BaykalWestcom Awards Nortel Networks Wireless Expansion Contracts in Russia; GSM Network Upgrades to Enable Services in Eastern Siberia.

MOSCOW -- BaykalWestcom, a major Eastern Siberian cellular operator, has awarded Nortel Networks (NYSE:NT)(TSX:NT) a series of contract extensions to add network capacity and increase data throughput across part of the operator's Russian wireless network.

New Nortel Networks GSM (Global System for Mobile Communications) and GPRS (General Packet Radio Service) equipment will enable cellular services in the Irkutsk region.

The Nortel Networks equipment will also enable BaykalWestcom to offer new mobile data offerings that can help drive new revenue through services like Internet access and e-mail. Upgrades to BaykalWestcom's existing digital wireless network are designed to accommodate more network traffic and wireless phone calls while also streamlining networking functions.

"Nortel Networks is critical to our market strategy for meeting growing subscriber demand while bringing more sophisticated mobile services to Russia," said Valdimir Shapovalov, general director, BaykalWestcom. "Nortel Networks provides not only a very flexible solution that meets our individual needs, but also delivers the most cost-efficient solution for modernizing our existing network."

"Russia is primed for a new era of mobile data services, and this contract expands our momentum in delivering a new era of networking capabilities to the Russian telecommunications market," said Igor Marchenko, general manager, Russia and CIS, Nortel Networks. "Nortel Networks is helping leading innovators like BaykalWestcom not only generate new revenues through regionalized services, but also drive down operating costs by making the network run more efficiently."

Nortel Networks GSM infrastructure equipment is designed to support next generation GPRS, EDGE (Enhanced Data for GSM Evolution), and 3GPP (Third Generation Partnership Project) Release 4 BICN (Bearer Independent Core Network) functions through modular upgrades. This can help position service providers like BaykalWestcom to reduce the cost of migrating to new technology by making use of existing infrastructure and eliminating the need for replacement of radio base stations and core network equipment.

Nortel Networks has provided BaykalWestcom with wireless infrastructure equipment and network engineering and consulting services since 1998. The new deployments will leverage BaykalWestcom's existing GSM network from Nortel Networks and introduce products from Nortel Networks Base Station Controller (BSCe3) and Mobile Switching Center (MSC) product portfolios.

Nortel Networks has designed, installed and launched more than 300 wireless networks in over 50 countries across the globe. Nortel Networks was the industry's first supplier with wireless networks operating in all advanced radio technologies (GSM/GPRS/EDGE, CDMA2000 1X and 1xEV-DO, UMTS and WLAN), and is the only end-to-end provider of all next generation wireless solutions.

BaykalWestcom is the largest Eastern Siberian cellular operator providing NMT-450i and GSM 900/1800 services in Irkutsk Oblast. The NMT-450I coverage extends to Irkutsk, Angarsk, Shelekhov, Usolie-Sibirskoye, Cheremkhovo, Sayansk, Zima, Bratsk, Vikhorevka, Ust-Ilimsk, Taishet, Tulun, Nizhneudinsk, Baikalsk, Sludyanka, town of Listvyanka and Baikal route. With 250,000 subscribers, BaykalWestcom was among the top ten Russian cellular operators in terms of subscriber base as of June 2004 (according to iKS-rating). BaykalWestcom has been a top 10 Russian cellular operator since September 2003.

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 work plan announced on August 19, 2004 as updated on September 30, 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 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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