CapRock Begins Network Implementation with $13 Million Purchase of Telecommunications Equipment from Nortel Networks.

Switching platforms to bring integrated

communications services to Houston, neighboring areas

DALLAS--(BUSINESS WIRE)--Jan. 25, 1999--CapRock Communications, Corp. (Nasdaq:CPRK) has agreed to purchase in excess of US$13 million worth of advanced telecommunications switching systems from Nortel Networks (NYSE: NT/TSE: NTL), enabling the company to begin delivery of facilities-based local services. Upon implementation of these switching systems, CapRock will provide local and long-distance service, plus Internet and data connectivity, over its own facilities.

"The purchase of these switching platforms will enable us to provide local dial tone services over CapRock-owned facilities, putting us ahead of our implementation schedule," said Tim Rogers, executive vice president of CapRock. "We feel Nortel Networks is a leader in the industry, and utilizing its switching platforms gives us the means to provide powerful new services to our customers."

As part of its network expansion, CapRock is installing a Year 2000-ready, 10,000-port Nortel Networks DMS-10 switching system in Victoria, Texas, which will provide customers advanced local calling services such as caller ID and call waiting ID. In addition, CapRock is installing Nortel Networks' DMS-500 multi-service switching system in its Houston site. The DMS-500 switch is scalable up to 100,000 ports, and supports a host of applications, including voice, video and data functions.

CapRock owns and operates a 260 route mile fiber optic network linking Houston, Victoria and Corpus Christi. The company has approximately 800 route miles of fiber optic network substantially complete as of 12/31/98, and intends to expand that network to 3,300 route miles by the end of 1999. The network will ultimately cover 5,500 route miles in five states by the end of 2000.

The purchase of the equipment, coupled with its extensive fiber optic network, moves CapRock nearer to its goal of becoming the dominant integrated communications provider (ICP) in the Texas and Southwest region, connecting every primary, secondary and tertiary market.

"The DMS-10 and DMS-500 switching platforms we're supplying to CapRock Communications provide the underpinning for a unified network that will enable them to deliver telephony, data, and multimedia services to their local and long-distance customers," said Ian Craig, president, Carrier Networks, Nortel Networks.

Nortel Networks' DMS-500 multi-service switching systems position service providers to offer a full portfolio of high-demand network services customized for small to medium-sized business customers, including Enhanced Centrex, Custom Local Access Signaling Services (CLASS), Residential Enhanced Services (RES), Local Number Portability (LNP), and Integrated Services Digital Network (ISDN). The DMS-500 supports Advanced Intelligent Network-based services, while providing a platform for evolving to next generation Internet Protocol (IP) networks.

In 20 years, Nortel Networks has installed 4,900 DMS-10 systems in some 35 countries. With its simple architecture, proven ability and low-cost operation, the DMS-10 system has become a solid system in both established and emerging telecommunications networks around the world. The DMS-10 delivers a set of advanced subscriber services similar to those of the DMS-500 including Advanced Intelligent Network and IP Network interface solutions.

Nortel Networks works with customers worldwide to design, build, and deliver telephony and IP-optimized networks. Customers include public and private enterprises and institutions; Internet service providers; local, long-distance, cellular and PCS communications companies, cable television carriers, and utilities.

Nortel Networks' common shares are listed on the New York, Toronto, Montreal, Vancouver, and London stock exchanges. Nortel Networks had 1997 revenues of US$15.5 billion and Bay Networks, a wholly owned subsidiary of Nortel Networks, had revenues of US$2.4 billion during its most recent fiscal year. The combined company's workforce totals approximately 80,000 employees worldwide.

CapRock is a regional facilities-based ICP offering local, long-distance, Internet, data and private line services to business customers. The company also provides switched and dedicated access, regional and international long-distance, private lines and dark fiber to carrier customers. For more information, visit CapRock'S website at http://www.caprock.com.

Statements in this news release regarding expected financial results and other planned events are forward-looking statements, subject to uncertainties and risks, including, but not limited to, the demand for the Company's services and the ability of the Company to successfully implement its strategies, each which may be affected, among other things, by economic, competitive or regulatory conditions. These and other applicable risks are summarized under the caption "Risk Factors" in the Company's Registration Statement filed on Form S-4 in October 1998.

DMS-10, DMS-500, How the world shares ideas, the Nortel Globemark and Nortel Networks are trademarks of Northern Telecom.