China Telecom Selects Nortel Networks to Extend Broadband IP Services in Zhejiang, Hubei.

Business Editors/High-Tech Writers

BEIJING--(BUSINESS WIRE)--July 29, 2003

China Telecom, China's largest fixed-line carrier, has selected Nortel Networks (NYSE:NT)(TSX:NT) to upgrade its broadband Internet Protocol (IP) networks in Zhejiang and Hubei provinces to address growing customer need for IP services.

China Telecom plans to use these upgrades to extend network capacity and service coverage. This will position China Telecom to offer secure broadband Internet access, broadband content, IP VPNs (Virtual Private Networks), traffic management, and other broadband IP services to business and high-end residential customers in both provinces.

"These two new contracts further demonstrate Nortel Networks leadership position in China's broadband market," said Robert Mao, president and chief executive officer, Nortel Networks China. "Carriers need to provide differentiated services to attract new customers and strengthen customer loyalty. Nortel Networks is well positioned to help China's carriers drive enhanced IP security, productivity and profitability."

Under these contracts, China Telecom will deploy Nortel Networks Shasta 5000 Broadband Service Nodes (BSNs) in Zhejiang, and Shasta 5000 BSNs and Nortel Networks Passport 8600 Routing Switches in Hubei.

Nortel Networks Shasta 5000 BSN enables service providers to transition from the simple connectivity model enabled by first generation subscriber management systems to a cost-effective, network-based, value-added broadband services model. Shasta 5000 BSN supports wholesale dial, digital subscriber line (DSL), fixed and mobile wireless, metro optical and Ethernet extension, ATM, frame relay and leased-line subscribers.

Nortel Networks Passport 8600 provides ease of use, high performance, reliability and scalability within a single voice, video and data platform. It can be used in campus and in-building backbone networks, or in service provider metro applications requiring higher performance, routing or metropolitan area network connectivity.

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 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 meet financial covenants contained in our credit agreements; 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 customer financing and commitments; stock market volatility; the entrance into an increased number of supply and outsourcing contracts which contain delivery and installation 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.

Nortel Networks, Shasta, the Nortel Networks logo and the Globemark are trademarks of Nortel Networks.