Nokia Corp. will return €4 billion ($4.4 billion) to shareholders as it expects savings from its proposed Alcatel-Lucent acquisition to materialize one year ahead of schedule, driving shares in both companies higher even as they reported worsened third-quarter results.

The Finnish maker of high-speed mobile networks on Thursday said shareholders will receive an ordinary dividend of at least €0.15 a share in both 2015 and 2016, plus a special dividend of €0.10 a share, subject to approval next year. In addition, it plans to kick-off a two-year €1.5 billion share repurchase program.

A further €3 billion will be spent on reducing debt next year, it said.

Nokia, which expects to complete its €15.6 billion acquisition of French rival Alcatel-Lucent in early 2016, said it now expects annual savings of €900 million to materialize in 2018 instead of 2019.

Nokia Chief Executive Rajeev Suri said he hoped the accelerated target, combined with a new capital structure optimization program, would give Alcatel-Lucent shareholders confidence in tendering their shares for the proposed swap.

Nokia and Alcatel-Lucent shares soared on the Helsinki and Paris bourses on Thursday. Both were up by about 9% midmorning.

Nokia on Thursday posted net profit of €152 million for the third quarter, down from the €747 million a year earlier, when the figure was boosted by a large tax gain.

Third-quarter revenue for its mainstay Networks unit fell 2% to €2.88 billion, as the rollout of mobile broadband slowed compared with last year, partially offset by growth for its services business. At constant currency, Nokia Networks net sales would have decreased 11% year-over-year, the company said, mainly due to lower sales in North America.

Nokia raised the profitability target for its Networks business and now expects its full-year operating margin for the unit to be around "slightly below the high-end" of its long-term 8% to 11% target. Previously it had expected the margin to be at the midpoint of its target range.

The operating profit margin at its Networks unit was 13.6% in the third quarter, compared with 13.5% in the year-earlier period and 11.5% in the second quarter this year.

Alcatel-Lucent, which also reported Thursday morning, posted a widening loss in the three months to Sept. 30, hit by a noncash goodwill impairment charge. The company continued to burn cash in the third quarter, reporting a €96 million free cash flow loss, compared with a free cash flow loss of €81 million a year earlier.

Still, the company underscored its commitment to report its first-ever full-year of positive free cash flow in 2015. It also reported an improved gross margin of 34.5% and lower operating expenses.

"These results demonstrate that both companies are in excellent shape ahead of the merger," research firm Sanford C. Bernstein said.

Once the world's leading supplier of mobile handsets, Nokia is redesigning itself into a global supplier of equipment and software to telecom operators.

The acquisition of Alcatel-Lucent, which has secured regulatory approval but still needs approval from Nokia's shareholders, could lift the merged companies into the same revenue league as market leaders, Ericsson AB of Sweden and Huawei Technologies Co. of China.

Aside savings, the enlarged company could get more pricing power to negotiate with big customers.

"I continue to believe that the acquisition of Alcatel-Lucent provides a very strong long-term value creation opportunity," Mr. Suri said.

Sam Schechner contributed to this article.

Write to Jens Hansegard at jens.hansegard@wsj.com

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(END) Dow Jones Newswires

October 29, 2015 07:55 ET (11:55 GMT)