HELSINKI (Reuters) - Finland's state investment arm has spent about 844 million euros ($1.04 billion or 747.78 million pounds) on building a 3.3 percent stake in Nokia NOKIA.HE, strengthening national influence over the telecom network gear maker.

FILE PHOTO: Rajeev Suri, Nokia's President and Chief Executive Officer, speaks during the Mobile World Congress in Barcelona, Spain February 25, 2018. REUTERS/Yves Herman /File Photo

Nokia ruled the global mobile phone market a decade ago and the collapse of that business was a major cause of a decade of economic stagnation from which Finland is only just recovering.

Nokia and Microsoft MSFT.O, which bought the Finnish company's phone business in 2014, have cut thousands of jobs in the Nordic country.

Now focused on the telecom network industry, Nokia employs 6,300 people in Finland in a global workforce of around 102,800.

“We believe that this will be a good investment. One must remember that Nokia is Finland’s largest company and its Finnish ownership has been rather thin,” Solidium CEO Antti Makinen told Reuters.

Solidium, the government investment arm, built the stake by buying shares on the market over the early months of 2018.

It trimmed its stake in Swedish telecoms company Telia TELIA.HE, steel firm SSAB SSABa.ST and holding company Sampo SAMPO.HE in the past weeks to finance the investment in Nokia.

Makinen said Solidium would not seek a seat on Nokia’s board at a shareholder meeting scheduled for May but that was an option it could look at in the future.

Economy minister Mika Lintila said the Nokia investment plan was purely down to the board of Solidium.

“For Finland, Nokia is of course an interesting company, and its ownership has been extremely dispersed,” Lintila said.

“Solidium is now a significant owner and it will be heard in the future when board seats are being discussed,” he added.

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Nokia shares were down 0.4 percent at 1400 GMT. The company declined to comment on the news.

Asked if Solidium was looking to increase its stake in Nokia, Makinen said that he was happy with the current stake and would not speculate on future investments.

Most of Solidium’s stakes are to the tune of over 10 percent in a company’s outstanding shares. The Nokia investment accounts for around 11 percent of its total equity stakes.

According to Nokia’s webpage, three Finnish pension funds at this point own less than 3 percent of Nokia, with most of the shares in the hands of foreign institutional investors. The biggest owner at the end of last year was U.S. asset manager Blackrock with a stake of 6.2 percent.

Nokia and rivals, Sweden's Ericsson ERICb.ST and China's Huawei [HWT.UL], have struggled in the past years as demand for current 4G generation network gear has slid.

But last month, Nokia said that major telecom operators were accelerating their schedules for adopting 5G networks, boosting hopes for an uplift for its business later this year.

Solidium was founded a decade ago as a bid to distance politicians from the state’s holdings. It manages minority holdings in 13 listed Finnish companies which mainly originate from an era of state-led industrialisation.

It aims to keep significant Finnish companies “more or less Finnish”, Makinen told Reuters in an interview last month, adding that the priority was to help the companies to succeed and not for example to protect Finnish jobs.

Fund manager Juha Varis from Danske Bank, who has Nokia among his fund’s biggest investments, welcomed an entry of a long-term Finnish investor but considered Solidium’s strategy as unclear.

"This is somewhat surprising.. Nokia is a very international company these days, it is not that strategic to the country like telecom operator Elisa ELISA.HE, for instance."

“Then again, 3 percent does not give you that much say in the company... it looks like a rather financial-driven investment,” he added.

Nokia’s dividend yield is just under 4 percent based on its current share price. ($1 = 0.8112 euros)