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.

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.

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…

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…

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.

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.

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.

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.

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.

Thank you, Aleksander. Kerry, next question please?

The next question comes from David Mulholland of UBS. Please go ahead.

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?

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.

Great. Thank you, David. Kerry, next question please?

The next question comes from Mike Walkley of Canaccord Genuity. Please go ahead.

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.

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.

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.

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.

Thank you, Achal. Kerry, next question please?

The next question comes from Sandeep Deshpande of JPMorgan. Please go ahead.

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.

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.

Thank you, Sandeep. Kerry, we'll take our next question, please.

The next question comes from Robert Sanders of Deutsche Bank. Please go ahead.

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.

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.

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?

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.

Great. Thank you, Francois. Kerry, next question please?

The next question comes from Stuart Jeffrey of Natixis. Please go ahead.

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.

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.

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.

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.

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).

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.

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.

Thank you, Sébastien. Kerry, we'll take our next question, please.

The next question comes from Amit Harchandani of Citigroup. Please go ahead.

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.

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.

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.

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.

So thank you for your great questions, today. And now, I'd like to turn the call back to Rajeev for closing comments.

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.

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.