Earnings season is in full swing and so far, of the licensing-heavy businesses to report, it’s Nokia that is arguably the standout performer.

Many of the headlines on the Finnish company’s results purred about the strong licensing performance from Nokia Technologies, the division responsible for monetising the company’s vast IP portfolio. It saw net sales for the quarter jump 79% year-on-year to €554 million while for the year as a whole they increased 57% to €1.654 billion.

The numbers will not surprise anyone who has followed the progress of Nokia’s licensing team over the last year. In 2017 it signed a series of headline deals including with Apple, Huawei and Xiaomi - a run of success which saw patent business chief Ilkka Rahnasto crowned as our top market maker of the year.

These latest results, though, had plenty of interest beyond the headline figures. For one thing, the company appears extremely bullish on its licensing outlook. It provided further detail on expected performance over the next three years. Of its approximately €1.6 billion in licensing in 2017 around €300 million was non-recurring.

According to additional guidance, Nokia expects recurring net sales from the licensing business to grow at a compound annual rate of 10% over the next three years.

When asked on an analyst call to explain where that growth might come from, CFO Kristian Pullola pointed to further opportunities in China, India - which for many licensors remains a relatively embryonic market - and sectors such as automotive, Internet of Things, consumer devices and possible brand licensing.

Again, that is no huge surprise. Having done deals with Huawei and Xiaomi, it’s not unreasonable to expect that Rahnasto and his team are likely to secure further ones with other Chinese manufacturers over the coming year. India, meanwhile, is becoming another hugely important mobile market; indeed, Hon Hai is now in the process of rolling out Nokia branded devices there. It is, of course, no great secret that convergence is also a significant opportunity for a lot of companies that have invested significantly in high-tech R&D over the years.

Since Nokia sold its handset division to Microsoft in 2013 and went through an internal reorganisation which saw patent licensing become part of Nokia Technologies, the Finnish company has focused intensely on growing the return from its patent portfolio. In a sign of the company’s progress, just five years ago the CFO at the time was making predictions of an annual licensing return of €500 million.

As the owner of one of the foundational wireless patent portfolios, Nokia can feel confident that IP monetisation will remain one of the key drivers for the business, but are its growth numbers achievable? The company’s own guidance points out what any licensor knows: royalty revenues can be highly variable and subject to forces not entirely within a patent owner’s own control.

For instance, a recalcitrant licensee in the process of negotiating a new deal may throw forecasts out of whack if they decline to sign a new licence and turn to litigation. An adverse – and precedential court decision in a major jurisdiction – has the potential to blow an entire portfolio out of the water. But Nokia would not be offering this kind of guidance to investors if it didn’t have a high degree of confidence that it was possible - such steers are not provided lightly.

Nokia’s results followed the latest numbers from Ericsson and it’s hard not to compare the performance of the two. The Swedish company continues to struggle overall, with 2017 net sales declining 10% year-on-year. Licensing remains a big driver, but while revenues for the year came in at SEK7.9 billion or around $1 billion, it now significantly lags its Finnish rival.

That’s notable because it has been clear for several years that Nokia had Ericsson in mind as it talked up the potential of its licensing business. On a July 2014 investor call the Finnish telco’s CEO Rajeev Suri set the bar high telling analysts:

“While we have a strong intellectual property business today, we continue to believe it can be better now that we are no longer in the device business. This belief is strengthened when we see at least one major competitor generate more IP revenues even with our view that our industry-leading portfolio is the result of broader and deeper investments in mobile and adjacent technologies.”

If, as seems likely, that competitor was Ericsson (which chalked up more than $1.5 billion from licensing in 2013) then Suri and the licensing team can take a great deal of credit for surpassing its Nordic rival. As the rollout of 5G gets underway, the stage is set for a titanic licensing battle between two of the wireless sector’s leaders.