JPMorgan's Sandeep Deshpande, who started coverage on Nokia (NOK +1.9%) today with an Overweight and €8 PT today, thinks the company would be worth €15/share if it could raise its mobile device royalty rate to 1%. Berenberg's Adnaan Ahmad predicts Nokia's rate "should gradually inflate to 0.75% over time as it renegotiates existing deals and aggressively monetises its IPR pool."
Qualcomm, which has profited far more than any company from mobile IP licensing, often receives royalty rates in the 4%-5% range, though certain firms have negotiated lower fees via cross-licensing deals.
The sale of Nokia's phone unit to Microsoft frees the company to become more aggressive in its efforts to license its ~30K patents, since it now only needs cross-licensing deals for infrastructure gear. Thanks to the sale, Deshpande thinks there could be opportunities to unravel cross-licensing deals with firms whose IP Nokia no longer needs (such as Apple).
He adds a recent U.K. injunction scored by Nokia in its patent battle against HTC could have big implications, since it suggests an OEM's use of baseband chips supplied by Qualcomm (a Nokia licensee) doesn't mean it's protected from having to separately pay Nokia.