An attendee holds a yellow Nokia 8110 4G smartphone, manufactured by HMD Global Oy, during a launch event ahead of the Mobile World Congress (MWC) in Barcelona, Spain, on Sunday, Feb. 25, 2018. At the wireless industry’s biggest conference, more than 100,000 people are set to see the latest smartphones, artificial intelligence devices and autonomous drones exhibited by roughly 2,300 companies. Photographer: Angel Garcia/Bloomberg
HMD this year revived the Nokia 8110, the curved 'banana phone' that found fame when it appeared in 'The Matrix' film © Bloomberg

The company behind an attempt to revive the Nokia brand of mobile phones has raised $100m, valuing the Finnish business at more than $1bn.

The new funding round in HMD Global, the business behind the new generation of Nokia phones, was led by Ginko Ventures, the Swiss venture capital firm. Wonderful Stars, a subsidiary of Foxconn’s FIH Mobile that makes the handsets for HMD, also participated as did DMJ Asia Investment Opportunity.

The new company, dubbed “Newkia” given its strong links to the old Nokia phone business, said it shipped 70m handsets in its first year. Its revenue for the 2017 financial year was €1.8bn when it reported an operating loss of €65m.

HMD Global was set up in Espoo, Finland — Nokia’s hometown — in 2016 to revive Europe’s most famous phone brand by manufacturing classic models under licence from Nokia, which had left the market to focus on network equipment.

HMD acquired the legacy feature phone business from Microsoft, which had paid €5.4bn for Nokia’s phone unit in 2013, and was still one of the world’s largest makers of basic phones. The company sold 35m of the handsets in 2016.

HMD has reintroduced a number of old-fashioned Nokia designs. It re-launched the 3310 model, replete with the game Snake and the famous Nokia ringtone based on the Francisco Tárrega waltz, in 2017. This year, HMD revived the Nokia 8110, the curved “banana phone” that found fame when it appeared in The Matrix film.

Those models captured attention but most of the new Nokia phones are low-cost feature phones and smartphones that go head-to-head with Chinese handsets.

Ben Wood, principal analyst at CCS Insight, said the new funds were a sign that HMD needed to grow. “It’s big because it is a recognition that to be successful HMD Global needs to scale very quickly,” he said. “There is no room for sub-scale mobile phone companies any more other than chasing small niches. I see this almost as a competitive response to Xiaomi, Huawei, OnePlus and others.”

Florian Seiche, chief executive of HMD Global, said: “It is our ambition to deliver great smartphones that delight our fans while staying true to our Finnish roots and the hallmarks that the Nokia brand has always been known for.”

Despite HMD’s growth rate, it has not been an entirely smooth ride for the company since it was formed. Arto Nummela, the original chief executive, left in July last year after a dispute with the board to be replaced by Mr Seiche, a telecoms veteran who had worked at Nokia, Microsoft HTC and Orange.

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