Rebalancing For Growth - Nokia

Forward-looking statementsIt should be noted that Nokia and itsbusinesses are exposed to various risks anduncertainties and certain statements hereinthat are not historical facts areforward-looking statements, including,without limitation, those regarding:A) our ability to integrate Alcatel Lucent intoour operations and achieve the targetedbusiness plans and benefits, includingtargeted synergies in relation to theAcquisition of Alcatel Lucent;B) expectations, plans or benefits related toour strategies and growth management;These statements are based on management’sbest assumptions and beliefs in light of theinformation currently available to it. Becausethey involve risks and uncertainties, actualresults may differ materially from the resultsthat we currently expect. Factors, includingrisks and uncertainties that could cause thesedifferences include, but are not limited to:1) our ability to execute our strategy, sustainor improve the operational and financialperformance of our business andcorrectly identify and successfully pursuebusiness opportunities or growth;D) expectations, plans or benefits related tochanges in organizational and operationalstructure;2) our ability to achieve the anticipatedbenefits, synergies, cost savings andefficiencies of the Acquisition of AlcatelLucent, and our ability to implementour organizational and operationalstructure efficiently;E) expectations regarding marketdevelopments, general economicconditions and structural changes;3) general economic and market conditionsand other developments in the economieswhere we operate;F) expectations and targets regardingfinancial performance, results, operatingexpenses, taxes, currency exchange rates,hedging, cost savings andcompetitiveness, as well as results ofoperations including targeted synergiesand those related to market share, prices,net sales, income and margins;4) competition and our ability to effectivelyand profitably compete and invest in newcompetitive high-quality products,services, upgrades and technologies andbring them to market in a timely manner;C) expectations, plans or benefits related tofuture performance of our businesses;G) timing of the deliveries of our productsand services;H) expectations and targets regardingcollaboration and partneringarrangements, joint ventures or thecreation of joint ventures, as well as ourexpected customer reach;I) outcome of pending and threatenedlitigation, arbitration, disputes, regulatoryproceedings or investigations byauthorities;5) our dependence on the developmentof the industries in which we operate,including the cyclicality and variabilityof the information technology andtelecommunications industries;6) our global business and exposureto regulatory, political or otherdevelopments in various countries orregions, including emerging marketsand the associated risks in relation totax matters and exchange controls,among others;7) our ability to manage and improve ourfinancial and operating performance, costsavings, competitiveness and synergiesafter the Acquisition of Alcatel Lucent;J) expectations regarding restructurings,investments, uses of proceeds fromtransactions, acquisitions and divestmentsand our ability to achieve the financial andoperational targets set in connection withany such restructurings, investments,divestments and acquisitions; and8) our dependence on a limited numberof customers and large multi-yearagreements;K) statements preceded by or including“believe,” “expect,” “anticipate,”“foresee,” “sees,” “target,” “estimate,”“designed,” “aim,” “plans,” “intends,”“focus,” “continue,” “project,” “should,”“will” or similar expressions.10) Nokia Technologies’ ability to protect itsIPR and to maintain and establish newsources of patent licensing income andIPR-related revenues, particularly in thesmartphone market;9) exchange rate fluctuations, as well ashedging activities;11) our dependence on IPR technologies,including those that we have developedand those that are licensed to us, and therisk of associated IPR-related legal claims,licensing costs and restrictions on use;12) our exposure to direct and indirectregulation, including economic ortrade policies, and the reliability ofour governance, internal controlsand compliance processes to preventregulatory penalties in our businessor in our joint ventures;13) our ability to identify and remediatematerial weaknesses in our internalcontrol over financial reporting;14) our reliance on third-party solutionsfor data storage and service distribution,which expose us to risks relating tosecurity, regulation and cybersecuritybreaches;15) inefficiencies, breaches, malfunctionsor disruptions of informationtechnology systems;16) Nokia Technologies’ ability to generatenet sales and profitability throughlicensing of the Nokia brand, particularlyin digital media and digital health, andthe development and sales of productsand services, as well as other businessventures which may not materializeas planned;17) our exposure to various legislativeframeworks and jurisdictions thatregulate fraud and enforce economictrade sanctions and policies, andthe possibility of proceedings orinvestigations that result in fines,penalties or sanctions;18) adverse developments with respectto customer financing or extendedpayment terms we provide to customers;19) the potential complex tax issues, taxdisputes and tax obligations we may facein various jurisdictions, including the riskof obligations to pay additional taxes;20) our actual or anticipated performance,among other factors, which could reduceour ability to utilize deferred tax assets;21) our ability to retain, motivate, develop andrecruit appropriately skilled employees;NOKIA ANNUAL REPORT ON FORM 20-F 2016

22) disruptions to our manufacturing, servicecreation, delivery, logistics and supplychain processes, and the risks relatedto our geographically-concentratedproduction sites;23) the impact of litigation, arbitration,agreement-related disputes or productliability allegations associated withour business;24) our ability to optimize our capitalstructure as planned and re-establishour investment grade credit rating orotherwise improve our credit ratings;25) our ability to achieve targeted benefitsfrom or successfully implement plannedtransactions, as well as the liabilitiesrelated thereto;26) our involvement in joint ventures andjointly-managed companies;27) the carrying amount of our goodwillmay not be recoverable;28) uncertainty related to the amount ofdividends and equity return we are ableto distribute to shareholders for eachfinancial period;29) pension costs, employee fund-relatedcosts, and healthcare costs; and30) risks related to undersea infrastructure,as well as the risk factors specified onpages 67 to 85 of this annual report onForm 20-F under “Operating and financialreview and prospects - Risk factors” and inour other filings with the U.S. Securitiesand Exchange Commission. Otherunknown or unpredictable factors orunderlying assumptions subsequentlyproven to be incorrect could cause actualresults to differ materially from those inthe forward-looking statements. We donot undertake any obligation to publiclyupdate or revise forward-lookingstatements, whether as a result of newinformation, future events or otherwise,except to the extent legally required.NOKIA ANNUAL REPORT ON FORM 20-F 2016Introduction and useof certain termsNokia Corporation is a public limited liabilitycompany incorporated under the laws of theRepublic of Finland. In this annual report onForm 20-F, any reference to “we,” “us,” “theGroup,” “the company” or “Nokia” meansNokia Corporation and its consolidatedsubsidiaries and generally to Nokia’sContinuing operations, except where weseparately specify that the term meansNokia Corporation or a particular subsidiary orbusiness segment only or our Discontinuedoperations. References to “our shares”,matters relating to our shares or matters ofcorporate governance refer to the shares andcorporate governance of Nokia Corporation.Nokia Corporation has published itsconsolidated financial statements in eurofor periods beginning on or after January 1,1999. In this annual report on Form 20-F,references to “EUR,” “euro” or “ ” are to thecommon currency of the European Economicand Monetary Union, and references to“dollars”, “U.S. dollars”, “USD” or “ ” are tothe currency of the United States. Solely forthe convenience of the reader, this annualreport on Form 20-F contains conversionsof selected euro amounts into U.S. dollars atspecified rates or, if not so specified, at therate of 1.0552 U.S. dollars per euro, whichwas the noon buying rate in New York Cityfor cable transfers in euro as certified forcustoms purposes by the Federal ReserveBank of New York on December 31, 2016.No representation is made that the amountshave been, could have been or could beconverted into U.S. dollars at the ratesindicated or at any other rates.The information contained in, or accessiblethrough, the websites linked throughoutthis annual report on Form 20-F is notincorporated by reference into thisdocument and should not be considereda part of this document.Nokia Corporation furnishes Citibank, N.A.,as Depositary, with its consolidated financialstatements and a related audit opinion ofour independent auditors annually. Thesefinancial statements are prepared on thebasis of International Financial ReportingStandards as issued by the InternationalAccounting Standards Board and inconformity with IFRS as adopted by theEuropean Union (“IFRS”). In accordance withthe rules and regulations of the SEC, we donot provide a reconciliation of net incomeand shareholders’ equity in our consolidatedfinancial statements to accounting principlesgenerally accepted in the United States, orU.S. GAAP. We also furnish the Depositarywith quarterly reports containingunaudited financial information preparedon the basis of IFRS, as well as all noticesof shareholders’ meetings and otherreports and communications that are madeavailable generally to our shareholders. TheDepositary makes these notices, reportsand communications available for inspectionby record holders of American DepositaryReceipts (“ADRs”), evidencing AmericanDepositary Shares (“ADSs”), and distributesto all record holders of ADRs notices ofshareholders’ meetings received bythe Depositary.In addition to the materials delivered toholders of ADRs by the Depositary, holderscan access our consolidated financialstatements, and other information includedin our annual reports and proxy materials,at nokia.com/financials. This annual reporton Form 20-F is also available at nokia.com/financials as well as on Citibank’s website athttp://citibank.ar.wilink.com (enter “Nokia”in the Company Name Search). Holdersmay also request a hard copy of this annualreport by calling the toll-free number1-877-NOKIA-ADR (1-877-665-4223), orby directing a written request to Citibank,N.A., Shareholder Services, PO Box 43077,Providence, RI 02940-3081, United States.With each annual distribution of our proxymaterials, we offer our record holders ofADRs the option of receiving all of thesedocuments electronically in the future.

OverviewContentsOverview 01This is Nokia 02Key data 06Nokia in 2016 – a successful firstyear of combined operations 08Business overview Letter from our President and CEO Our role as a global technology leader Our values Our strategy Our leadership Our businesses Operating and financial reviewand prospects Principal industry trendsaffecting operations Results of operations Results of segments Liquidity and capital resources Material subsequent events Sustainability and corporateresponsibility Employees Dividend Risk factors Shares and share capital Board of Directors and management Articles of Association NOKIA ANNUAL REPORT ON FORM 20-F ate governance Corporate governance statement Compensation 8890104General facts on Nokia Our history Memorandum and Articlesof Association Selected financial data Shares and shareholders Depositary payments in 2016 Related party transactions Production of infrastructureequipment and products Key ratios Controls and procedures Government regulation Sales in U.S.-sanctioned countries Taxation 120122Financial statements Consolidated primary statements Notes to consolidated financialstatements Report of independent registeredpublic accounting firm 143144Other information Exhibits Glossary of terms Investor information Contact information Signatures 015021401

This is NokiaWe create the technology to connect the world.Powered by the research and innovation ofNokia Bell Labs, we serve communications serviceproviders, governments, large enterprises andconsumers with the industry’s most completeend-to-end portfolio of products, services andlicensing. From the enabling infrastructure for5G and the Internet of Things (“IoT”) to emergingapplications in Virtual Reality (“VR”) and digitalhealth, we are shaping the future of technologyto transform the human experience.Since the closing of the Alcatel Lucentacquisition in early January 2016 (the“Acquisition of Alcatel Lucent”), we havecombined global leadership in mobile andfixed network infrastructure with thesoftware, services and advanced technologiesto serve customers in more than 100countries around the world. We are driving thetransition to smart, virtual networks andconnectivity by creating one single networkfor all services, converging mobile and fixedbroadband, IP routing and optical networks,with the software and services to managethem. Our research scientists and engineerscontinue to invent new technologies that willincreasingly transform the way people andthings communicate and connect: 5G, ultrabroadband access, IP and Software DefinedNetworking (“SDN”), Cloud applications,IoT and security platforms, data analytics,as well as sensors and imaging.02Through our five business groups, we havea global presence with operations in Europe,the Middle East & Africa, Greater China,North America, Asia-Pacific and Latin America.In 2016, we had sales in approximately130 countries. We also have research anddevelopment (“R&D”) facilities in Europe,North America and Asia, and at the endof 2016, we employed approximately101 000 people.We closed 2016 delivering net sales ofEUR 23.6 billion. We continued to makesignificant targeted R&D investments, abedrock of our success in innovation, withR&D expenditures equaling EUR 4.9 billionin 2016.Countries of operation100 Number of employees at the end of 2016 101 000R&D investment in 2016EUR 4.9bnNOKIA ANNUAL REPORT ON FORM 20-F 2016

OverviewAcquisition of Alcatel LucentIn April 2015, we announced plans to acquireAlcatel Lucent with an aim to create aninnovation leader in next generationtechnology and services. The all-sharetransaction was agreed on the basis of 0.55new Nokia shares for every Alcatel Lucentshare, a transaction valued at EUR 15.6 billionon a fully diluted basis.At the end of 2015, our shareholders votedoverwhelmingly to approve the Alcatel Lucentacquisition, and in early January 2016 weannounced that we had gained control ofAlcatel Lucent through the successful publicexchange offer for all outstanding AlcatelLucent securities by holding nearly 80%of outstanding Alcatel Lucent securities.NOKIA ANNUAL REPORT ON FORM 20-F 2016During the course of the year, we continuedto take steps towards gaining full ownershipof Alcatel Lucent through the initial andreopened exchange offers and by purchasingAlcatel Lucent shares and OCEANE convertiblebonds in privately negotiated transactions,consequently reaching full ownership ofAlcatel Lucent in November 2016.On October 4, 2016, the French stock marketauthority (Autorité des marchés financiers,the “AMF”) announced that a legal actionwas filed before the Paris Court of Appeal onSeptember 30, 2016 for annulment of theAMF’s clearance decision regarding our publicbuy-out offer, which would be followed bya squeeze-out of all remaining securitiesof Alcatel Lucent. As a result, the publicbuy-out offer period was extended and thesqueeze-out was postponed. We foundthe legal challenge to be without merit,as we believed that the offer compliedwith all applicable laws and regulations.On October 25, 2016, with the legal challengestill pending, the AMF announced thecontinuation of the timetable of the publicbuy-out offer followed by a squeeze-outof all remaining securities of Alcatel Lucent,allowing the public buy-out period to endon October 31, 2016 and the squeeze-outto be implemented on November 2, 2016.On November 2, 2016, we achieved 100%ownership of Alcatel Lucent.On December 15, 2016, the plaintiffswithdrew the complaint they had filed beforethe Paris Court of Appeal and, consequently,the public buy-out offer followed by asqueeze-out had therefore become definitive,confirming our ownership of 100% ofAlcatel Lucent.03

This is Nokia continuedOrganizational structureand reportable segmentsJanuary 14, 2016 was Nokia and AlcatelLucent’s first day of combined operations.After the Acquisition of Alcatel Lucent, weorganized our networks-oriented businessesinto four business groups: Mobile Networks,Fixed Networks, IP/Optical Networks andApplications & Analytics (together the“Networks business”); and kept our driverof future innovation and licensing, NokiaTechnologies, as a separate fifth businessgroup. For descriptions of our businessgroups, refer to “Business overview—Networks business” and “Business overview—Nokia Technologies”.We have three reportable segments:(i) Ultra Broadband Networks comprisingMobile Networks and Fixed Networks,(ii) IP Networks and Applications comprisingIP/Optical Networks and Applications &Analytics (all within our Networks business),and (iii) Nokia Technologies.04Following the changes to our organizationalstructure announced on March 17, 2017, wewill continue to report financial informationfor Ultra Broadband Networks, IP Networksand Applications and Nokia Technologies.Ultra Broadband Networks will be composedof the Mobile Networks, Global Services andFixed Networks business groups. IP Networksand Applications is composed of the IP/OpticalNetworks and Applications & Analyticsbusiness groups.Additionally, we report the results of otherbusiness activities that are not reportablesegments, such as our undersea cablesbusiness, Alcatel-Lucent SubmarineNetworks (“ASN”), and our antenna systemsbusiness, Radio Frequency Systems (“RFS”),in aggregate. Both ASN and RFS are beingmanaged as separate businesses.NOKIA ANNUAL REPORT ON FORM 20-F 2016

OverviewOur business groups in 2016Mobile NetworksHigher quality and morereliable mobil

As filed with the Securities and Exchange Commission on March 23, 2017 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016 Commission file number 1-13202 Nokia Corporation