Matt Shimao - Nokia Oyj Rajeev Suri - Nokia Oyj Kristian Pullola - Nokia Oyj

Andrew M. Gardiner - Barclays Capital Securities Ltd. Aleksander Peterc - Société Générale SA (UK) David T. Mulholland - UBS Ltd. T. Michael Walkley - Canaccord Genuity, Inc. Achal Sultania - Credit Suisse Securities (Europe) Ltd. Sandeep Deshpande - JPMorgan Securities Plc Robert Sanders - Deutsche Bank AG Francois A. Meunier - Morgan Stanley & Co. International Plc Stuart Jeffrey - Natixis (United Kingdom) Richard Kramer - Arete Research Services LLP Sébastien Sztabowicz - Kepler Cheuvreux SA Amit B. Harchandani - Citigroup Global Markets Ltd. Simon M. Leopold - Raymond James & Associates, Inc.

Hello, and welcome to the Nokia Q2 2017 Earnings Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I'd now like to turn the conference over to Mr. Matt Shimao, Head of Investor Relations. Sir, you may begin. Matt Shimao - Nokia Oyj: Ladies and gentlemen, welcome to Nokia's second quarter 2017 conference call. I'm Matt Shimao, Head of Nokia Investor Relations. Rajeev Suri, President and CEO of Nokia; and Kristian Pullola, CFO of Nokia, 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've identified such risks in more detail on pages 67 through 85 of our 2016 Annual Report on Form 20-F, our financial report for Q2 and half year 2017 issued today, as well as our other filings with the U.S. Securities and Exchange Commission. 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 financial 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. Rajeev Suri - Nokia Oyj: Thank you, Matt, and thanks to all of you for joining Nokia's Q2 financial results call. Overall, I'm pleased with where we landed in the second quarter. We again reduced the rate of our top line decline and delivered solid profitability, all while making good progress on executing our strategy. We also saw some important developments in the quarter that I will share with you, but before that, a quick recap of the quarter's numbers. Group level non-IFRS net sales in the quarter were €5.6 billion, close to flat year-on-year; within that, Nokia Technologies led the way, with sales up 90% versus the same period last year. That was largely, but not completely, driven by our recently-announced agreement with Apple; and you can also see the impact of that agreement in our cash position. On the Networks side, sales of nearly €5 billion were down about 5% year-on-year, just slightly better than the 6% year-on-year decline we reported in Q1. Profitability was good across the board, including Networks' gross margin, which came in at 39.1%, up 150 basis points from one year ago. Our pipeline and orders remain robust, particularly in new verticals we are targeting, such as energy, public sector, and web-scale. Overall in Networks, we continue to win a significant majority of the deals that we pursued, and we landed more large contracts in the first half of the year than we did during the same period one year ago. This progress is important, given that we are slightly more negative about market conditions this year than we were one quarter ago. As you've seen, we've called down slightly our estimates for our primary addressable market with communication service providers for this year. Given a range of factors, such as M&A in some markets, operator competition, challenges in China, and a slower-than-expected recovery in Europe, we now believe that the market will decline in the range of 3% to 5% this year. This compares to our earlier view that the decline would be a low-single-digit. At the same time, we continue to expect Networks' sales to perform in line with the market. In general, however, I believe our second quarter results continue to show the underlying strength of Nokia, and of our disciplined operating model and end-to-end portfolio in particular. Reflecting that, I remain confident we will meet the full-year 2017 guidance that we have given for our Networks business operating margin, and that we also remain on track to reach our goal of €1.2 billion in total cost savings in full-year 2018. So in summary, the second quarter showed ongoing challenging market conditions, but also a solid Nokia performance. With that, let me turn to the four pillars of our strategy, starting with leading in high-performance, end-to-end networks with communication service providers. Order momentum in this area remains good, despite year-on-year revenue declines in both Mobile Networks and Fixed Networks in the second quarter. Sales in Global Services, which we are now reporting as its own segment, were flat year-on-year. On the Fixed side, I noted last quarter that 2017 is a bit of a transition year after an exceptional 2016. That said, Fixed Networks orders grew nicely in the quarter, its lean cost structure also allowed us to deliver excellent profit margins despite the top line challenges, and the team is making good progress enhancing our portfolio to capitalize on the growing cable market. The power of our innovation showed in the quarter with the deployment of Nokia's next generation fiber-optic 10G equipment for Estonia's Starman, the first cable operator in Europe to offer ultra-fast Internet service based on 10G EPON technology. In terms of Global Services, as I noted, year-on-year revenues were flat. Operating margin, on the other hand, was up nicely from one year ago at 8.5%. We're extremely focused on driving differentiation in our Services business through automation, artificial intelligence, augmented reality, and advanced analytics. Our goal is to use these tools to drive the next wave of cost reductions in our services organization while providing constantly-improving performance for our customers. A great example of how we're doing this is through Nokia AVA, our cloud-based cognitive services platform. In Mobile Networks, we announced in the quarter that we would develop a 5G ecosystem with NTT DOCOMO, and that we will play an integral role in T-Mobile's launch of 5G coverage in the United States. We also had some nice first-ever wins in the quarter, including a core network entry in Korea and a cloud-based 3G voice switching deal in North America; and, our leading small cells portfolio continued to get traction in the market, registering strong year-on-year growth. As we make this progress, we are seeing some important market developments related to 5G. Our original expectation was that 5G would only really take off in the 2020 to 2021 time period, that is now changing, as we see some lead customers in both the United States and China preparing to move earlier, and that should drive others to respond. I know that this may be contrary to what some of you on the call believe, but based on discussions that I've been having with a number of our customers, I'm increasingly convinced that 5G trials will accelerate in 2018, and that in 2019, we can expect to start to see meaningful deployments in the U.S. and China, and potentially several other markets like Japan. We also believe that 5G is likely to last longer and be deeper than we first thought. This is not just a small cell game; 5G will go big into the macro world; it will cover low, mid, and high bands to address both capacity and coverage, and drive changes and investment requirements in other parts of the network as well, but that is generally good news for Nokia. What is less good is that, it puts increased pressure on us to accelerate our 5G roadmaps, expanding the workload on our R&D team and Mobile Networks that is already extremely focused on product integration, and new feature requests. I want to be transparent that this situation does create some near-term risk as it makes the timing of certain project completions and acceptances more uncertain than is typical for us. But we have successfully worked through such issues before, and I'm confident that we will do so again. We have strong customer relationships, deep R&D capacity, and thanks to our robust balance sheet, the ability to further invest as needed. While we are still evaluating the full impact of these developments, I want to be clear that this is not a time to back off from product leadership. We believe, we are gaining share from a competitor that is struggling, and we are focused on working hard and fast to meet the needs of our customers. Now, onto the second strategy pillar of expanding Networks sales through select vertical markets needing high-performing secure Networks. Pleasingly, we saw double-digit year-on-year growth in our order pipeline in most of our target verticals, including energy, public sector, transportation and technological extra-large enterprises, which include web-scale. Now, these areas remain relatively small, but our goal is to grow both fast and prudently ensuring that we are focusing investment where we are generating the greatest momentum. We continue to expand into some exciting new areas in the quarter, including an agreement to provide Amazon Web Services with Nokia's Multi-access Edge Computing technology, which allows customers to process content more quickly at the very edge of the Mobile Networks. For the first half overall, our efforts led to the addition of over 50 new companies to our win list in the vertical space, a far faster rate compared to the same period in 2016. As I'm sure, many of you've seen already, a big, second quarter highlight in our efforts to expand to new vertical markets was our launch of the world's most powerful Internet routing platforms, powered by Nokia's new FP4 silicon, the world's first multi-terabit chipset, that is many times faster and far smarter than anything on the market today. While we do not expect meaningful revenues from these products to come until 2018, we do expect that they will fundamentally improve our IP routing position with web-scale companies in our target enterprise verticals, and with our traditional communication service provider customers. We're seeing strong early customer interest with BT Group and Xiaomi among those who've already expressed their intent to purchase FP4-based products. As I said last quarter, we expect the remainder of 2017 to be challenging for our overall IP/Optical Networks business, but I would note that the rate of sales decline in the business slowed from Q1, orders increased in the first half of the year compared to 2016, and we believe, we will soon be in a position of clear technological leadership. With that, I now want to move on to Nokia's third strategy pillar; building a strong standalone software business at scale, in this area, our progress is meaningful. After several quarters of sales decline, our Applications & Analytics business looked flat in the first quarter, and then returned to growth of 9% year-on-year in the second quarter. About half of that growth was organic, while the rest came from our successful completion of the Comptel acquisition. We are seeing the results of the work that I've talked about on this call before, strengthening our software sales capacity and incentive programs, renewing customer-facing personnel, rearchitecting our software on a common foundation, and adjusting our portfolio to target the most compelling opportunities and more. Our journey continues, but the momentum that we're building here is increasingly strong. Now, onto our fourth pillar, creating new business and licensing opportunities in the consumer ecosystem, and here, Nokia Technologies delivered well from a financial deal and brand perspective. Tech's net sales were up 90% year-on-year, while operating margin was 16 percentage points higher, mostly as a result of the multi-year patent licensing deal we signed with Apple. Overall, we're tracking well against the roadmap we've set out for our licensing business. First, to close deals with the biggest players; Apple and Samsung, then to turn our focus to China, then to other regions and onto potential licensees in automobile and other sectors. Q2 was clearly an excellent period for our licensing business, given both the Apple deal, and another one with Xiaomi. The Xiaomi agreement is important, because we believe that it opens the door for us to move forward with other Chinese companies. While there are no guarantees of our (11:35) success, we continue to engage with a number of players in that market. Nokia and Xiaomi are to cross license cellular standard essential patents, and Xiaomi also acquired patents from Nokia. In addition, the two companies expanded their business collaboration, including sales of network infrastructure equipment by Nokia to Xiaomi. And this builds on work we're already doing with Xiaomi to connect their data centers in China, and create a private cloud network for the company. As a final note on Nokia Technologies, we announced, just at the end of the quarter that Gregory Lee joined us. Gregory is serving as President of Nokia Technologies, and a member of the Nokia Group leadership team; and he joined from Samsung Electronics, where he led that company's business in United States; he's a very welcome addition to the team. Finally, let me just comment on our Networks business from a geographical perspective; focusing on China, North America and India. First, China where we continue to see some market softness despite longer-term potential as the shift to 5G accelerates. Our sales in China were down by 7% year-on-year, reflecting overall market conditions. Despite these challenges, we are well-positioned in China, now that Nokia and China Huaxin have closed the transaction for the creation of the Nokia Shanghai Bell joint venture that brings together Alcatel-Lucent Shanghai Bell, and Nokia's China business. Nokia Shanghai Bell or NSB is a big player in China, with approximately 16,000 employees in the country, more than 60% of them working in R&D. It is also the sole successful joint venture between a member of the State-owned Assets Supervision and Administration Commission or SASAC and a foreign company. As such, it's a source of pride in China with both support from and access to key decision makers. At a time when more than a few technology companies are experiencing challenges in China, we believe that this puts us in a solid position for the future. Second, North America where operator competition and M&A-related uncertainty has put a slight short-term damper on the market, more than we expected at the start of the year. As I noted in my remarks on 5G, however, the longer-term catalysts with (13:37) strength in North America are there, with big players who are pushing to move fast. In addition, we are working with our largest customers in North America to replace older Alcatel-Lucent equipment with our ultra-modern AirScale solution. One of the advantages of these upgrades is that, it will put 5G-ready Nokia equipment widely into operation. Finally India, which helped drive sales in our Asia-Pacific region back to growth in the quarter. India has an aggressive challenge of forcing the entire market to respond. As a result, even if M&A activities start to cool the market somewhat, we see generally favorable conditions, as well as a very strong Nokia position. In fact, we believe, we are considerably outpacing all our competitors in the country. It is remarkable to see how far India has come so fast, and I would not even be surprised to see 5G coming to India faster than many other parts of the world. It is now home to some of the world's most innovative and aggressive operators, and that will help continue to drive progress forward. With that, as an overview of the quarter, I will hand the call over to, Kristian, for more on our financials. Kristian? Kristian Pullola - Nokia Oyj: Thank you, Rajeev. I will begin today by commenting on our new IPR licensing, and business collaboration deals with Apple and Xiaomi, along with an overall financial performance of Nokia Technologies. Then, some words on the creation of Nokia Shanghai Bell, and the financial performance of Group Common and Other before taking you through our cash performance and working capital in Q2. And finally, I'll spend a few moments summarizing our recent refinancing activities, progress around cost savings, and the guidance for the full-year 2017. Starting with Apple and Xiaomi. On the Apple deal, we have multiple reasons to be pleased. First, the licensing income has increased significantly. Furthermore, reaching an agreement quickly without continuing costly litigation enables us to save considerable OpEx, and that adds to the value of the deal from our perspective. Related to only the Apple litigation, we had expected to spend at a run rate of approximately €100 million annually, given the agreement, we should not see any Apple-related litigation costs in Q3, and going forward. Second, we got a substantial upfront cash payment of €1.7 billion from Apple, strengthening further our cash position. As said earlier, our plans is to provide more details on the intended use of cash in conjunction with our Q3 earnings. Third, instead of a simple patent licensing agreement, we have agreed on a more extensive business collaboration with Apple, providing potential for a meaningful uplift in our IP Routing, Optical Networks and Digital Health business units over time. Hence, the value of the agreement will be reflected partly as patent licensing net sales in Nokia Technologies, and partly as net sales in other Nokia business groups. Then, on our agreement with Xiaomi. While the deal is clearly smaller in size, it marks a significant milestone in our efforts to get Chinese smartphone manufacturers under license. As we discussed in the past, after signing Apple, we see our biggest licensing opportunity now with the Chinese smartphone vendors. Similar to the Apple deal, the Xiaomi agreement is broad and strategic in nature, including network equipment and collaboration in a range of strategic projects. As part of the transaction, we did also divest certain patents to Xiaomi in Q2. We expect to start recording licensing income from Xiaomi beginning from Q4. Now, on the quarterly numbers. Nokia Technologies' net sales grew by 90% in Q2, primarily due to higher patent and brand licensing revenue, divested IPR, and the acquisition of Withings in the year-ago quarter. Approximately, 40% of the year-on-year increase was due to non-recurring net sales related to a new licensing agreement. The higher net sales drove higher gross and operating profit in the quarter, both year-on-year and sequentially. Moving then to the creation of Nokia Shanghai Bell. We closed the transaction with China Huaxin earlier this month. And as we have discussed in previous quarters, we have taken a fresh look at our operating model in China, without grandfathering any past practices. While it took some time, I believe that, now with our Nokia Shanghai Bell JV, we have achieved the best possible model for long-term success in China. Nokia owns 50% plus one share of NSB; and China Huaxin owning the remainder. In the transaction, Nokia's China business was sold to the JV in China in exchange for fair value compensation in cash. As the JV was, and NSB continues to be, reported on a fully-consolidated basis, there was no change in Nokia's overall cash level as a result of the transaction. However, we now have a greater flexibility to utilize the cash received, as we are able to repatriate it from China. In our financial report today, in the subsequent events section in the back part of the document, you will find an explanation of how NSB will be accounted for going forward, given the fact that China Huaxin has a put option, and Nokia has a call option related to NSB. The important point here is that we will run the JV NSB for long-term success; and at the same time, the exercised price of the options is based on a calculation which Nokia believes is a fair way to value NSB. Continuing next to the performance of Group Common and Other in Q2. The overall revenue that we report in this area increased by approximately 14% year-on-year. The growth was primarily driven by Alcatel Submarine Networks, its sales benefited from the timing of certain large projects. Although the sales in Radio Frequency Systems remained flattish year-on-year, our cost savings initiatives in RFS continue to show progress. We are continuing the strategic reviews of both businesses, for example on ASN, while the business has limited synergies with the rest of our Networks portfolio, submarine cables are becoming more important for web-scale players that need to link data centers on different continents. There are many factors to consider, and as always, we aim to maximize shareholder value. Turning then to our cash performance in the second quarter; on a sequential basis, Nokia's net cash and other liquid assets decreased by approximately €450 million, with a quarter-end balance of approximately €4 billion. The sequential decrease was mostly attributable to cash outflows from financing activities, primarily due to the payout of our 2016 dividend along with buybacks, as well as cash outflows from investing activities, primarily related to the acquisition of Comptel. In Q2, Nokia had approximately €140 million of restructuring and associated cash outflows. Excluding this, net working capital resulted in an increase of net cash of approximately €1.2 billion. This was primarily due to an increase in short-term receivables, mostly related to the €1.7 billion upfront cash payment from Apple, partly offset by the payment of incentives related to Nokia's business performance in 2016. Furthermore, a decrease in receivables was offset by an increase in inventories. Our inventories have been building up during the first half of the year, and bringing this back to a more normalized level is a priority. Given the extent of the non-recurring cash inflows and outflows we have seen thus far in 2017, our earlier commentary on free cash flow for the full year 2017 is no longer as relevant. The large non-recurring puts and takes include upfront cash payment from Apple, cash outflows for the acquisition of businesses, as well as our recent refinancing transactions, and an upcoming cash tax outflow, which I will discuss shortly. Excluding these non-recurring items, we would still expect Nokia's free cash flow for the full year 2017 to be slightly positive. In Q2, we continued the optimization of Nokia's debt structure by issuing approximately €900 million of new U.S. dollar denominated bonds, and purchasing, through tender offers, approximately €1.2 billion of the legacy Lucent U.S. dollar notes, as well as our shortest-dated U.S. dollar notes. Overall, the cash flow related to our bond issuance and redemptions in the first half of the year roughly offset each other. In addition to improving debt maturity profile, our debt structure optimization activities enabled us to reduce our interest rate expense run rate significantly. And this was reflected in our updated guidance for non-IFRS financial income and expenses earlier this year. Our overall Q2 debt-related activities did result in a further improvement in our interest rate expense run rate, but this will be largely offset going forward by a interest charge related to the NSB transaction, which again is discussed in the subsequent events section of our press release in detail. The interest charge replaces, from an accounting point of view, the non-controlling interest in the P&L. Thus, we continue to expect Nokia's non-IFRS financial income and expenses to be approximately €250 million for the full-year 2017. Our share repurchases under our capital structure optimization program continue to progress. In Q2, we executed approximately €180 million of share buybacks, and cumulatively, we have completed approximately €630 million of the overall planned €1 billion. We plan to resume the share repurchases after Q2 earnings, and we are on track to complete the program by the end of 2017. As already mentioned, we intend to provide an update on Nokia's capital structure plans along with our Q3 earnings, when our current capital structure optimization program will be approaching completion. Continuing next with an update on taxes. Favorable profit mix benefited P&L tax rate again in the second quarter, with our non-IFRS tax rate coming in lower than expected at 14%. Given the unusually low tax rate in the first half of 2017, we have today lowered our guidance for Nokia's non-IFRS tax rate for the full-year to be in the range of 25% to 30%. Also, we have today raised our guidance on Nokia's cash taxes to be approximately €800 million for the full year 2017. The increase of €200 million relates to an uncertain tax position in Germany, which originated from the disposal of the former Alcatel-Lucent railway signaling business to Thales in 2006. Based on new facts and circumstances, in Q2, we had an unfavorable non-recurring change in uncertain tax positions of approximately €200 million. The cash impact, which is also expected to be €200 million is likely to come later in 2007 (26:00). Turning finally to our multi-year €1.2 billion cost savings target, and a recap on key guidance items. We have today, reiterated our €1.2 billion cost savings target. We continued to believe that this is the right target for us; and we are continuing to make progress towards this goal. We also reiterated our guidance for product portfolio integration-related network equipment swap outs to total €900 million over the life of the program. Executing on our cost savings and swap out plans are clear priorities. Lastly, on guidance for our Networks business for the full year 2017. While we have reiterated our expectations for top line to declining in line with our primary market, and operating margin in the range of 8% to 10%, we now expect conditions in our primary market to be slightly more challenging than earlier anticipated; instead of low-single-digit decline, we currently expect 3% to 5% decline in our primary market. As a reminder, the outlook is provided assuming constant foreign currency rates. In addition, as Rajeev discussed in his remarks, we have today provided some new commentary on the drivers for our full-year outlook for our Networks business. These include uncertainties related to the timing of completions, and acceptances of certain projects, particularly in the second half 2017, as well as the level of R&D investment needed to maintain product competitiveness and accelerate 5G. We believe that we can manage through these headwinds and risks in 2017 with a relatively small impact on our targets for the full year. With that, over to Matt for Q&A. Matt Shimao - Nokia Oyj: Thank you, Kristian. For the Q&A session, please limit yourself to one question only. Kerry, please go ahead.

We will now begin the question-and-answer session. The first question comes from Andrew Gardiner of Barclays. Please go ahead. Andrew M. Gardiner - Barclays Capital Securities Ltd.: Good afternoon. Thanks for taking my question. I just had one regarding some of the different outlook within the Networks division; you've mentioned some of it in your prepared comments, but just in particular, the uncertainty related to the timing of completions and acceptances of certain projects, I'm just wondering if you can provide little more, sort of detail in terms of what you mean there; what type of projects might be causing some problems. Is it in relation to some of the technology spending that you've also discussed, a bit more detail would be helpful? Thanks very much. Rajeev Suri - Nokia Oyj: Thanks, Andrew. So I talked about this in previous calls, that we are seeing a bigger than expected workload on the Radio Mobile Networks (29:20) division; one, due to platform migration; this is what I've talked about before, but we're also seeing advancement of some features by customers, and now we're seeing acceleration of 5G. So when we put these three things together, there is even more pressure on workload and product roadmaps particularly in the Radio team. So this leads to a slight elevation of risk, that in certain projects, and I want to say that the operative word is really certain – that there could be some timing impact on acceptances, and this could affect our revenues. Now, I want to be clear, this is not broad based, and we are talking just about certain projects, and we expect to be confident to manage through this as, Kristian said. Matt Shimao - Nokia Oyj: Thank you, Andrew. Kerry, we'll take our next question, please.

The next question comes from Aleksander Peterc of Société Générale. Please go ahead. Aleksander Peterc - Société Générale SA (UK): Yes. Hi, thank you for taking my question. Just very briefly on licensing. Can you tell us a little bit more about where we are with the LG arbitration? You said in June 2015 that this will be concluded within one to two years. So should we expect a resolution anytime soon or is there a delay here? And also with LG deal – the deal with LG contain significant catch-up components. And then, just also (30:47) licensing with respect to other Chinese vendors, what sort of timeline should we expect for the developments there? Thanks a lot. Rajeev Suri - Nokia Oyj: Thanks for the question. So with regard to LG, because it's an arbitration, one can't predict the timing of that. So I won't do that, but instead allow me to give you a roadmap of how we see things. So yes, there's the LG component, but now that we've got the entry into China with the first licensee, we've also – as we said before, been working with the regulator, the NDRC in trying to get collaboration with them to help support discussions with further licensees. So the next step for us is China, that's in our roadmap; sort of go down a little bit further, automotive players, where there's an interest to get licensing from us, and then there's also India. So going back to – now that we've done Apple, Samsung there'll be LG, but there will also be China (31:46) and India. And again, I won't put a timeframe on China except to say that, we're in active dialog with multiple licensees. Matt Shimao - Nokia Oyj: Thank you, Aleksander. Kerry, next question please?

The next question comes from David Mulholland of UBS. Please go ahead. David T. Mulholland - UBS Ltd.: Hi, and thanks very much. I just wanted to come back to the comments you made on win rates and orders and contracts, and the growth you're seeing there. I know, you mentioned, you feel you're winning share, but could you be a bit more specific on what areas, is this both across Mobile, and do you feel – how material do you feel the share gains are getting in the (32:21) side of the business? Rajeev Suri - Nokia Oyj: Yeah, I think it's – it comes out to be an end-to-end company. We're winning more strategic mindshare with a number of customers. And again, it's two quarters, so let's be careful not to sort of declare victory, here. But I'd say that, we want to watch for three or four rolling quarters to really confirm that we're taking share. It does appear that we are taking share; we're strong in the market. I'd say more on the Mobile side; when it comes routing, your question there, I think, we will get sort of a significant leap in technological leadership with FP4. We expect orders to come in, in the second half of the year, Q4 more likely, and then meaningful revenues only starting next year with the web-scales and enterprises and even service providers. Matt Shimao - Nokia Oyj: Great. Thank you, David. Kerry, next question please?

The next question comes from Mike Walkley of Canaccord Genuity. Please go ahead. T. Michael Walkley - Canaccord Genuity, Inc.: Great, thank you. Just on a Networks division also, with you reiterating the 8% to 10% guidance, can you talk about maybe the mix in the second half of the year. Is there a different mix that maybe impacts gross margin or is it the increase in R&D that maybe keeps this in the 8% to 10% range given the strong margin to start the year? Thank you. Kristian Pullola - Nokia Oyj: I think, it's fair to say that, now in Q2 we have strong margins in the Networks business, helped partly by Global Services. We had some acceptances coming there that helped us in the quarter, and as we move forward, we will continue to drive the pricing discipline that we have. We'll actually start – leverage more Analytics in pricing as we go forward. And then also continue with the continued improvement mindset that we have for product cost and any fixed costs to drive good margins also going forward. But then, as we said there are some of these uncertainties to take into account, and I think it's also fair to say that, out of the €100 million OpEx cost savings that we estimated for the year, we have achieved, if you look at our financials, approximately €80 million during the first two quarters. So in that sense, we do have a tougher compare in the second half also from an operating expense point of view. Matt Shimao - Nokia Oyj: Thank you, Mike. Kerry, we'll take our next question please?

The next question comes from Achal Sultania of Credit Suisse. Please go ahead. Achal Sultania - Credit Suisse Securities (Europe) Ltd.: Hi, thanks. Just a question on the market outlook again, Rajeev. I think, given your comments around order book being up year-on-year, the number of contracts you won is also up year-on-year. I'm just trying to get a sense of, like, are you assuming that there will be some M&A in the telco space going forward in the second half of the year, which is why you're being slightly more cautious as you were? Or do you already see some kind of slowdown in the business already in the last, like few weeks, which is causing that downtick in the outlook statement, just wanted to get a sense of what exactly is happening, and in which region? Thank you. Rajeev Suri - Nokia Oyj: Yeah. Thanks, Achal. With regard to the market first, so let me give a geographical sort of perspective on that. So, previously we thought that North America could be a positive catalyst. We're seeing that less of the case this year, down a little bit of the operator competition there, but also sort of impending possible consolidation M&A. We thought that China will be slow, and that it is confirmed to be slow. Europe is slower in terms of the recovery than we'd also expect at the beginning of the year. Middle East and Africa, Latin America, pretty much in line with what we had thought. Southeast Asia, parts of Southeast Asia actually have turned out to be a bit more positive, but not enough to offset North America not being the positive catalyst. And then India robust, as we said before, we're even stronger than anybody else, that's going well. Japan bouncing off its lows, and that being positive, but we said that as well. So if you want to look at the deviations from what we thought at the beginning of the year, I would say, Europe recovery slower, and North America not being as much a positive catalyst. I think the second part of the question was, if we've got all this order intake, why is that not translating to our own sort of revenues? And why we said that our revenues will fall in line with this new market guidance on top line, and that is because, one, the risk on timing of certain projects we mentioned. Yes, there's FP4 that's coming, but that's a next-year activity for us, in terms of meaningful revenue. And then, the third thing I will say is that, some of the order intake is related to multi-year contracts that don't necessarily convert in the second half of the year. Matt Shimao - Nokia Oyj: Thank you, Achal. Kerry, next question please?

The next question comes from Sandeep Deshpande of JPMorgan. Please go ahead. Sandeep Deshpande - JPMorgan Securities Plc: Yeah, hi. My question's two-parts. Quickly, Rajeev, on the 5G market, you've talked about North America, China possibly for the first time, and Japan; but you did not mention Korea. What is happening in terms of potentially rollout of 5G networks in that country? Secondly, regarding your growth in the second pillar markets where you've highlighted some of the wins, can you talk a little bit about FirstNet and what your contribution there is going to be, and when that will start? Thank you. Rajeev Suri - Nokia Oyj: Thanks, Sandeep. So on the 5G market, yes, Korea will go with sort of pre-commercial pilots, but really, I'd categorize them in showcase instead of – little bit more than demonstrations in 2018. And then, I think the first time I'm talking about this is really because, there is the willingness in the market now to drive 5G faster. Standardization is moving a little bit faster as well. And then, also the fact that the ecosystem, and when I'm talking ecosystem, I mean chipsets, devices, potentially could be brought forward as well by several months. All of this means that the commercial deployments could be brought forward. And the other recognition is that, it is not just a small cell technology, and so it will be low-band spectrum, think 600 MHz, 800 MHz, 900 MHz, that kind of spectrum. It will be mid-band, think 3.5 GHz, 4.5 GHz, and even high-band millimeter waves and so on. So therefore, I think there is clearly going to be a macro for coverage. And then there is going to be capacity with small cells and so on. So it is not just a small cell ultra-dense technology, it's everything. And of course this will drive investments in other parts of the network, like transport, optical and so on. So on Korea, I think it will be in the mix too. So clearly, it will be Japan, China, and U.S., but Korea could be, but don't count on 2018 being the big one, it will be a bit later. So 2019 could be mass commercial rollouts in these markets, but potentially also parts of Europe. Your second, question public sector, so overall in verticals our order intake is strong. On public sector specifically, I would say that, when it comes to FirstNet, in terms of meaningful investments and spend there, I think it's more 2018 than 2017. Matt Shimao - Nokia Oyj: Thank you, Sandeep. Kerry, we'll take our next question, please.

The next question comes from Robert Sanders of Deutsche Bank. Please go ahead. Robert Sanders - Deutsche Bank AG: Yeah. My first question would just be around the business collaboration agreement with Apple that you signed. Can you just talk a bit about what's the nature of that agreement when it comes to providing network equipment infrastructure products? Do you have a supply agreement or is it more that Apple has agreed to trial maybe your IP routing products? And if I can just bolt-on one other follow-up question to the previous. Do you think that 5G is ready enough to now kind of pull your addressable market to growth next year? Thanks a lot. Rajeev Suri - Nokia Oyj: Thank you, Robert. So first on the business collaboration on Apple, yes, it does involve agreements to supply optical and routing gear. So it's clearly more than trial. This is a real business collaboration with business that's going to come. On 5G and translation (40:53) to market for next year, we're not giving any guidance as such for next year, it's still early days to form a solid opinion on that. Again, as I said, meaningful deployments, and hence meaningful revenues for the sector from a market standpoint in 5G, will be 2019. Matt Shimao - Nokia Oyj: Thank you, Rob. Kerry, next question please.

The next question comes from Francois Meunier of Morgan Stanley. Please go ahead. Francois A. Meunier - Morgan Stanley & Co. International Plc: Yeah, thanks everyone. So again, like last quarter, congratulations on the margin, and especially on the gross margin performance. So, I mean, probably there were quite a few low-hanging fruits from the Alcatel Wireless and the Alcatel business in general. But can you describe if there is more juice, basically, potentially, coming from this gross margin number? We can see in the (41:50) networks gross margins going up despite revenues going down. In Global Services, same stuff; flat revenues, but the gross margin's going up something like 400 bps. So like, is there anything we can expect for the coming quarter, and maybe for 2018? Rajeev Suri - Nokia Oyj: Yeah, thanks. I'll repeat what I said. I think, this was a good quarter. Gross margin wise a lot of hard work by a lot of people to get this resolved. So huge thanks to the team for that. We did get some help in Global Services from the timing of certain projects. And then, when we look forward, in the current environment, it is important for us to continue to have pricing discipline, the utilization of analytics there; the centralization approach that we have taken is going to be key and important going forward. And in a similar way, driving costs out throughout the company, sharing best practices be it then former Alcatel-Lucent practices or former Nokia practices, we really don't care. If they are best practices, they should be shared across the company, and then, we go for continued improvement there. So that needs to be the mindset. And we need to do that to offset some of the pricing pressure that will come in the industry, given competition, and with that continue to drive good margin here. Matt Shimao - Nokia Oyj: Great. Thank you, Francois. Kerry, next question please?

The next question comes from Stuart Jeffrey of Natixis. Please go ahead. Stuart Jeffrey - Natixis (United Kingdom): Hello. Thank you very much. I had a question on the IPR business. You're not giving a run rate, but given that the Apple deal only had one missed quarter, is there any reason we can't just look at the sequential increase Q1 to Q2; divide that by two to get a realistic run rate going forward? And then, just to clarify on the Xiaomi, could you just talk about why they felt the need to take this license, and how we translate that into why (44:03) the other Chinese might be compelled to license your technology, because they obviously haven't found any before. I'm trying to understand what's changed? Thank you. Kristian Pullola - Nokia Oyj: So, maybe I'll start, then Rajeev chip in. So on Apple or on the licensing business, we did pretty clearly call out that 40% of the increase of revenue related to non-recurring parts of a new license agreement. And if you do the math there based on the numbers we said, you kind of come to a €60 million to €65 million (sic) [€70 million to €73 million] (44:43) number, which is the revenue we book now in the second quarter, that's related to the first quarter. So I think, yes, you can use that number through; a) calculate what the run rate revenue for the patent and brand licensing business is, and we also gave that number €357 million. So I would claim that the run rate number is there, there's maybe a bit more math to do to get there. When it comes to Xiaomi and the Chinese, it is clear that they are, a) operating more and more outside of China; and b) China wants to be in a position to monetize IP, because Chinese companies do a lot of R&D, and create a lot of IP, as we speak. And because of that, the environment for IP in China is also changing. So I think there are these two drivers why Chinese vendors in general are now approaching IP in a different way. Matt Shimao - Nokia Oyj: I think we're good there. So, thank you, Stuart. And Kerry, we'll take our next question, please.

The next question comes from Richard Kramer of Arete Research. Please go ahead. Richard Kramer - Arete Research Services LLP: Thanks very much. Rajeev, I'd like to sort of challenge a couple of the received wisdom items about the industry. One is that, the industry profitability depends almost entirely on the North American market, and in this quarter obviously, North America was down sharply sequentially, yet the margins were fairly stable. And then the second one, sort of hanging out there is that the industry as a whole is, for lack of a better word, more or less ex-growth, and that was some of the logic of the consolidation for the Alcatel deal among others. With all the areas that you're mentioning both in verticals, in acceleration of 5G and so forth, and also in terms of profitability, do you think those elements of received wisdom are still correct? Do you think the profitability in other regions will over time match that, that you're seeing in North America? And do you think the industry has another growth cycle ahead of it, or are we just sort of looking at managing down costs in relatively flat environment long-term? Thanks. Rajeev Suri - Nokia Oyj: Thanks, Richard. So I think, some of that's valid because, yes, it's a mature industry, but when we talk about that, let's think about the primary addressable market for us on an end-to-end basis. And then, yeah, there'll always be some markets that are going to be higher margins, sort of North America, Japan and so on relative to the others. But over time, with the pricing excellence and so on, others are also coming up. But again, that difference will remain; right? Then, when it comes to the next cycle of growth in the longer-term, 5G we will be one. I believe, 5G with macro and micro and ultra-dense will be a new super cycle of growth down the line. And then, for us, cable is the first point of diversification, lots of trials going on after the acquisition of Gainspeed, revenues could start to come in 2018. Our products in the (48:11), SD-WAN, SD for data center, sort of that whole space, plus also software can be sold to verticals, public sector, utilities, transportation, technological extra large enterprises that use technology for competitive advantage, then web-scales, right. So we are seeing early momentum in web-scales. We are present in web-scale, so it's not new. Now, we just need to increase the penetration in the web-scale with FP4 when that comes, and sell some more products. So cable, 5G, verticals, web-scale and of course the software business that we have. So for me, those are the growth drivers that should, at some point, we should be starting to talk about the primary market plus the adjacencies, which is the total addressable market for Nokia, which will be healthier (48:56). Matt Shimao - Nokia Oyj: Thank you, Richard. Kerry, next question, please?

The next question comes from Sébastien Sztabowicz of Kepler Cheuvreux. Please go ahead. Sébastien Sztabowicz - Kepler Cheuvreux SA: Yeah. Hello, one question on Optics because the business declined quite sharply over the last few quarters, and some of your competitors like (49:15) for instance are growing still nicely. So do you have any specific plans to turn on the business or to introduce new products in order to match customer needs? Thank you. Rajeev Suri - Nokia Oyj: Thank you for the question. Yes, we have new products in front hall, which is basically connecting radio to basebands; there's one there. We have the new cycle of – moving to 200G and 400G will start as well in the future. And of course web-scale for us is new opportunity. Matt Shimao - Nokia Oyj: Thank you, Sébastien. Kerry, we'll take our next question, please.

The next question comes from Amit Harchandani of Citigroup. Please go ahead. Amit B. Harchandani - Citigroup Global Markets Ltd.: Good afternoon, everyone. Amit Harchandani from Citi and thanks for taking my question. A couple if I may. Firstly, with respect to your Applications & Analytics business, what should we think about the medium-term trajectory there? And it has moved into a high-single-digit growth this quarter. And how do you think it's positioning, it's shaping up versus your expectations? And what are the milestones to watch out for next? And separately as an unrelated follow-up, could you maybe comment on pricing dynamics in the industry, particularly as Huawei looks to us pursue profitability at the expense of all-out growth (50:32)? Thank you. Rajeev Suri - Nokia Oyj: Thanks, Amit. So first on Applications & Analytics, so long-term this is a growth business, even in the service provider space, it's a growth business. It is less price-sensitive. And for us, I think, the milestones are a common software foundation, so we want to make sure all of the software products we build are on a common software foundation, because then you can innovate faster, and you get more scale, and you get better margin accretion as well. The second thing we're trying to do is, renew the sales force that can sell to CIOs and CMOs and that's already happening. You can see the progress in some of the numbers. So the order intake was high, the revenue was up 9%. The third thing is, new forms of pricing models for software, because they will be different; more education in the sales force. And then finally increase the attach rate of services, and sort of increase margins and services as you attach more services to every product you sell. Those are the milestones to look for. We are quite pleased with the progress in our strategy here. I'm really pleased with what the software team is doing. On pricing overall, in the sector, no change from the time we spoke about it two years ago, neutral. Matt Shimao - Nokia Oyj: Thank you, Amit. Looks like, we have time to take one more question for today. So we'll take our last question for today, Kerry.

Okay. The last question comes from Simon Leopold from Raymond James. Please go ahead. Simon M. Leopold - Raymond James & Associates, Inc.: Great. Thank you for squeezing me in here. Maybe, a good way to sort of wrap this up is to talk a little bit about the strategy of diversifying verticals, in terms of where you think you're going with this, because I heard you, and I understand that, much of this is relatively small in terms of diversification, today. But I'd like to get a better understanding of which are the biggest verticals, and what are your objectives for perhaps one to two years out. I presume, you've already been in cable, but that gets bigger, and that this web-scale high-end enterprise is probably the biggest upside opportunity. But I want to make sure my understanding is reasonable, and understand where it can go? Thank you. Rajeev Suri - Nokia Oyj: Thank you. Simon. So, yeah, I think, the greatest potential for us is in high-end enterprise for these large enterprises, utilities, public sector and clearly web-scale. So public sector, mostly it's about LTE for public safety, FirstNet type of deals. So I'd say utilities, public sector, web-scale that package, and then software, Applications & Analytics. Matt Shimao - Nokia Oyj: So thank you for your great questions, today. And now, I'd like to turn the call back to Rajeev for closing comments. Rajeev Suri - Nokia Oyj: Thanks, Matt and Kristian . And thanks again to all of you for joining. Let me close by saying that, I'm pleased with where we landed with our second quarter results. Not a perfect performance, and we know where the gaps are, but I am confident, we've taken the right steps to further accelerate those things that are working well, and fix those that are not. Looking ahead, we do see some market headwinds this year that are slightly beyond what we originally expected, but facing such headwinds is nothing new for Nokia. We've shown that we have our hands on the right business levers to adapt as needed, have unique advantages in our powerful portfolio and disciplined operating model, and have a consistent focus on creating value. With that, thank you very much for your time and attention. Matt, back to you. Matt Shimao - Nokia Oyj: Ladies and gentlemen, this concludes our conference call. I'd like to remind you that during the conference call today, we have 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've identified these in more detail on pages 67 through 85 of our 2016 Annual Report on Form 20-F, our Interim Report for Q2 and half year 2017 issued today, as well as our other filings with the U.S. Securities and Exchange Commission. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.