By Sven Grundberg 

STOCKHOLM-- Nokia Corp. has named mobile-network veteran Rajeev Suri chief executive and said it will use a significant amount of the cash from the recent sale of its handset business to distribute more than EUR3 billion ($4.15 billion) to investors.

The moves, announced early Tuesday, follow Friday's closing of the EUR5.4 billion sale of Nokia's once-dominant mobile-device unit to Microsoft Corp. First announced in September, the deal is designed to focus Finland-based Nokia's business on wireless networks and intellectual property and make the U.S. hardware giant more competitive in the mobile industry.

The sale has been widely applauded by Nokia investors, many of whom assigned little or even negative value to the phone business after it lost considerable ground to the likes of Apple Inc., Google Inc. and Samsung Electronics Co. Since the deal was announced last September, Nokia's stock has almost doubled.

The company said it will now pay at least EUR800 million in ordinary dividends for 2013 and 2014, and a special dividend of 26 euro cents a share, or about EUR1 billion in all. In addition, Nokia will initiate a EUR1.25 billion share-repurchase program and reduce interest-bearing debt by EUR2 billion by 2016, as it seeks to restore its investment-grade credit rating.

Mr. Suri, a 46-year old electronics and telecom engineer, has headed Nokia's mobile network unit since 2009 and was widely expected to be named chief executive.

The Indian-born executive succeeds Risto Siilasmaa, Nokia's chairman, who served as interim CEO of the since last September, when Microsoft Corp. announced its intention to buy Nokia's handset business. Stephen Elop had been running Nokia when the handset business was sold, but stepped down to take a senior job with Microsoft.

Mr. Suri is often credited with the successful turnaround of Nokia's mobile-network arm, Nokia Solutions and Networks, a business that had been plagued by losses and overcapacity after its complicated merger with Siemens's network unit in 2006. With Nokia's sale of its phone business, that unit will account for the lion's share of the company's revenue.

In 2011 Mr. Suri embarked on a plan to significantly trim the network business, cutting a quarter of its total staff and exiting several business areas. That returned the operation to profitability, but Mr. Suri must now oversee its return to growth. Fourth-quarter for the network business was down 22% from a year earlier, and is expected to decline further in the first quarter. Nokia said it had appointed Samih Elhage, the former chief financial officer of its mobile-network unit, as its new chief operating officer.

Relieved of its money-losing phone operation, Nokia said its "financial position and earnings profile have both improved significantly" and that it therefore would distribute extra cash to shareholders and buy back shares as part of a "capital structure optimization program."

In a statement, Nokia finance chief Timo Ihamuotila said the initiatives are part of Nokia's longer-term ambition to "return to an investment grade credit rating." Nokia ended the first quarter with EUR2.1 billion in net cash, before the sale of its handset unit to Microsoft was completed. Had the transfer been completed during the quarter, Nokia said its net cash holdings would have been EUR7.1 billion.

Nokia will releasing its first-quarter earnings report later Tuesday.

Write to Sven Grundberg at sven.grundberg@wsj.com

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