The reason for the boost was attributed to the acquisition of Franco-American Alcatel-Lucent and cost cuts helped it in the tough networks market.

Nokia and its rivals are facing a down time as demand for faster 4G mobile broadband equipment has peaked, and upgrades to next-generation 5G equipment are still years away.

Fourth-quarter group earnings before interest and taxes (EBIT) fell 27 per cent  from a year ago to €940 million due to a drop in spending by telecom operators, but beat analysts' average forecast of €788 million in a Reuters poll.

The networks unit's operating margin in the quarter was 14.1 per cent, compared to a market forecast of 11.7 per cent.

Nokia said that while networks sales were set to decline further this year, profitability could improve.

Chief executive Rajeev Suri said:

"We continue to expect our performance to improve in 2017 and see the potential for margin expansion in 2017 and beyond, as market conditions improve and our sales transformation programmes gain further traction."