Microsoft will pay Nokia more than $1 billion (€719 million) to promote and develop Windows-based handsets as part of their smartphone software agreement, according to sources.

Nokia will pay Microsoft a fee for each copy of Windows used in its phones, costs that will be offset as Nokia curtails its own budget for software research and development. The agreement runs for more than five years, the sources said.

Nokia shares have dropped 26 per cent since the accord was unveiled on February 11th, reflecting doubts about the move to adopt Microsoft’s operating system. – (Bloomberg)