Swedish
mobile telecom gear maker Ericsson said it had signed a patent license
deal with Apple Inc over technology that helps smartphones and tablets
connect to mobile networks, sending its shares up much as 8 percent.
The
deal ends a year-long dispute with Apple, one of the biggest legal
battles in mobile technology and Ericson said it would pave the way for
cooperation between the companies on future technologies.
Ericsson
had said in its filing to a U.S. district court in January that Apple's
license to use the technology developed by the Swedish firm had
expired, and that two years of negotiations had not led to a new deal.
Ericsson
on Monday estimated overall revenue from intellectual property rights
in 2015 would hit 13 to 14 billion crowns ($1.52-$1.64 billion) up from
9.9 billion in 2014 as a result of the agreement.
An
Apple spokesman in Europe had no immediate comment, referring to a
January statement by the firm where it said it had deep respect for
intellectual property and was willing to pay a fair price for rights to
patents.
While
Ericsson did not specify exactly how much the Apple deal would
contribute to sales and earnings, UBS analysts said in a research note
it believed the deal meant a catch-up payment of 3.6 billion crowns for
2015, including a one-off sum of 0.5 billion covering items such as
legal fees.
UBS
estimated the agreement would boost Ericsson's operating profit by 13
percent in 2015 and 10 percent in 2016, providing 775 million crowns per
quarter in licensing fees.
NOKIA BOOST.
Ericsson
Chief Intellectual Property Officer Kasim Alfalahi said the agreement
was broad, covering the latest 4G-LTE generation of mobile technology,
as well as the earlier 2G and 3G technologies.
"It
means we can continue to work with Apple in areas such as 5G radio
network and optimization of the network," Alfalahi told Reuters, but
declined to provide further financial details.
Investment
bank ABG Sundal Collier said in a note to clients it believed the deal
meant Apple would be charged around 0.5 percent of its revenue on iPads
and iPhones by Ericsson.
Ericsson shares were up 5.6 percent by 1227 GMT, on track for their biggest one-day gain in 17 months.
Shares
in Finland's Nokia, which by the end of January will get an arbitration
verdict over how much South Korea's Samsung will have to pay it in
patent licensing fees, rose 2.4 percent.
Ericsson's deal with Apple echoes a January 2014 patent agreement with Samsung, which also followed a legal dispute.
Ericsson
filed the complaint against Apple over mobile technology license
payments, responding to a lawsuit filed by the iPhone maker that month.
In
a statement, Ericsson said the agreement included a cross license
covering both companies' patents and resolved all pending
patent-infringement litigation between the companies.
Analysts
had estimated that if the dispute with Apple went Ericsson's way, the
U.S. firm would have to pay it between 2-6 billion Swedish crowns
annually, based on estimates of levels of handset sales and royalty
payments per phone.
Ericsson has more than 100 patent licensing agreements and holds about 37,000 patents for mobile communication.
By: Sven Nordenstam and Olof Swahnberg.
Reporting: Olof Swahnberg and Sven Nordenstam.
Editing: Niklas Pollard and Alison Williams.
Review: Emerging Market Formulations & Research Unit, Flagship Records.
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