Cable & Wireless Selects Nortel Networks for VoIP Infrastructure in Cayman Islands; Next Generation Network Expected to Deliver Advanced Multimedia Services, Reduce Costs.

Business Editors/High-Tech Writers

GRAND CAYMAN, Cayman Islands--(BUSINESS WIRE)--Jan. 6, 2004

Cable & Wireless Cayman Islands has selected Nortel Networks (NYSE:NT)(TSX:NT) to provide a next generation network that will converge existing voice, data and Internet services onto one advanced packet infrastructure to help drive increased network efficiency and reduced network costs.

Under an agreement estimated at US$17 million over two years, Nortel Networks will deploy products from its Succession voice over IP (Internet Protocol) and Multimedia Communications portfolios as well as professional services, positioning Cable & Wireless to provide customers in the Cayman Islands with advanced multimedia services like video calling.

With a voice over IP (VoIP) network, customers in the Cayman Islands are expected to eventually be able to customize their communications to fit personal needs, and to consolidate services like e-mail, mobile, home and work phones onto a single number or address.

A packet infrastructure allows voice information to be broken down into 'packets' and transmitted over a data network, maintaining the quality of the voice and the communication experience. By enabling voice, video and data traffic to reside on a common network, Cable & Wireless will be positioned to derive operating and capital efficiencies. The packet network is also expected to provide additional network capacity and centralized network management, positioning Cable & Wireless to rapidly deploy new services.

"Cable & Wireless is committed to providing leading-edge communications services to customers in the Cayman Islands and in the region," said Tim Adam, chief executive of Cable & Wireless Cayman Islands. "Nortel Networks has the proven technology and the expertise to understand our requirements and implement an advanced IP network that will enable us to quickly deploy those new services that our customers demand."

"Cable & Wireless is building an advanced IP infrastructure that eliminates the traditional boundaries between voice and data networks, and between voice and data services," said Norberto Milan, managing director, Caribbean, Nortel Networks. "We look forward to continuing our more than 30-year relationship with Cable & Wireless in the Caribbean, and to working closely with them in the Cayman Islands to ensure a smooth evolution and to help them meet their business objectives."

Nortel Networks solution for Cable & Wireless Cayman Islands will include Nortel Networks Multimedia Communication Server 5200, which uses open standards-based software and commercially available hardware to help service providers deliver a rich suite of multimedia and collaboration services that can be seamlessly integrated with existing telephone services.

It will also include the latest IP enhancements to Nortel Networks Succession Media Gateway 9000, a leading-edge access gateway designed to smoothly transition revenue-generating telephony services onto a packet infrastructure. Cable & Wireless Cayman Islands is expected to be the second service provider worldwide to deploy these enhancements.

Cable & Wireless will also deploy Nortel Networks Succession Communication Server 2000-Compact superclass softswitches, and products from the Nortel Networks Passport and Nortel Networks OPTera portfolios.

In addition to network equipment and services, the agreement includes professional services that range from design through to network operation assistance and maintenance support.

Nortel Networks has a proven portfolio for packet voice and multimedia services that enable the delivery of solutions across all four carrier voice over packet market applications: cable, local, long distance and wireless. In the first and second quarters of 2003, Nortel Networks ranked #1 in the global markets for voice over IP and voice over ATM ports shipped and in global softswitch revenue, according to Synergy Research Group.

Cable & Wireless is one of the world's leading international communications companies. It provides voice, data and IP (Internet Protocol) services to business and residential customers, as well as services to other telecoms carriers, mobile operators and providers of content, applications and Internet services. Cable & Wireless' principal operations are in the United Kingdom, continental Europe, the United States, Japan, the Caribbean, Panama, the Middle East and Macau. For more information about Cable & Wireless, go to www.cw.com.

Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at www.nortelnetworks.com.

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 sufficiency of our 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 our customers; fluctuations in operating results and general industry, economic and market conditions and growth rates; the communication by our auditors of the existence of material weaknesses in internal control; the ability to recruit and retain qualified employees; fluctuations in cash flow, the level of outstanding debt and our current debt ratings; the ability to meet the financial covenant in our credit facilities; the use of cash collateral to support our normal course business activities; the dependence on our subsidiaries for funding; the impact of our defined benefit plans and our deferred tax assets on our results of operations, cash flows and compliance with our financial covenant; the dependence on new product development and our ability to predict market demand for particular products; the 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 our 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 our purchase contracts; risks associated with a consolidation of our common shares; the impact of 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 our strategic alliances; and the adverse resolution of litigation, 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 and Form 10-K 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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