OREANDA-NEWS. Fitch Ratings says Nokia's (BB / Positive) planned sale of its digital mapping and location services business HERE for EUR2.8bn to a consortium of automotive companies will increase financial flexibility but leave the operating profile unchanged.

Nokia estimates it will receive net proceeds of slightly above EUR2.5bn and book a gain on the sale and a related release of cumulative foreign exchange translation differences totalling approximately EUR1bn.

The sale of the division is in line with company's strategy of focussing on its networks and technologies businesses. HERE is a small part of Nokia's overall business, representing 2% of total group non-IFRS operating profits in 2014. Monetising the value of the division in light of Nokia's forthcoming acquisition of Alcatel-Lucent carries strategic logic, in our opinion.

The substantial net sales proceeds of EUR2.5bn will add to Nokia's existing net cash position of EUR3.83bn in 2Q15, although this in itself will not trigger an upgrade of Nokia's rating.

Nokia's rating is driven by its operating profile which Fitch view as making a step improvement following the acquisition of Alcatel-Lucent. Fitch is likely to upgrade Nokia once there is evidence that the integration programme with Alcatel-Lucent is on track, assuming both companies continuing to perform well ahead of the acquisition and Nokia maintains its conservative financial structure post acquisition. Fitch views a sustained net cash position in the multiple billion range as important to the rating given industry and operating risks.