China Railcom Selects Nortel Networks, Digital China for Nationwide Network.

Business Editors & High-Tech Writers

BEIJING--(BUSINESS WIRE)--Oct. 22, 2001

China Railcom has selected Nortel Networks (NYSE:NT)(TSE:NT.) and Digital China to deliver a nationwide, multiservice ATM backbone network for the People's Republic of China. The contract provides for both equipment and services.

With nearly 30 years of operating experience in Greater China, Nortel Networks has won contracts estimated to be worth more than US$1.2 billion since the start of 2001 from customers such as China Railcom. Nortel Networks is also investing in China to deliver key next generation networking solutions, and its comprehensive R&D facilities in Beijing are expected to play an important role in developing new technologies.

The agreement for China Railcom's new broadband, multiservice ATM backbone network provides for the supply of Nortel Networks Passport 15000-VSS multiservice carrier switch and Passport 7480 multiservice switches.

The Passport service provider portfolio is a key component of Nortel Networks solutions for high-growth Internet services. This versatile, reliable, highly scalable platform speeds new data services such as ATM, frame relay and IP VPNs (Virtual Private Networks). It can also be optimized to meet the requirements of specific network sites, enabling service providers to 'grow as they go' by expanding switch features as requirements increase or change.

By allowing multiple services to run on a single switch, Passport drives lower operational costs and improved service margins. Requiring only one platform to deploy multiple services, Passport removes the need for parallel networks. Passport is complemented by rich network and service management capabilities.

Scheduled to commence operation by year-end 2001, the China Railcom backbone network will provide an end-to-end multiservice platform to China Railcom's branches in 150 cities across China. The network will deliver the power and bandwidth of the Optical Internet, allowing China Railcom to provide data services including voice, data, multiprotocol label switching (MPLS), IP VPN, ATM, frame relay and other services to any of its customers, with a focus on strategic accounts. ATM technology simplifies the overall networking environment through consolidation of all types of traffic onto a single, manageable network.

Based on infrastructure and institutes under the Ministry of Railways (MOR), China Railcom was established December 2000 and operates one of China's three largest telecommunications networks. Nortel Networks has a proven business record with both MOR and China Railcom. Nortel Networks built a nationwide data backbone network for MOR in 1998, and won a contract from China Railcom at the end of 2000 to build a Beijing-Shanghai-Guangzhou 1,600 gigabits-per-second, high-performance Optical Internet ring to connect five other smaller rings.

"This network is an important milestone in our relationship with China Railcom," said Yuan-hao Lin, senior vice president, Nortel Networks China. "China Railcom's new national ATM backbone network will create a new business framework. It will allow us to position them for new, high-value, broadband services, drive higher returns on their customer relationships, accelerate delivery of personalized content, and unleash new business models."

Nortel Networks ranked No. 1 in China's ATM market with a 24.3 percent share at year-end 2000 according to the CCID Group. Frost & Sullivan ranked Nortel Networks as the No. 1 supplier to China's Optical Internet infrastructure market in 2000. In February 2001, Nortel Networks was awarded China's single, largest optical contract ever - to build a 15,000-kilometer long haul network for China Telecom, which operates the nation's most extensive terrestrial communications network. IDC ranks Digital China No. 1 in systems integration volume in China, including No. 1 in government, No. 2 in finance, and No. 4 in telecommunications.

China Railcom is a fully licensed operator in China, focusing on large and medium enterprises and large ISPs. China Railcom is also a carrier's carrier serving Jitong Networks, China Netcom, China Unicom and others who lease fiber or bandwidth. China Railcom's fixed-line network has a capacity of over two million lines. It has launched its IP telephony service in 28 cities and plans to extend to 100 cities. China Railcom is approved by the Ministry of Information Industry to launch phone, data, Internet and other services.

Digital China focuses on e-Commerce in China by engaging in three types of businesses: the distribution of foreign-branded IT products, the provision of systems integration services, and the development and distribution of networking products. Digital China claims dominance in all categories of its distributorship, while emerging as the most important e-commerce enabler with E-Bridge, currently the largest B2B platform in the country in terms of turnover. For more information, please visit www.digitalchina.com.cn.

Nortel Networks is a global leader in networking and communications solutions and infrastructure for service providers and corporations. The Company is at the forefront of transforming how the world communicates, exchanges information and profits from the high-performance Internet through capabilities spanning Optical Long Haul Networks, Wireless Networks and Metro Networks. Nortel Networks does business in more than 150 countries and 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 severity and duration of the industry adjustment; 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; fluctuations in operating results and general industry, economic and market conditions and growth rates; the ability to recruit and retain qualified employees; fluctuations in cash flow, the level of outstanding debt and debt ratings; the ability to make acquisitions and/or 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; 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; the dependence on new product development; the uncertainties of the Internet; the impact of the credit risks of our customers and the impact of increased provision of customer financing and commitments; stock market volatility; the entrance into an increased number of supply, turnkey, and outsourcing contracts which contain delivery, installation, and performance provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; the ability to obtain timely, adequate and reasonably priced component parts from suppliers and internal manufacturing capacity; the future success of our strategic alliances; and the adverse resolution of litigation. For additional information with respect to certain of these and other factors, see the reports 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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