In the present work we analyze the Zn1-xMgxO:Al/Ni/p-GaN system as a transparent electrode for GaN-based UV-LEDs. We first study the properties of the Zn1-xMgxO:Al films obtained by DC magnetron sputtering under various conditions and find that they exhibit anomalous crystallization behavior i.e. not all Mg substituted Zn in the ZnO crystal lattice creating Mg precipitates as well as a lack of correlation between the Mg content and film band gap. Subsequently, we study the behavior of the contact with ultrathin Ni films (2.5-10 nm) introduced at the interface with p-GaN both after deposition as well after annealing steps at temperatures from 400 degrees C to 750 degrees C. We use complementary techniques to discuss the structural and chemical properties of the material. We find that the Ni interlayer improved the properties of electrodes, especially their electrical parameters - a 2-3-fold increase in the current at a bias of 2 V was observed. Finally, in a full LED structure, we obtained an enhancement of the 380 nm irradiated power by 9.5% for the Zn1-xMgxO: Al/2.5 nm Ni electrode in comparison with a diode without the Ni interlayer.