Barak 013 to Transform Network with Carrier Voice over IP Technology from Nortel Networks.

TEL AVIV, Israel -- Barak 013, Israel's leading international telephony operator, has chosen a superclass softswitch solution from Nortel Networks (NYSE:NT)(TSX:NT) to upgrade its telephony network to voice over IP technology.

Barak 013 expects to be the first Israeli service provider to migrate its entire carrier telephony infrastructure to a next generation packet-based network, maintaining the same level of security and reliability it has today with its traditional circuit-switched network.

This solution will include Nortel Networks Succession Communication Server 2000 superclass softswitch and Nortel Networks Passport Packet Voice Gateway for toll quality voice. Succession Communication Server 2000 performs call control processing including centralized service delivery, routing, translation and signaling for switching voice over IP (VoIP) calls between packet gateways. This solution will enable Barak 013 to converge TDM and VoIP for both international and domestic telephony services, and is expected to help Barak 013 significantly reduce its network operating costs.

Barak 013 will be able to efficiently and dynamically route traffic to many international destinations using technologies like ISDN User Part (ISUP), H.323, and Session Initiation Protocol (SIP) while providing a foundation for delivery of new, value-rich services.

SIP will provide Barak 013 with the option to offer multimedia applications via fixed and mobile telephones, personal computers, handheld personal digital assistants (PDAs), and other devices using broadband connection technologies like Asynchronous Digital Subscriber Line (ADSL), cable and third generation (3G) cellular.

Another component of this solution is Traffic Operator Position System-IP (TOPS-IP), which will allow Barak 013 to transmit operator traffic over its IP core network to enable operators to respond to calls from IP-enabled workstations.

Nortel Networks solution will seamlessly migrate Barak 013's network from current TDM technology to a next generation VoIP infrastructure enabling hybrid mode operation.

"The implementation of Nortel Networks new system is yet another stepping stone for the company's Voice (International calls) technology center," said David Kaminitz, chief executive officer and president, Barak 013. "Using Nortel Networks solutions, Barak 013 will be able to provide its customers with advanced international call services and expand its customer product range, which includes domestic communications infrastructure."

"Since it was established, Barak 013 has based its international communication infrastructure on Nortel Networks solutions," said Sorin Lupu, president, Israel, Poland and South Eastern Europe, Nortel Networks. "Barak 013 always focuses on advanced and innovative solutions and this technology will enable it to provide international and domestic telecommunication services and new multimedia services while realizing significant savings in operating costs."

Selection by Barak for this VoIP upgrade continues Nortel Networks momentum in the strategic Carrier VoIP market. For the entire year 2003 and the first half of 2004, Nortel Networks ranked #1 in the global markets for carrier packet voice and softswitch revenue, according to Synergy Research Group (SRG). Nortel Networks has announced wins with a number of major carriers globally, including Verizon, BellSouth, Bell Canada and Charter in North America; Chungwha Telecom and Dacom in Asia Pacific; Cable & Wireless and Telefonica in the Caribbean and Latin America; and THUS and Cable & Wireless in Europe.

Barak 013 is a fully integrated telecom provider dedicated to providing worldwide state-of-the art communications for customers, a challenging work environment for employees, and to being an asset for shareholders. The company is one of four companies licensed by the Israeli Ministry of Communications to provide international telecommunication services and also provides data services to businesses in Israel, Internet services for business and residential customers and carrier services to other telecommunication services providers in Israel and abroad.

As a global innovation leader, Nortel Networks enriches consumer and business communications worldwide by offering converged multimedia networks that eliminate the boundaries among voice, data and video. These networks use innovative packet, wireless, voice and optical technologies and are underpinned by high standards of security and reliability. For both carriers and enterprises, these networks help to drive increased profitability and productivity by reducing costs and enabling new business and consumer services opportunities. Nortel Networks does business in more than 150 countries. For more information, visit Nortel Networks on the Web at www.nortelnetworks.com or www.nortelnetworks.com/media_center.

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 Nortel Networks independent review and planned restatement or revisions of its previously announced or filed financial results; the impact of the management changes announced on April 28, 2004 and August 19, 2004; the impact of the inability to meet Nortel Networks filing obligations on support facilities and public debt obligations; the sufficiency of Nortel Networks restructuring activities, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; continued reductions in spending by Nortel Networks customers; fluctuations in Nortel Networks operating results and general industry, economic and market conditions and growth rates; the communication by Nortel Networks auditors of the existence of material weaknesses in internal controls; Nortel Networks ability to recruit and retain qualified employees; fluctuations in Nortel Networks cash flow, level of outstanding debt and current debt ratings; the use of cash collateral to support Nortel Networks normal course business activities; the dependence on Nortel Networks subsidiaries for funding; the impact of Nortel Networks defined benefit plans and deferred tax assets on results of operations and Nortel Networks cash flows; Nortel Networks dependence on new product development and its ability to predict market demand for particular products; Nortel Networks 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 in the telecommunications industry; changes in regulation of the Internet; the impact of the credit risks of Nortel Networks 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 of Nortel Networks purchase contracts; the impact of Nortel Networks 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; the future success of Nortel Networks strategic alliances; and the adverse resolution of litigation, investigations, intellectual property disputes and similar matters.

For additional information with respect to certain of these and other factors, see the most recent Form 10-Q/A and Form 10-K/A filed by Nortel Networks with the United States Securities and Exchange Commission. Unless otherwise required by applicable securities laws, Nortel Networks 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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