Description
• Nokia to sell Devices & Services business to Microsoft in EUR 5.44 billion all-cash transaction
− The transferred business includes the Mobile Phones and Smart Devices business units as well as an industry-leading design team,
operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities,
and related support functions
− Approximately 32,000 people are expected to transfer to Microsoft at closing
− As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of closing, and
Microsoft will grant Nokia reciprocal rights to utilize Microsoft’s patents in its HERE services. In addition, Nokia will grant Microsoft
an option to extend this mutual patent agreement to perpetuity.
− Of the total purchase price, EUR 3.79 billion relates to the purchase of substantially all of the Devices & Services business, and EUR
1.65 billion relates to the mutual patent license agreement and future option
Conference Call
September 3, 2013
15.00 / Helsinki
08.00 / New York
Nokia
Risto Siilasmaa / Chairman and interim CEO
Timo Ihamuotila / CFO and interim President
Matt Shimao / Head of Investor Relations
2 © Nokia 2013
FORWARD-LOOKING STATEMENTS
It should be noted that Nokia and its business are exposed to various risks and uncertainties and certain statements herein that are not historical
facts are forward-looking statements, including, without limitation, those regarding: A) the planned sale by Nokia of substantially all of Nokia’s
Devices & Services business, including Smart Devices and Mobile Phones (referred to below as "Sale of the D&S Business") pursuant to a purchase
agreement between Nokia and Microsoft (referred to below as “Agreement”); B) the closing of the Sale of the D&S Business; C) obtaining the
shareholder approval for the Sale of the D&S Business; D) receiving timely, or at all, necessary regulatory approvals for the Sale of the D&S
Business; E) expectations, plans or benefits related to or caused by the Sale of the D&S Business; F) expectations, plans or benefits related to
Nokia’s strategies, including plans for Nokia with respect to its continuing business areas that will not be divested in connection with the Sale of
the D&S Business; G) expectations, plans or benefits related to changes in leadership and operational structure; H) expectations and targets
regarding our operational priorities, financial performance or position, results of operations and use of proceeds from the Sale of the D&S
Business; and I) statements preceded by "believe," "expect," "anticipate," "foresee," “sees,” "target," "estimate," "designed," "aim", "plans,"
"intends," “focus,” "will" or similar expressions. These statements are based on management's best assumptions and beliefs in light of the
information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we
currently expect. Factors, including risks and uncertainties that could cause these differences include, but are not limited to: 1) the inability to
close the Sale of the D&S Business in a timely manner, or at all, for instance due to the inability or delays in obtaining the shareholder approval or
necessary regulatory approvals for the Sale of the D&S Business, or the occurrence of any event, change or other circumstance that could give
rise to the termination of the Agreement; 2) the potential adverse effect on the sales of our mobile devices, business relationships, operating
results and business generally resulting from the announcement of the Sale of the D&S Business or from the terms that we have agreed for the
Sale of the D&S Business; 3) any negative effect caused by us entering into the Sale of the D&S Business, as we may forego other competitive
alternatives for strategies or partnerships that would benefit our Devices & Services business and if the Sale of the D&S Business is not closed, we
may have limited options to continue the Devices & Services business or enter into another transaction on terms favorable to us, or at all; 4) our
ability to effectively and smoothly implement planned changes to our leadership and operational structure or maintain an efficient interim
governance structure and preserve or hire key personnel; 5) any negative effect from the implementation of the Sale of the D&S Business, which
will require significant time, attention and resources of our senior management and others within the company potentially diverting their attention
from other aspects of our business; 6) disruption and dissatisfaction among employees caused by the plans and implementation of the Sale of the
D&S Business reducing focus and productivity in areas of our business; 7) the amount of the costs, fees, expenses and charges related to or
triggered by the Sale of the D&S Business; 8) any impairments or charges to carrying values of assets or liabilities related to or triggered by the
Sale of the D&S Business; 9) potential adverse effect on our business, properties or operations caused by us implementing the Sale of the D&S
Business; 10) the initiation or outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against us
relating to the Sale of the D&S Business; and, as well as the risk factors specified on pages 12-47 of Nokia's annual report on Form 20-F for the
year ended December 31, 2012 under Item 3D. "Risk Factors." and risks outlined in our most recent interim report. Other unknown or
unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in
the forward-looking statements. Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a
result of new information, future events or otherwise, except to the extent legally required.
Disclaimer
© Nokia 2013 3
Agenda
Transaction summary 4
Nokia post transaction 11
Summary 16
© Nokia 2013 4
Transaction Summary
• Nokia to sell Devices & Services business to Microsoft in EUR 5.44 billion all-cash transaction
? The transferred business includes the Mobile Phones and Smart Devices business units as well as an industry-leading design team,
operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities,
and related support functions
? Approximately 32,000 people are expected to transfer to Microsoft at closing
? As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of closing, and
Microsoft will grant Nokia reciprocal rights to utilize Microsoft’s patents in its HERE services. In addition, Nokia will grant Microsoft
an option to extend this mutual patent agreement to perpetuity.
? Of the total purchase price, EUR 3.79 billion relates to the purchase of substantially all of the Devices & Services business, and EUR
1.65 billion relates to the mutual patent license agreement and future option
• Transaction is expected to close in Q1 2014, subject to approval by Nokia’s shareholders, regulatory
approvals, and other customary closing conditions
• Nokia has secured EUR 1.5 billion of financing from Microsoft at attractive terms
? The financing is not conditional on the transaction closing
? If the transaction closes, the outstanding bonds will be netted against the deal proceeds at principal and accrued interest
• Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a
four year license
• Leadership changes
? To avoid any potential conflict of interest, between now and the pending closure of the transaction, Stephen Elop will step aside as
President and CEO, resign from the Board of Directors, and will become Executive Vice President, Devices & Services
? Risto Siilasmaa will assume responsibility as interim CEO, while continuing in his role as Chairman of the Nokia Board of Directors
? Timo Ihamuotila will become interim President of Nokia, and will assume responsibility for chairing the Nokia Leadership team,
while continuing in his role as CFO of Nokia
© Nokia 2013 5
Transaction Summary (continued)
• Gain on sale of approximately EUR 3.2 billion expected
• Transaction expected to be significantly accretive to earnings
• The transaction will provide Nokia with financial strength to invest for success and puts Nokia on a
path to return to its target Investment Grade rating
• Nokia will retain its Chief Technology Office organization and patent portfolio
• Following the transaction, Nokia plans to focus on its three established businesses, each of which is a
leader in enabling mobility in its respective market segment:
? NSN – leading wireless infrastructure provider, with focus on mobile broadband and related services
? HERE – leading independent location cloud platform company
? Advanced Technologies – leading technology innovator and patent portfolio, targeting to expand its patent licensing program
• Nokia will retain its headquarters in Finland
• Excluding the approximately 32,000 people planned to transfer to Microsoft, Nokia would have
employed approximately 56,000 people at the end of the second quarter 2013
• The Nokia Board of Directors is conducting a strategy evaluation between signing and closing of the
transaction
• After the evaluation is complete, deemed excess capital is planned to be distributed to shareholders
© Nokia 2013 6
Transaction expected to be significantly
accretive to earnings
Full Year 2012
Non-IFRS Operating Margin %
First Half 2013
Non-IFRS Operating Margin %
Pro-Forma results reflect Nokia’s continuing businesses, with Devices & Services treated as discontinued operations, as
well as the inclusion of the new HERE license
0,4%
8,5%
As published 2012 Pro-Forma 2012
4,2%
12,1%
As published 1H'13 Pro-Forma 1H'13
© Nokia 2013 7
Secured attractive financing from
Microsoft
• Nokia has secured EUR1.5B of financing from Microsoft for the period between signing and closing at a blended
interest of c.2.4%
• Microsoft has extended the financing available at the sole option of Nokia and independently from closing of the
transaction, in the form of subordinated convertible notes
• Nokia has notified Microsoft of its intention to draw on the aforementioned notes for their entire amount
• The financing has been negotiated at arm-length terms and structured in 3 tranches of EUR500M each
1. Maturing in Sep-2018 with 1.125% coupon and EUR3.93 conversion price per NOKIA share
2. Maturing in Sep-2019 with 2.5% coupon and EUR4.09 conversion price per NOKIA share
3. Maturing in Sep-2020 with 3.625% coupon and EUR4.24 conversion price per NOKIA share
• Nokia will pay back the outstanding amount to Microsoft from the proceeds of the deal upon closing
• Microsoft cannot exercise the call option on the convertible for 2 years
• In case the transaction will not close, the financing will continue to be available to Nokia as per the terms agreed
• The three tranches are subject to a lock-up period which terminates at the earliest of respectively 2, 3, and 4 years
and the termination by Nokia of the Existing Commercial agreement with Microsoft
• Nokia has secured EUR 1.5 billion of financing from Microsoft, immediately available
• The financing structure is three EUR 500 million tranches of convertible notes
? The first tranche matures in 5 years and has a 1.125% per annum coupon payable semi-annually
with an initial conversion price of EUR 3.9338
? The second tranche matures in 6 years and has a 2.5% per annum coupon payable semi-annually
with an initial conversion price of EUR 4.0851
? The third tranche matures in 7 years and has a 3.625% per annum coupon payable semi-annually
with an initial conversion price of EUR 4.2364
• It is at Nokia’s discretion if it chooses to draw down all or some of these tranches
• The financing is not conditional on the transaction closing
• If the transaction closes, the outstanding bonds will be netted against the deal
proceeds at principal and accrued interest
• The earliest that Microsoft could convert any of these bonds to shares is two years
from draw down
Risto Siilasmaa
(Chairman of Nokia Board of Directors
and interim CEO)
Michael Halbherr
(EVP, HERE)
Stephen Elop
(EVP, Devices
& Services)
Marko Ahtisaari
(EVP, Design**)
Jo Harlow
(EVP, Smart Devices)
Juha Putkiranta
(EVP, Operations)
Timo Toikkanen
(EVP, Mobile Phones)
Chris Weber
(EVP, Sales and
Marketing)
Timo Ihamuotila
(CFO and interim
President*)
Louise Pentland
(EVP, Chief Legal
Officer)
Henry Tirri
(EVP, Chief Technology
Officer)
Juha Äkräs
(EVP, HR)
Kai Öistämö
(EVP, Corporate
Development)
Jesper Ovesen
(Chairman of NSN
Board of Driectors)
Rajeev Suri
(CEO, NSN)
Nokia Leadership Structure
*Timo Ihamuotila will also assume the responsibility of chairing the Nokia Leadership Team
**Marko Ahtisaari will step down from the Nokia Leadership Team and his position as EVP, Design, effective November 1, 2013
8
Timeline
Closing of the transaction is subject to approval by Nokia’s
shareholders, regulatory approvals, and other customary
closing conditions
© Nokia 2013
September 3, 2013 November 19, 2013
Regulatory review
Announcement
Sale of Devices & Services
business, mutual patent
agreement, availability of EUR
1.5 billion of financing, and
HERE license agreement
Call of Nokia
EGM
Nokia calls EGM to request
approval for transaction
Nokia to make available more
information on the transaction
and its background
September, 2013
EGM
EGM expected to take place on
November 19, 2013
Expected closing
Regulatory approvals expected
to be received
Closing of transaction
Q1 2014
9
Reverse
Termination
Provision
The transaction is subject to a USD 750 million termination fee payable
by Microsoft to Nokia, in the event that the transaction fails to receive
necessary regulatory clearances
© Nokia 2013 10
Agenda
Transaction summary 4
Nokia post transaction 11
Summary 16
© Nokia 2013
Change and reinvention
11
1865 c.1910s c.1980s Today
Sale of Devices & Services business
Nokia Solutions and Networks HERE Advanced Technologies
World’s specialist in mobile
broadband and global #2 in LTE
Leading position through a broad
location offering across mobile
devices, connected devices,
enterprise solutions, and the
automotive environment
Following the transaction, Nokia plans to focus on its three established businesses, each of which is a leader in enabling
mobility in its respective market segment
Pulp producer Electronic component supplier Mobile phone company
Leading technology innovator
and patent portfolio, targeting to
expand its patent licensing
program
© Nokia 2013 12
• Nokia acquired full control of NSN in August
2013
? Acquisition of 50% stake it did not already
own from Siemens for a consideration of
EUR 1.7 billion
• NSN is the world’s specialist in mobile
broadband
? Five consecutive quarters of non-IFRS
operating profit and seven consecutive
quarters of positive free cash flow
generation*
• Focused on operating at the forefront of
each generation of mobile technology,
including pushing the boundaries of
connecting people through LTE and future
technologies
Sales (EURm) and non-IFRS
Operating Margin (%)
*Free cash flow represents the sum of net cash from continuing operations and net cash used in investing activities less proceeds from/purchases of current available-for-sale investments, liquid assets
Building Nokia’s next chapter
Mobile broadband and related services
% margin
7.0% 11.8%
2 804
2 781
Q1'13 Q2'13
© Nokia 2013 13
• HERE will continue to execute its strategy to
become the leading location cloud company,
offering mapping and location services across
different screens and operating systems
• Subject to closing, Microsoft will become a
strategic licensee of the HERE platform, and
will separately pay Nokia for a four year
license.
? Microsoft will become one of the top three
customers of HERE.
? This revenue stream will substantially replace
the revenue stream HERE is currently receiving
from Nokia’s Devices & Services business
internally.
• 4 out of 5 cars with in-dash navigation use
HERE maps
• Customers of note: Microsoft, Yahoo, Amazon,
Garmin, Firefox, SAP, Qualcomm, U.S. Federal
Highway Administration, Pepsi, Continental,
Toyota, Audi, VW, BMW, Volvo, Ford, Hyundai,
Chrysler, Mercedes Benz, Kia
Sales (EURm) and non-IFRS
Operating Margin (%)
Building Nokia’s next chapter
Independent location cloud company
% margin
-2.3% 3.4%
216
233
As published Q1'13 As published Q2'13
© Nokia 2013 14
• The Advanced Technologies business will build on several of Nokia’s current CTO and
IPR activities.
• It will explore new innovation and business opportunities through advanced research,
development and concept products in areas such as connectivity, sensing and material
technologies as well as web and cloud technologies.
• Nokia has one of the broadest and strongest portfolios in the industry
? Approximately 10,000 patent families comprising approximately 30,000 patents and
applications
? Approximately 1,200 patent families are declared essential to communications standards with
more than 40 licensees
? Approximately two thirds of our current patents will still be in force in 10 years’ time.
• Currently, approximately half of our patent filings come from our CTO Office
• Patent licensing and CTO operating expenses are currently being reported as the
primary components within Devices & Services Other
Building Nokia’s next chapter
Advanced Technologies
© Nokia 2013 15
Agenda
Transaction summary 4
Nokia post transaction 11
Summary 16
© Nokia 2013 16
• Nokia to sell Devices & Services business to Microsoft in EUR 5.44 billion all-cash transaction
• Transaction expected to be significantly accretive to earnings
• Nokia has secured EUR 1.5 billion of financing from Microsoft at attractive terms
• Following the transaction, Nokia plans to focus on its three established businesses, each of which
is a leader in enabling mobility in its respective market segment:
? NSN – leading wireless infrastructure provider, with focus on mobile broadband and related services
? HERE – leading independent location cloud platform company
? Advanced Technologies – leading technology innovator and patent portfolio, targeting to expand its patent
licensing program
• The Nokia Board of Directors is conducting a strategy evaluation between signing and closing of
the transaction
• This transaction maximizes value for Nokia and its shareholders
• The Board of Directors recommends that Nokia shareholders vote to confirm and approve the
sale of substantially all of the Devices & Services business to Microsoft at the Extraordinary
General Meeting
Summary
© Nokia 2013
Q&A
17
doc_733942722.pdf
• Nokia to sell Devices & Services business to Microsoft in EUR 5.44 billion all-cash transaction
− The transferred business includes the Mobile Phones and Smart Devices business units as well as an industry-leading design team,
operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities,
and related support functions
− Approximately 32,000 people are expected to transfer to Microsoft at closing
− As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of closing, and
Microsoft will grant Nokia reciprocal rights to utilize Microsoft’s patents in its HERE services. In addition, Nokia will grant Microsoft
an option to extend this mutual patent agreement to perpetuity.
− Of the total purchase price, EUR 3.79 billion relates to the purchase of substantially all of the Devices & Services business, and EUR
1.65 billion relates to the mutual patent license agreement and future option
Conference Call
September 3, 2013
15.00 / Helsinki
08.00 / New York
Nokia
Risto Siilasmaa / Chairman and interim CEO
Timo Ihamuotila / CFO and interim President
Matt Shimao / Head of Investor Relations
2 © Nokia 2013
FORWARD-LOOKING STATEMENTS
It should be noted that Nokia and its business are exposed to various risks and uncertainties and certain statements herein that are not historical
facts are forward-looking statements, including, without limitation, those regarding: A) the planned sale by Nokia of substantially all of Nokia’s
Devices & Services business, including Smart Devices and Mobile Phones (referred to below as "Sale of the D&S Business") pursuant to a purchase
agreement between Nokia and Microsoft (referred to below as “Agreement”); B) the closing of the Sale of the D&S Business; C) obtaining the
shareholder approval for the Sale of the D&S Business; D) receiving timely, or at all, necessary regulatory approvals for the Sale of the D&S
Business; E) expectations, plans or benefits related to or caused by the Sale of the D&S Business; F) expectations, plans or benefits related to
Nokia’s strategies, including plans for Nokia with respect to its continuing business areas that will not be divested in connection with the Sale of
the D&S Business; G) expectations, plans or benefits related to changes in leadership and operational structure; H) expectations and targets
regarding our operational priorities, financial performance or position, results of operations and use of proceeds from the Sale of the D&S
Business; and I) statements preceded by "believe," "expect," "anticipate," "foresee," “sees,” "target," "estimate," "designed," "aim", "plans,"
"intends," “focus,” "will" or similar expressions. These statements are based on management's best assumptions and beliefs in light of the
information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we
currently expect. Factors, including risks and uncertainties that could cause these differences include, but are not limited to: 1) the inability to
close the Sale of the D&S Business in a timely manner, or at all, for instance due to the inability or delays in obtaining the shareholder approval or
necessary regulatory approvals for the Sale of the D&S Business, or the occurrence of any event, change or other circumstance that could give
rise to the termination of the Agreement; 2) the potential adverse effect on the sales of our mobile devices, business relationships, operating
results and business generally resulting from the announcement of the Sale of the D&S Business or from the terms that we have agreed for the
Sale of the D&S Business; 3) any negative effect caused by us entering into the Sale of the D&S Business, as we may forego other competitive
alternatives for strategies or partnerships that would benefit our Devices & Services business and if the Sale of the D&S Business is not closed, we
may have limited options to continue the Devices & Services business or enter into another transaction on terms favorable to us, or at all; 4) our
ability to effectively and smoothly implement planned changes to our leadership and operational structure or maintain an efficient interim
governance structure and preserve or hire key personnel; 5) any negative effect from the implementation of the Sale of the D&S Business, which
will require significant time, attention and resources of our senior management and others within the company potentially diverting their attention
from other aspects of our business; 6) disruption and dissatisfaction among employees caused by the plans and implementation of the Sale of the
D&S Business reducing focus and productivity in areas of our business; 7) the amount of the costs, fees, expenses and charges related to or
triggered by the Sale of the D&S Business; 8) any impairments or charges to carrying values of assets or liabilities related to or triggered by the
Sale of the D&S Business; 9) potential adverse effect on our business, properties or operations caused by us implementing the Sale of the D&S
Business; 10) the initiation or outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against us
relating to the Sale of the D&S Business; and, as well as the risk factors specified on pages 12-47 of Nokia's annual report on Form 20-F for the
year ended December 31, 2012 under Item 3D. "Risk Factors." and risks outlined in our most recent interim report. Other unknown or
unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in
the forward-looking statements. Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a
result of new information, future events or otherwise, except to the extent legally required.
Disclaimer
© Nokia 2013 3
Agenda
Transaction summary 4
Nokia post transaction 11
Summary 16
© Nokia 2013 4
Transaction Summary
• Nokia to sell Devices & Services business to Microsoft in EUR 5.44 billion all-cash transaction
? The transferred business includes the Mobile Phones and Smart Devices business units as well as an industry-leading design team,
operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities,
and related support functions
? Approximately 32,000 people are expected to transfer to Microsoft at closing
? As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of closing, and
Microsoft will grant Nokia reciprocal rights to utilize Microsoft’s patents in its HERE services. In addition, Nokia will grant Microsoft
an option to extend this mutual patent agreement to perpetuity.
? Of the total purchase price, EUR 3.79 billion relates to the purchase of substantially all of the Devices & Services business, and EUR
1.65 billion relates to the mutual patent license agreement and future option
• Transaction is expected to close in Q1 2014, subject to approval by Nokia’s shareholders, regulatory
approvals, and other customary closing conditions
• Nokia has secured EUR 1.5 billion of financing from Microsoft at attractive terms
? The financing is not conditional on the transaction closing
? If the transaction closes, the outstanding bonds will be netted against the deal proceeds at principal and accrued interest
• Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a
four year license
• Leadership changes
? To avoid any potential conflict of interest, between now and the pending closure of the transaction, Stephen Elop will step aside as
President and CEO, resign from the Board of Directors, and will become Executive Vice President, Devices & Services
? Risto Siilasmaa will assume responsibility as interim CEO, while continuing in his role as Chairman of the Nokia Board of Directors
? Timo Ihamuotila will become interim President of Nokia, and will assume responsibility for chairing the Nokia Leadership team,
while continuing in his role as CFO of Nokia
© Nokia 2013 5
Transaction Summary (continued)
• Gain on sale of approximately EUR 3.2 billion expected
• Transaction expected to be significantly accretive to earnings
• The transaction will provide Nokia with financial strength to invest for success and puts Nokia on a
path to return to its target Investment Grade rating
• Nokia will retain its Chief Technology Office organization and patent portfolio
• Following the transaction, Nokia plans to focus on its three established businesses, each of which is a
leader in enabling mobility in its respective market segment:
? NSN – leading wireless infrastructure provider, with focus on mobile broadband and related services
? HERE – leading independent location cloud platform company
? Advanced Technologies – leading technology innovator and patent portfolio, targeting to expand its patent licensing program
• Nokia will retain its headquarters in Finland
• Excluding the approximately 32,000 people planned to transfer to Microsoft, Nokia would have
employed approximately 56,000 people at the end of the second quarter 2013
• The Nokia Board of Directors is conducting a strategy evaluation between signing and closing of the
transaction
• After the evaluation is complete, deemed excess capital is planned to be distributed to shareholders
© Nokia 2013 6
Transaction expected to be significantly
accretive to earnings
Full Year 2012
Non-IFRS Operating Margin %
First Half 2013
Non-IFRS Operating Margin %
Pro-Forma results reflect Nokia’s continuing businesses, with Devices & Services treated as discontinued operations, as
well as the inclusion of the new HERE license
0,4%
8,5%
As published 2012 Pro-Forma 2012
4,2%
12,1%
As published 1H'13 Pro-Forma 1H'13
© Nokia 2013 7
Secured attractive financing from
Microsoft
• Nokia has secured EUR1.5B of financing from Microsoft for the period between signing and closing at a blended
interest of c.2.4%
• Microsoft has extended the financing available at the sole option of Nokia and independently from closing of the
transaction, in the form of subordinated convertible notes
• Nokia has notified Microsoft of its intention to draw on the aforementioned notes for their entire amount
• The financing has been negotiated at arm-length terms and structured in 3 tranches of EUR500M each
1. Maturing in Sep-2018 with 1.125% coupon and EUR3.93 conversion price per NOKIA share
2. Maturing in Sep-2019 with 2.5% coupon and EUR4.09 conversion price per NOKIA share
3. Maturing in Sep-2020 with 3.625% coupon and EUR4.24 conversion price per NOKIA share
• Nokia will pay back the outstanding amount to Microsoft from the proceeds of the deal upon closing
• Microsoft cannot exercise the call option on the convertible for 2 years
• In case the transaction will not close, the financing will continue to be available to Nokia as per the terms agreed
• The three tranches are subject to a lock-up period which terminates at the earliest of respectively 2, 3, and 4 years
and the termination by Nokia of the Existing Commercial agreement with Microsoft
• Nokia has secured EUR 1.5 billion of financing from Microsoft, immediately available
• The financing structure is three EUR 500 million tranches of convertible notes
? The first tranche matures in 5 years and has a 1.125% per annum coupon payable semi-annually
with an initial conversion price of EUR 3.9338
? The second tranche matures in 6 years and has a 2.5% per annum coupon payable semi-annually
with an initial conversion price of EUR 4.0851
? The third tranche matures in 7 years and has a 3.625% per annum coupon payable semi-annually
with an initial conversion price of EUR 4.2364
• It is at Nokia’s discretion if it chooses to draw down all or some of these tranches
• The financing is not conditional on the transaction closing
• If the transaction closes, the outstanding bonds will be netted against the deal
proceeds at principal and accrued interest
• The earliest that Microsoft could convert any of these bonds to shares is two years
from draw down
Risto Siilasmaa
(Chairman of Nokia Board of Directors
and interim CEO)
Michael Halbherr
(EVP, HERE)
Stephen Elop
(EVP, Devices
& Services)
Marko Ahtisaari
(EVP, Design**)
Jo Harlow
(EVP, Smart Devices)
Juha Putkiranta
(EVP, Operations)
Timo Toikkanen
(EVP, Mobile Phones)
Chris Weber
(EVP, Sales and
Marketing)
Timo Ihamuotila
(CFO and interim
President*)
Louise Pentland
(EVP, Chief Legal
Officer)
Henry Tirri
(EVP, Chief Technology
Officer)
Juha Äkräs
(EVP, HR)
Kai Öistämö
(EVP, Corporate
Development)
Jesper Ovesen
(Chairman of NSN
Board of Driectors)
Rajeev Suri
(CEO, NSN)
Nokia Leadership Structure
*Timo Ihamuotila will also assume the responsibility of chairing the Nokia Leadership Team
**Marko Ahtisaari will step down from the Nokia Leadership Team and his position as EVP, Design, effective November 1, 2013
8
Timeline
Closing of the transaction is subject to approval by Nokia’s
shareholders, regulatory approvals, and other customary
closing conditions
© Nokia 2013
September 3, 2013 November 19, 2013
Regulatory review
Announcement
Sale of Devices & Services
business, mutual patent
agreement, availability of EUR
1.5 billion of financing, and
HERE license agreement
Call of Nokia
EGM
Nokia calls EGM to request
approval for transaction
Nokia to make available more
information on the transaction
and its background
September, 2013
EGM
EGM expected to take place on
November 19, 2013
Expected closing
Regulatory approvals expected
to be received
Closing of transaction
Q1 2014
9
Reverse
Termination
Provision
The transaction is subject to a USD 750 million termination fee payable
by Microsoft to Nokia, in the event that the transaction fails to receive
necessary regulatory clearances
© Nokia 2013 10
Agenda
Transaction summary 4
Nokia post transaction 11
Summary 16
© Nokia 2013
Change and reinvention
11
1865 c.1910s c.1980s Today
Sale of Devices & Services business
Nokia Solutions and Networks HERE Advanced Technologies
World’s specialist in mobile
broadband and global #2 in LTE
Leading position through a broad
location offering across mobile
devices, connected devices,
enterprise solutions, and the
automotive environment
Following the transaction, Nokia plans to focus on its three established businesses, each of which is a leader in enabling
mobility in its respective market segment
Pulp producer Electronic component supplier Mobile phone company
Leading technology innovator
and patent portfolio, targeting to
expand its patent licensing
program
© Nokia 2013 12
• Nokia acquired full control of NSN in August
2013
? Acquisition of 50% stake it did not already
own from Siemens for a consideration of
EUR 1.7 billion
• NSN is the world’s specialist in mobile
broadband
? Five consecutive quarters of non-IFRS
operating profit and seven consecutive
quarters of positive free cash flow
generation*
• Focused on operating at the forefront of
each generation of mobile technology,
including pushing the boundaries of
connecting people through LTE and future
technologies
Sales (EURm) and non-IFRS
Operating Margin (%)
*Free cash flow represents the sum of net cash from continuing operations and net cash used in investing activities less proceeds from/purchases of current available-for-sale investments, liquid assets
Building Nokia’s next chapter
Mobile broadband and related services
% margin
7.0% 11.8%
2 804
2 781
Q1'13 Q2'13
© Nokia 2013 13
• HERE will continue to execute its strategy to
become the leading location cloud company,
offering mapping and location services across
different screens and operating systems
• Subject to closing, Microsoft will become a
strategic licensee of the HERE platform, and
will separately pay Nokia for a four year
license.
? Microsoft will become one of the top three
customers of HERE.
? This revenue stream will substantially replace
the revenue stream HERE is currently receiving
from Nokia’s Devices & Services business
internally.
• 4 out of 5 cars with in-dash navigation use
HERE maps
• Customers of note: Microsoft, Yahoo, Amazon,
Garmin, Firefox, SAP, Qualcomm, U.S. Federal
Highway Administration, Pepsi, Continental,
Toyota, Audi, VW, BMW, Volvo, Ford, Hyundai,
Chrysler, Mercedes Benz, Kia
Sales (EURm) and non-IFRS
Operating Margin (%)
Building Nokia’s next chapter
Independent location cloud company
% margin
-2.3% 3.4%
216
233
As published Q1'13 As published Q2'13
© Nokia 2013 14
• The Advanced Technologies business will build on several of Nokia’s current CTO and
IPR activities.
• It will explore new innovation and business opportunities through advanced research,
development and concept products in areas such as connectivity, sensing and material
technologies as well as web and cloud technologies.
• Nokia has one of the broadest and strongest portfolios in the industry
? Approximately 10,000 patent families comprising approximately 30,000 patents and
applications
? Approximately 1,200 patent families are declared essential to communications standards with
more than 40 licensees
? Approximately two thirds of our current patents will still be in force in 10 years’ time.
• Currently, approximately half of our patent filings come from our CTO Office
• Patent licensing and CTO operating expenses are currently being reported as the
primary components within Devices & Services Other
Building Nokia’s next chapter
Advanced Technologies
© Nokia 2013 15
Agenda
Transaction summary 4
Nokia post transaction 11
Summary 16
© Nokia 2013 16
• Nokia to sell Devices & Services business to Microsoft in EUR 5.44 billion all-cash transaction
• Transaction expected to be significantly accretive to earnings
• Nokia has secured EUR 1.5 billion of financing from Microsoft at attractive terms
• Following the transaction, Nokia plans to focus on its three established businesses, each of which
is a leader in enabling mobility in its respective market segment:
? NSN – leading wireless infrastructure provider, with focus on mobile broadband and related services
? HERE – leading independent location cloud platform company
? Advanced Technologies – leading technology innovator and patent portfolio, targeting to expand its patent
licensing program
• The Nokia Board of Directors is conducting a strategy evaluation between signing and closing of
the transaction
• This transaction maximizes value for Nokia and its shareholders
• The Board of Directors recommends that Nokia shareholders vote to confirm and approve the
sale of substantially all of the Devices & Services business to Microsoft at the Extraordinary
General Meeting
Summary
© Nokia 2013
Q&A
17
doc_733942722.pdf