networks, you called out core network growth versus radio. I was wondering if you could elaborate on that a little bit, it sounded as if maybe you are looking for core networks growth to outstrip radio, given your comments on VoLTE and voice over Wi-Fi, is that case and is there any sort of meaningful gross margin implications from that, I always think of core network gross margins is being somewhat higher than radio? Thanks.

True. But I think its going to balanced across radio and core, that’s what we see, that’s what we also saw in this quarter. So of course, FD LTE moving into some regions, into coverage other regions and capacity. There is TD LTE rollouts that still will continue. But we are seeing particular momentum in next generation core, which is this IMS VoLTE, voice over Wi-Fi analytics which has got some experienced management OSS. But I think its going to broad based and balanced from a portfolio point of view.

Thank you, Stuart. Stephanie, we'll take our next single question, please.

Your next question comes from the line of Richard Kramer with Arete. Your line is open.

Thank you. No one has really asked about HERE and at the CMD you mentioned how it was refocusing away from consumer internet services to a B2B business. And it’s interesting to me that you've given the HERE team a slightly different set of incentives in the program often in the rest of your Nokia team. Can you talk about whether you think now it’s a time where you'd see a material acceleration in the HERE business because of all the attention that’s being paid to connected car and how you think about that business over the medium term if certainly as you very quickly taken cost out? Thanks.

Thanks, Richard. Timo, here. Why don’t I answer the incentive question because there might be a bit of misunderstanding maybe. So, of course, core our businesses are driven by their own results. The results are driven by the time that’s what are given to HERE on top line margin and so forth. But you might be referring to the comment where we said that HERE OpEx was up because of slightly higher incentive accruals and that is on year-on-year basis driven more by the fact that, call it, we who gain from the old Nokia side, they didn’t really performed in 2, 3 years and say incentives cost where, virtually zero, a very low and now the company has performed 2014. So we will have call it normal, more normal situation. That’s why this is not called out in network, it doesn’t mean that the structured, assets [indiscernible] different, but of course it’s driven by the right parameters which want to drive our business.

Yes. And on the HERE sort of performance as such, yes, we are seeing a strong momentum in automotive. It’s driven by couple of things, vehicle sales have trended well and take up rates as well in terms of the embedded navigation in cars. Our competitiveness has strengthened as well. Our product competitiveness, our customer relationships and that’s important too. So we are more sticky. And then there is a positive driver by the way of operational efficiency, which is only just begun to embark on it, because some of that in Q4, but that’s going to continue to strengthen. So the combination of this and that’s partly why we raise the guidance that we did.. Connected driving, yes, we are in early stages. We are partnering with many of the customers, early are excused and so on, but that in terms of revenue impact and so on is – it’s a more medium term impact.

Maybe I'll give just a quick numbers needed into this, so I you look at this take up rates which we are giving, so Q4 they went up from 3.2 TO 3.9, that’s 22% growth and we also have 22% growth year-on-year. So this is actually quite a long and sustained trend which we are at the moment observing.

Thank you, Richard for the question on HERE. Stephanie, we'll take the next question, please.

Your next question comes from the line of Mark Sue with RBC Capital Markets. Your line is open.

Thank you. In the smartphone market, we're seeing two concentrations, one is the dominance of Apple and also the concentration of growth in China where IPO is not as respected. So perhaps your thoughts on just kind of how you see the opportunities, is that going forward, what other markets you can monetize. And also just, as we look at non-traditional markets your ability to monetize outside of this concentration that we're seeing? Thank you.

Yes. So, thank you, Mark. So, there are of course other targets, in terms of handset players beyond the – beyond Apple and Samsung and some sort of even on the Chinese players Go Global, they are also sort of longer term targets. So there is more potential within the core business of IP licensing to expand the pipeline if you like, and also to sort of find a mix of arbitration negotiation litigation. Second, as we said, technology licensing is a new opportunity for us, where we build technology that we can license and we have a lot of technology, audio, video, codec's and sensors and graphene and a lot of stuff that we have in camera technology and so on. And that can be done within the device space and beyond the device space. And we are forming early partnerships getting deals beyond the device space to kind of get the president rates, so that we can benefit from that downstream. And we could even build technology in completely adjacent areas, like medical and so on where we don’t necessarily make a product, but just license the technology because other people need it. And then there is brand licensing. So I've always said that I look brand licensing, technology licensing and IP licensing going together in the medium and long-term and brand licensing will actually, every time we do a brand licensing deal you have to do an IP deal. That opens up kind of it’s like a channel to further IP licensing as well. So if you look at the long-term, you've got to drive the three in tandem to some extent. And the short term, it’s IP licensing alone, in the long-term its kind of intending.

If I may, again, just very short comment, on China first of all, so its true that the market is growing in China, but simultaneous that that Chinese vendors are pushing to be outside China and often when you then come to agreement if you would, you do it in a global scale, that’s also one possibility to kind of like enter China without necessarily having a massive litigation on the local ground so to say and then Apple of course is current licensee and we will discuss with them when the time is right.

Thank you, Mark. Stephanie, next single question, please.

Your next question comes from the line of Pierre Ferragu with Bernstein. Your line is open.

Hi. Thank you for taking my question. On the networking front and the possibility of your mobile broadband business, so we've seen some volatility in gross margin in last year that was mostly related of course to product mix, is it something that is – that we should expect to continue this year. And then more specifically, you mentioned that like a tightening of competitive dynamics could affect your profitability this year. I was wondering what your best view is specifically in the US, as one of your competitors seem to have discussed lately your opportunity for them to come back at one of your – your largest client there, is there a risk that to keep your position in the US, you have to be very, very aggressive on pricing to decide on what you're so far? Thank you.

Yes. Pierre, I am not sure if I agree with this volatility in gross margin necessarily, because I think we've now – as I said delivered seven consecutive quarters with non-IFRS gross margin over 36% and four straight quarters in the range of – for topping 38%. So to some extent it’s actually being a bit stable. On…

The competitive dynamics, particularly in Japan and…

And US?

Competitive dynamics you mentioned for the tightening of growth. If – we of course are saying if there would be tightening of competitive dynamics, so there would be price intensity in market then potentially we can go to the low end of the range and if you execute well with the high end of the range. So we are not saying that there is that dynamic playing out yet. In Japan, in US, we not necessarily using pricing as a card, as I've always said that, pricing will only be a card in very select cases and even in those select cases, we think we have this continuous improvements, market program and efficiency is something that we deploy to offset any such thing. And we still have a big pricing volumes around the world in a very centralized way to price in the company as well. So I look at this thing is being balanced and there is more room for continuous improvement for Nokia Networks.

Thank you, Pierre. Stephanie, next question, please.

[Operator Instructions] Your next question comes from the line of Ehud Gelblum with Citigroup. Your line is open.

Hey, thank you. Good afternoon, Rajeev. My question, I want to take it back to networks a little bit and again talk about the pace of operating margin. You had in mobile broad band a nice ramp as the year went on, as the Sprint contract came in and your North America business primarily through Sprint was strong in the second half of the year and really helped your operating margin on the mobile broadband side. Can you give us a sense as to how far along are you in that Sprint contract, how much more is there to go as we get into next year. And does that mean, I'd imagine it, it peaks either now or in the next couple of quarters, does that mean that if we were to look at the pace of operating margin in mobile broadband next year, forget about the numbers, but the actual – the pace of it, is it not type of same backend loaded kind of ramp that we saw this year or is it more kind of like stable as the year goes on or how should we view that ups and downs, that Sprint contract vis-à-vis put together the margin does? Thanks.

Thank you, Ehud. So, actually, no it was not just driven by Sprint in Q4. In fact, Sprint was sequentially weaker from Q3 to Q4. And it was broad based. So we saw that in Canada growth, we saw in Verizon and we saw it in T-Mobile and we saw it in Sprint and in Q3 it was also Sprint and T-Mobile. So we saw a broad based, and it is still early days for Sprint as they embark on this vision program and there is lot of runway, then there is going to be capacity and carrier aggregation, LTE Advanced and so on. But the important things is, we saw balanced growth in Q4 and I expect to see more of that balanced going forward as well.

Thank you, Ehud. Stephanie, we'll take our next question.

Our next question comes from the line of Tim Long with Capital Markets. Your line is open.

Thank you. Just want to touch on the service business, pretty nice recovery on the revenue line, last quarter. Could you talk a little bit about that, was that – was there anything big, new one time in there and do we think after two big down years we can start to see this business growing like you expect the overall networks to grow? Thank you.

Thank you. Yes, we expect to see that sort of rising momentum in global services because we're done with a lot of the contract exits and countries exits that was basically strategically driven in the last couple of years. So there are two things we saw in Q4, one is the are chosen targeted segments have grown well, like systems integration, which is quite critical to core networks deployment and VoLTE and IMS and customer experience management. All that is in fact in the future going to be driven by system integration rather than as an effect of core networks. So that’s one. Second is, as we saw our mobile broadband business turned to growth in the last few quarter, there is a lag effect. And so this is a tap [ph] services starts to grow as well. And given that MBB has grown after the last couple of quarters, we should see that lag effect continuing and we should also see some of the professional services, like SI to be a segment of strength for us.

Thank you, Tim. Stephanie, we'll now take our last question for today.

Certainly. Your last question comes from the line of Joanne Zuo with Deutsche Bank. Your line is open.

Yes. Hi, there. Thanks for letting me on. One of your peers commented a lot of very high margins software spending, specifically in Europe in the fourth quarter. Now given that you haven’t really commented on that and then your gross margins also don’t really show any of that in Q4. I was just wondering how we should think about that, is that – and in fact that is for you already behind us or is that something still to come or is something that will not really impact you because you are exposed to a different customer set in Europe? Thank you.

Yes. Thanks, Joanne. No, specifically on Europe we didn’t see any such sort of one off major effect that you're pointing to for software. We saw growth again there, and we see – we see a great deal momentum in 2014 overall. So I'd call it, we came back in Europe, but not particularly the one off effect that you're point to.

Well, thank you everyone for your great questions. With that, I'd like to turn the call back over to Rajeev for some closing remarks.

Thanks Matt and Timo and thanks again to all of you for joining. Overall the fourth quarter was a very good one for Nokia with growth across all three businesses and we ended the year with a solid platform in place, a platform on which we will build in the coming months and years. My thanks to the many hardworking people at Nokia who made this possible. While some of you may have concerns about the OpEx increases in the quarter, I do not share those concerns given the underlying detail and our future expectations. To be very clear about my position on this topic first, we plan to continue to invest in line with our long-term strategy to ensure we can compete in existing businesses and build new ones. This is a must for any technology business and we are certainly no exception, where we believe there are compelling opportunities we will not shy away from pursuing those opportunities. Second, we will strive to ensure that every euro we spend has maximum impact. We will be very focused on cost discipline across the company. The transformational work that we did in 2014 in our mobile broadband segment is a good example of this approach and we will not back away from these efforts, even if they are hard. With that, thanks for your time and attention. Matt, back to you.

Ladies and gentleman this concludes our conference call. I would like to remind you that during the conference call today we've made a number of forward-looking statements that involve risks and uncertainties. Actual results may therefore differ materially from the results currently expected. Factors that could cause such differences can be both external such as general, economic and industry conditions, as well as internal operating factors. We have identified these in more detail in the Risk Factors section of our 20-F for 2013 and in our results report for Q4 and full year 2014 issued today. Thank you.

This concludes today’s conference call. You may now disconnect.