Apple expected to pay Nokia €420m as part of patent settlement

Nokia also to receive quarterly payments of around €95m, according to Deutsche Bank

Apple is expected to pay Nokia a lump sum of around €420m as part of the recently announced patent settlement, according to estimates from a Deutsche Bank analyst.

The companies reached an agreement on Tuesday over their long-running battle, and Apple will pay a licensing fee to Nokia in order to continue using its wireless, encoding and encryption intellectual property.

The terms of the settlement will remain confidential, but rough estimates have been made on how much Apple will have to pay by Deutsche Bank research analyst Kai Korschelt.

The financial agreement will provide Nokia with a much-needed cash injection.

"Nokia could receive a one-off payment of €420m in Q2 2010 if we assume a one per cent royalty rate on all 110 million iPhones sold up to Q1 2011 at an average selling price of $550," he wrote.

The Finnish manufacturer will also receive recurring royalty payments based on future revenues generated by the iPhone and iPad which could bring in significant revenues, Korschelt continued.

"We estimate Nokia could generate €95m in quarterly royalty income if we assume a quarterly run-rate of 20 million iPhones and five million 3G iPads and a one per cent royalty rate," he said.

However, the analyst noted that, although this is positive for Nokia, it doesn't change the bigger picture for the ailing firm.

"[There is] still considerable uncertainty whether future Windows Mobile-based smartphones can drive a stabilisation and/or recovery in Nokia's smartphone share and margins," he said.

Analysts at Nomura have predicted that Samsung and Apple will overtake Nokia in the mobile market in the second quarter of 2011, as the company loses its former status as the top handset manufacturer in the world.

Nokia chief executive Stephen Elop has also had to repeatedly quash rumours of an impending Microsoft takeover.