Helsinki-based Nokia has made several acquisitions to expand Internet services. The company announced last month that it would buy Enpocket, a U.S.-based mobile advertising company, and last year acquired Loudeye Corp. to expand its digital music offerings. In a push to challenge rivals, including Apple Inc.'s iTunes and iPod, Nokia unveiled new Internet services and gadgets this year to help customers download music and to play games on mobile handsets.

Kallasvuo added that by acquiring Navteq, Nokia "will be able to bring context and geographical information to a number of our Internet services with accelerated time to market."

Jari Honko, an analyst at eQ Bank in Helsinki, said Nokia is "extremely driven" in its strategy to move into mobile services and called Navteq "the most significant player in its field."

"It makes a lot of sense," he said. "This is one of the areas that should become extremely important in the future. ... Nokia could very well build one of its core services around it."

The acquisition is subject to regulatory approvals and is expected to close in the first quarter in 2008. It will be financed through a combination of cash and debt.

Nokia said it expects the acquisition to dilute its earnings in 2008 and 2009, but that it will not impact share buybacks under the current mandate, or future dividends and share buybacks.

In the long term, Honko said the deal was "brilliant," but said that in the short term, "investors might worry about the diluted earnings."

Navteq shares fell 98 cents to $76.99 Monday, while Nokia fell 81 cents to $37.12.