BT Chooses Nortel Solution to Enhance Customer Service; BT Retail Customer Contact Centres to Evolve with Nortel Centrex IP.

LONDON -- BT plans to enhance its consumer and business contact center organization with an upgrade to voice over IP (Internet Protocol) technology from Nortel (NYSE:NT) (TSX:NT) under an agreement announced today. This upgrade program aims to streamline interaction across BT Retail's operations to increase customer satisfaction and enhance the user experience for its 20 million UK customers.

Upgrading to voice over IP (VoIP) across its contact centers in the UK and India is expected to help BT reduce operational costs and increase efficiency by allowing dispersed teams to seamlessly work together as if in a single contact center location.

BT Retail's Customer Contact Center organization provides services to BT's residential and business customers from service and fault reporting to sales. With over 10,000 agents in the UK, BT has used Nortel Centrex ACD (Automatic Call Distribution) platforms for the past 10 years.

The upgrade program will introduce Centrex IP on existing Nortel platforms, providing an evolution path to the 21st Century Network. In the initial phase, 700 agents will be IP-enabled, with growth plans for more than 2,000 by the end of 2005.

This upgrade will be in addition to the Nortel enterprise VoIP contact center solution announced on December 2, 2004 for 10,000 of BT's back office agents. Both projects reinforce Nortel's leadership position in VoIP across both enterprise and carrier contact centers for deployment in next generation networks.

"It is critical that BT's internal networks continue to be developed to meet new business challenges as we constantly strive to deliver an excellent customer experience at the lowest operational cost," said Julie Lowther, general manager, Technology and Programmes for Customer Contact Centres, BT Retail. "Deploying Nortel Centrex IP technology underlines our commitment and determination to build an infrastructure that will help us achieve this goal."

"Providing this capability to BT highlights how our customers can evolve to an IP solution and build on the full capabilities and benefits of their current investments," said Mark Weeks, managing director, BT account, Nortel. "BT's selection of our solution is a vote of confidence in our VoIP and contact center technology and demonstrates that convergence really can deliver huge benefits and reduced costs on a very large scale."

Nortel Centrex IP ACD solutions enable companies to create virtual contact centers that span wide geographic areas and cross multiple time zones, ensuring the most appropriate agent available handles each caller's needs promptly. Separate voice and data infrastructures can be converged, resulting in increased operational efficiency and reduced staffing, management and training costs.

End-users benefit from seamless access to customer services virtually 'anytime, anywhere.' Nortel Centrex IP ACD solutions deliver multiple levels of survivability and resiliency, using the inherent nature of IP to work around network issues. They also provide the ability to use a standby contact center in the event of a catastrophic event.

BT Retail Customer Contact Centre's consolidated, converged infrastructure, based on Nortel's Centrex IP portfolio, will extend the existing infrastructure based on Nortel's DMS-100 Centrex ACD telephony system, IP-enabling the existing platforms. The upgrade is consistent with Nortel's evergreen technology strategy, which allows customers to evolve their existing telephone systems, phasing in VoIP as needed to provide a rapid return on investment. Nortel i2004 IP phones will be deployed to BT's contact center agents.

About Nortel

Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events.

Factors which could cause results or events to differ from current expectations include, among other things: the outcome of regulatory and criminal investigations and civil litigation actions related to Nortel's restatements and the impact any resulting legal judgments, settlements, penalties and expenses could have on Nortel's results of operations, financial condition and liquidity, and any related potential dilution of Nortel's common shares; the findings of Nortel's independent review and implementation of recommended remedial measures; the outcome of the independent review with respect to revenues for specific identified transactions, which review will have a particular emphasis on the underlying conduct that led to the initial recognition of these revenues; the restatement or revisions of Nortel's previously announced or filed financial results and resulting negative publicity; the existence of material weaknesses in Nortel's internal control over financial reporting and the conclusion of Nortel's management and independent auditor that Nortel's internal control over financial reporting is ineffective, which could continue to impact Nortel's ability to report its results of operations and financial condition accurately and in a timely manner; the impact of Nortel's and NNL's failure to timely file their financial statements and related periodic reports, including breach of its support facility and public debt obligations and Nortel's inability to access its shelf registration statement filed with the United States Securities and Exchange Commission ("SEC"); ongoing SEC reviews, which may result in changes to our public filings; the potential delisting or suspension of Nortel's and NNL's publicly traded securities; the impact of management changes, including the termination for cause of Nortel's former CEO, CFO and Controller in April 2004; the sufficiency of Nortel's restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 2004 and December 14, 2004, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions;

cautious or reduced spending by Nortel's customers; increased consolidation among Nortel's customers and the loss of customers in certain markets; fluctuations in Nortel's operating results and general industry, economic and market conditions and growth rates; fluctuations in Nortel's cash flow, level of outstanding debt and current debt ratings; Nortel's monitoring of the capital markets for opportunities to improve its capital structure and financial flexibility; Nortel's ability to recruit and retain qualified employees; the use of cash collateral to support Nortel's normal course business activities; the dependence on Nortel's subsidiaries for funding; the impact of Nortel's defined benefit plans and deferred tax assets on results of operations and Nortel's cash flow; the adverse resolution of class actions, litigation in the ordinary course of business, intellectual property disputes and similar matters; Nortel's dependence on new product development and its ability to predict market demand for particular products; Nortel's ability to integrate the operations and technologies of acquired businesses in an effective manner; the impact of rapid technological and market change; the impact of price and product competition; barriers to international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization and consolidation in the telecommunications industry; changes in regulation of the Internet; the impact of the credit risks of Nortel's customers and the impact of customer financing and commitments; stock market volatility generally and as a result of acceleration of the settlement date or early settlement, which is currently not available, of Nortel's forward purchase contracts; negative developments associated with Nortel's supply contracts and contract manufacturing agreements, including as a result of using a sole supplier for a key component of certain Optical Networks solutions; the impact of Nortel's supply and outsourcing contracts that contain delivery and installation provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; and the future success of Nortel's strategic alliances.

For additional information with respect to certain of these and other factors, see the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by Nortel with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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