Goodwill and intangible assets

12 Months Ended

Dec. 31, 2023

Intangible assets and goodwill [abstract]

Goodwill and intangible assets

4.1. Goodwill and intangible assets

Accounting policies

Intangible assets acquired separately are measured on

initial recognition at cost. Internally generated intangibles,

except for development costs that may be capitalized, are

expensed as incurred. Development costs are capitalized

only if Nokia has the technical feasibility to complete the

asset; has an ability and intention to use or sell the asset;

can demonstrate that the asset will generate future

economic benefits; has resources available to complete

the asset; and has the ability to measure reliably the

expenditure during development.

The useful life of Nokia’s intangible assets, other than

goodwill, is finite. Following initial recognition, finite

intangible assets are carried at cost less accumulated

amortization and accumulated impairment losses. Intangible

assets are amortized over their useful lives, generally three

years to ten years, using the straight-line method, which is

considered to best reflect the pattern in which the asset’s

future economic benefits are expected to be consumed.

Depending on the nature of the intangible asset, the

amortization charges are included in cost of sales,

research and development expenses or selling, general

and administrative expenses.

Goodwill is allocated to the cash-generating units or groups

of cash-generating units that are expected to benefit from

the synergies of the related business combination and that

reflect the lowest level at which goodwill is monitored for

internal management purposes. A cash-generating unit, as

determined for the purposes of Nokia’s goodwill impairment

testing, is the smallest group of assets generating cash

inflows that are largely independent of the cash inflows

from other assets or groups of assets. The carrying value

of a cash-generating unit includes its share of relevant

corporate assets allocated to it on a reasonable and

consistent basis. When the composition of one or more

groups of cash-generating units to which goodwill has been

allocated is changed, the goodwill is reallocated based on

the relative fair value of the affected groups of cash-

generating units.

Nokia tests the carrying value of goodwill for impairment

annually. In addition, Nokia assesses the recoverability of the

carrying value of goodwill and intangible assets if events

or changes in circumstances indicate that the carrying value

may be impaired. Factors that Nokia considers when it

reviews indications of impairment include, but are not

limited to, underperformance of the asset relative to its

historical or projected future results, significant changes

in the manner of using the asset or the strategy for the

overall business, and significant negative industry or

economic trends.

Nokia conducts its impairment testing by determining the

recoverable amount for an asset, a cash-generating unit or

groups of cash-generating units. The recoverable amount

of an asset, a cash-generating unit or groups of cash-

generating units is the higher of its fair value less costs of

disposal and its value-in-use. The recoverable amount is

compared to the asset’s, cash-generating unit’s or groups

of cash-generating units’ carrying value. If the recoverable

amount for the asset, cash-generating unit or groups of

cash-generating units is less than its carrying value, the

asset is considered impaired and is written down to its

recoverable amount. Impairment losses are presented

in cost of sales, research and development expenses or

selling, general and administrative expenses, except for

impairment losses on goodwill, which are presented in

other operating expenses.

EURm	Goodwill	Intangible assets	Total
2023
Acquisition cost at 1 January	6 799	9 778	16 577
Additions	—	299	299
Disposals, retirements and reclassifications	(22)	(23)	(45)
Translation differences	(148)	(161)	(309)
Acquisition cost at 31 December	6 629	9 893	16 522
Accumulated amortization and impairment charges at 1 January	(1 132)	(8 515)	(9 647)
Amortization	—	(423)	(423)
Impairment charges	—	(26)	(26)
Disposals, retirements and reclassifications	—	17	17
Translation differences	7	140	147
Accumulated amortization and impairment charges at 31 December	(1 125)	(8 807)	(9 932)
Net book value at 1 January	5 667	1 263	6 930
Net book value at 31 December	5 504	1 086	6 590
2022
Acquisition cost at 1 January	6 552	9 499	16 051
Additions	—	49	49
Disposals, retirements and reclassifications	—	(19)	(19)
Translation differences	247	249	496
Acquisition cost at 31 December	6 799	9 778	16 577
Accumulated amortization and impairment charges at 1 January	(1 121)	(7 879)	(9 000)
Amortization	—	(465)	(465)
Disposals, retirements and reclassifications	—	19	19
Translation differences	(11)	(190)	(201)
Accumulated amortization and impairment charges at 31 December	(1 132)	(8 515)	(9 647)
Net book value at 1 January	5 431	1 620	7 051
Net book value at 31 December	5 667	1 263	6 930

Net book value of intangible assets by type of asset

EURm	2023	2022
Customer relationships	605	923
Patents and licenses	316	151
Technologies and IPR&D	31	83
Tradenames and other	134	106
Total	1 086	1 263

At 31 December 2023, the weighted average for the remaining

amortization period is approximately two years for customer

relationships, six years for patents and licenses, two years for

technologies and IPR&D, and three years for tradenames

and other.

Goodwill

Nokia has allocated goodwill to its operating segments

corresponding to groups of cash-generating units (CGUs) that

are expected to benefit from goodwill. Refer to Note 2.2.

Segment information.

Allocation of goodwill

The following table presents the allocation of goodwill to

groups of CGUs at 31 December:

EURm	2023	2022
Network Infrastructure	2 739	2 812
Mobile Networks	2 228	2 284
Cloud and Network Services	537	571

Recoverable amounts

The recoverable amounts of the groups of CGUs in 2023 were

based on value-in-use that was determined using a discounted

cash flow calculation. The cash flow projections used in

calculating the recoverable amounts were based on financial

plans approved by management covering an explicit forecast

period of three years.

Seven additional years of cash flow projections subsequent

to the explicit forecast period of three years reflect a gradual

progression towards the steady state cash flow projections

modeled in the terminal year. The terminal growth rate

assumptions reflect long-term average growth rates for the

industries and economies in which the groups of CGUs operate.

The discount rates reflect current assessments of the time

value of money and relevant market risk premiums considering

risks and uncertainties for which the future cash flow estimates

have not been adjusted. Discounted cash flow projections are

based on post-tax cash flows and post-tax discount rates,

which do not materially differ from the pre-tax basis

discounted cash flow projections. Other key variables in future

cash flow projections include assumptions on estimated sales

growth, gross margin and operating margin.

Sales growth and gross margin assumptions reflect

management expectations of addressable market growth,

market share and competitive position, strategy and long-term

business outlook. Gross margin and operating profit

assumptions include the impact of an ongoing cost savings

program announced on 19 October 2023. The cost savings

program is expected to reduce cost base and increase

operational efficiency especially within Mobile Networks

and Cloud and Network Services.

Terminal growth rate and post-tax discount rate applied in the

impairment test for the groups of CGUs:

	Terminal growth rate		Post-tax discount rate
Key assumption %	2023	2022	2023	2022
Network Infrastructure	1.0	1.6	9.3	9.0
Mobile Networks	1.0	1.3	8.3	7.7
Cloud and Network Services	1.0	1.8	7.7	7.0

The results of the impairment testing indicate adequate

headroom for each group of CGUs in 2023.