Mexico's UNEFON Selects Nortel (Northern Telecom) to Supply US$700 Million Fixed Wireless Network.

MEXICO CITY--(BUSINESS WIRE)--July 7, 1998--UNEFON, Mexico's new provider of fixed and mobile telephone services, has selected Nortel (Northern Telecom) [NYSE: NT/TSE: NTL], a leading global integrated communications products and network provider, for the supply of equipment and services for the planning, construction, implementation and maintenance of a fixed wireless access network across Mexico using advanced CDMA digital wireless technology.

UNEFON, through its subsidiary Sistemas Profesionales de Comunicacion, S.A. de C.V. ("SPC"), and Nortel have signed a commitment letter, which is subject to the execution of definitive agreements, valued at approximately US$700 million over five years. This includes the US$590 million commitment announced by UNEFON on July 3, 1998, and reflects fixed network equipment, terminals and other related services. The project targets providing telephone access to 1.5 million people throughout Mexico, and could eventually grow to support Unefon's plans to reach more than two million subscribers in year 2003.

UNEFON also announced that on June 30, 1998, it paid the amount of Ps.602.8 million (US$67 million). This payment constituted the 20 percent up front payment (inclusive of value added tax), for the concession of radio spectrum awarded pursuant to the official results of the spectrum bid published by the COFETEL (Federal Commission of Telecommunications) on May 18, 1998.

"UNEFON expects to be a major provider of fixed wireless telephone services in households and small businesses, focused on the middle-low and low social economic levels that represent the vast majority of the Mexican population," said Javier Sarro, CEO of UNEFON.

"Nortel's fixed wireless access solutions will help us to fulfill our objective of providing modern, affordable telephone services to the people of Mexico," Mr. Sarro added. "Nortel's cutting edge technology and its proven track record in deploying large scale fixed wireless access networks were decisive factors in our selection of Nortel as UNEFON's fixed equipment network provider."

All network operations and maintenance staff will receive on-the-job training from Nortel during the construction, installation, and testing of UNEFON's network. Nortel will provide significant assistance in the operation, administration and maintenance of the system for two years. UNEFON employees will receive additional continuous on-the-job training during this early operational phase.

"This network, based on CDMA technology, will have the benefit of using Nortel's Proximity solution for fixed wireless access, using digital radio instead of copper wires to reduce the time and costs related to the construction of the network. By selecting a cost effective fixed wireless access network, UNEFON will help universalize telephone access in the country and strengthen Mexico's position as a global economic power," said Dan Hunt, president, Nortel CALA (Caribbean and Latin America).

"Mexico's Communications and Transportation Secretary ("SCT") has done an outstanding job in pursuing its market liberalization goals and orchestrating the completion of the frequency allocation auction in a timely fashion," said Gian Carlo Pecchioni, president, Nortel de Mexico. "The success of these initiatives ensures a competitive telecommunications environment in Mexico and consequently access to the most advanced technology by the Mexican people."

With a total investment of over US$1 billion during the next five years, UNEFON plans to offer its services to an estimated market of 10 million households that do not have access to existing telephony services, offering basic phone services at competitive prices.

Mr. Sarro pointed out UNEFON's strong business platform to efficiently reach its target market using a unique nation-wide distribution network to sign-up customers, distribute phones, service its clients, and provide billing and collection, as well as advertising and promotional services. Additionally, the company has immediate nationwide access to different sites to deploy the network radio base stations and switching facilities efficiently and rapidly.

Ricardo B. Salinas Pliego, Chairman and controlling stockholder of UNEFON is also the controlling stockholder of Grupo Elektra, S.A. de C.V. ("Elektra"), Latin America's largest specialty retailer of consumer electronics, major appliances and furniture; TV Azteca, S.A. de C.V. ("TV Azteca"), one of the two over-the-air TV broadcasters in Mexico and BIPER, S.A. de C.V. ("BIPER"), the largest Mexican paging service provider. All the companies combined have a market value of over US$5 billion.

UNEFON has been constituted as an independent company with its own capital structures and operating organization.

(Note: Certain statements in this Press Release are "forward looking statements" within the meaning of the Private Securities Litigation Act of 1995.)

UNEFON and its subsidiary Sistemas Profesionales de Comunicacion, S.A. de C.V. (SPC) were organized to build a nationwide wireless network to provide fixed and mobile basic telephone services to the middle-low and low segments of the population in Mexico. UNEFON's goal is to become one of the leading providers of local telephone services in Mexico and Latin America.

Nortel works with customers in more than 150 countries and territories to design, build and integrate their communications products and advanced digital networks. Customers include public and private institutions; Internet service providers; local, long-distance, cellular mobile and PCS communications companies; cable television companies; and utilities. Nortel's research capabilities around the world include a network of research and development facilities, affiliated joint ventures, and other collaborations fostering innovative product development and advanced design research in 16 countries. Nortel reported revenues of US$15.5 billion in 1997 and has approximately 73,000 employees worldwide.

    CONTACT:  Investor Contacts:
               Ernesto Sarenana                Oscar Arguelles
               Nortel - Mexico                 UNEFON-SPC
               Phone: [phone]            Phone: [phone]
               Fax: [phone]              Fax: [phone]
               [e-mail]
               Ernesto Ortiz                   Jose Luis Riera
               Nortel CALA                     UNEFON-SPC
               Phone: [phone]            Phone: [phone]
               [e-mail]          Ext. 71304
                                               Fax: [phone]
                                                 Ext. 71305
                                               [e-mail]
               Mark Buford                     Jane Valdez
               Nortel                          The Anne McBride Co.
               Phone: [phone]           Phone: [phone]
               Fax: [phone]             Fax [phone]
               [e-mail]          [e-mail]