China Telecom to Deploy Nortel Networks Succession VoIP Solution in Four Key Cities; Will Transform Separate Networks into Single, Cost-Effective Converged Infrastructure.

Business Editors & High Tech Writers

BEIJING--(BUSINESS WIRE)--March 22, 2002

China Telecommunications Corporation (China Telecom), operator of The People's Republic of China's largest terrestrial communication network, has signed a contract with Nortel Networks (NYSE:NT)(TSE:NT.) for deployment of a next generation voice over Internet Protocol (VoIP) solution over the next few months in Beijing, Shanghai, Guangzhou and Shenzhen.

China Telecom will use this solution to conduct a commercial trial of traditional telephone services and new, IP-based multimedia services over a more cost-effective packet infrastructure.

Leveraging core elements of its carrier-grade Succession voice over IP solutions portfolio, including softswitches, Nortel Networks will enable China Telecom to employ a single, more cost-efficient, converged network for packet trunking, packetized broadband and narrow band access, as well as for multimedia services delivery.

"The trial networks will position China Telecom to offer a much greater variety of high-quality voice, data and multimedia services than ever before," said Robert Mao, president and chief executive officer, Nortel Networks China. "Nortel Networks is committed to working with China Telecom and other Chinese carriers to transform their existing, separate networks into single, cost-effective converged infrastructures, creating reliable platforms for future, feature-rich, revenue-generating services."

Nortel Networks Succession next generation network solution for the China Telecom trial deployment will include Nortel Networks Succession Communication Server 2000 (CS2000)-Compact, Succession Communication Server 3000 (CS3000), and Interactive Multimedia Server softswitches; Nortel Networks Passport Packet Voice Gateway; integrated access devices (IADs); and session initiation protocol (SIP) client.

Succession CS2000-Compact is a highly scalable, small-footprint softswitch that will enable service providers like China Telecom to deliver all line-side (Class 5) and trunking features. This softswitch is designed to be the centerpiece of feature-rich trunking and access networks that will enable easy geographic expansion. Its space-efficient design and low power consumption will enable service providers to reduce operating expenses.

Nortel Networks Succession CS3000 will enable China Telecom to provide more profitable long distance services, and a whole new realm of revenue-generating opportunities including number translation services, 800/freephone, and carrier-hosted services. Running on an open server platform, Succession CS3000 will allow service providers to take advantage of the ever-increasing capacities of industry standard computing platforms.

For delivery of new IP-based services like instant video conferencing, China Telecom will also trial Nortel Networks Interactive Multimedia Server. This software-based application server can be deployed in existing terrestrial or wireless networks, or in a next generation packet network. Consumers and business professionals will have the power to create personal communications profiles that are portable, providing the flexibility to be reached virtually `anytime, anywhere' on any device over any network. Nortel Networks Interactive Multimedia Server takes full advantage of the very latest IP technology - including SIP - and supports 3GPP Open Services Architecture specifications.

Nortel Networks is a global leader in next generation network solutions. The company has announced network `packetization' contracts from such major international carriers as BT Spain, Germany's ish (formerly Kabel NRW), and Sprint Communications and Qwest Communications in the United States.

China Telecom is the country's largest telecommunications operator with businesses covering fixed lines and various value-added Internet services. China Telecom added 35 million fixed line subscribers during 2001 alone, about 50 per cent of the world's subscriber growth for the year, and increased its total subscriber base to 179 million, 99 percent of China's total. China Telecom's national Internet network, CHINANET, serves some 32 million Internet users, approximately 80 per cent of the national total.

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 Metro and Enterprise Networks, Wireless Networks and Optical Long Haul 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 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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