Nortel Delivers Improved Customer Interaction for Enterprises; Nortel Applications Center to Drive Improved Customer Loyalty.

SANTA CLARA, Calif. -- Nortel (NYSE:NT)(TSX:NT) today announced the new Nortel Applications Center that brings together contact center, advanced speech, unified messaging, and multimedia collaboration into a cohesive application environment. This is designed to deliver an easy-to-use customer experience and increased profitability for the businesses that it serves.

The new Nortel Applications Center platform will ultimately integrate what have previously been stand-alone applications with a seamless integration across multiple applications, common tools, and standard reporting modules, making the application center a more efficient and effective solution for managing customer interaction.

This open, standards-based framework allows our customers to adopt a complete solution to interact with their customers at one time. Open standards allow this solution to be integrated into a multi-vendor environment. Customers can deploy additional Nortel applications over time by simply turning them on. Also, by employing the Session Initiation Protocol (SIP) standard, customers can customize these solutions to reflect their specific business needs and deliver faster innovation and competitive differentiation.

"Applications are the driving force behind convergence," said Bern Elliot, research vice president, Gartner. "Businesses demand innovative applications that will catapult their success to the next level. They want to generate lasting customer loyalty, provide employees with tools that boost performance, and simplify the management complexity of multiple applications. The concept of an open application suite that leverages SIP and integration across multiple applications will allow businesses to become more efficient, driving profitability."

"Enterprises work tirelessly to ensure they are providing the highest possible levels of customer satisfaction," said Malcolm Collins, president, Enterprise Networks, Nortel. "Nortel is committed to helping enterprises find new and innovative ways to increase meaningful interaction with their customers by providing the right tools to ensure managing the customer experience is easy, accurate and timely. The Nortel Application Center will deliver on this objective by providing enterprises with all the ingredients to create far greater customer interaction regardless of whether delivered face-to-face, over the phone, or via multimedia applications."

The new Nortel Applications Center provides the framework for customers to provide improved customer service via IP-enabled video communications, virtual contact center, real-time multimedia, collaboration, unified messaging, advanced speech, and computer-telephony integration for contact centers. Based on an open architecture, it leverages Session Initiation Protocol Voice Extensible Markup Language and Call Control Extensible Markup Language.

The Canterbury District Health Board, which is responsible for providing or purchasing Government-funded health care services for communities in New Zealand, turned to Nortel to help ensure its customers receive quick and efficient access to the board's services. "We're in the business of promoting healthcare by providing information that facilitates out-patient care, surgery, intensive care, mental health and elderly care," said Kerry Varcoe, telecommunications and operation manager, Canterbury District Health Board. "The services that we provide are paramount to our community's well-being. Nortel's customer service applications act as our initial interface to the public and have allowed us to provide better service to those seeking information on our health services."

Specifically, Nortel announced several Nortel Applications Center components today:

--Nortel Contact Center Suite 6.0 is a comprehensive suite of open, SIP-based contact center and self-service solutions, combined with the real-time collaborative multimedia capabilities available on the Nortel MCS 5100. Nortel's Contact Center Suite 6.0 eliminates the boundaries of traditional contact centers by allowing businesses to deploy multimedia SIP-enabled agents anywhere and is anticipated to be generally available in the fall of this year.

--CallPilot Unified Messaging release 4.0 enables users to access messages from PDAs and other e-mail-enabled devices, empowering employees to work from any location. Additionally, advanced integration with Nortel Call Center Web Portal, allows CallPilot 4.0 messages to be immediately delivered to the right agents, ensuring prompt responses to customer inquiries, allowing businesses the opportunity to achieve higher customer satisfaction.

--Communication Control Toolkit 5.0 is Nortel's next generation platform that enhances the contact center and self-service environment. Based on the Microsoft .Net framework, it is easy to develop tailored converged applications on this platform that can improve employee productivity while enhancing customer service.

Coweta-Fayette EMC, a consumer-owned cooperative providing electricity and related services to 65,000 members in eight Georgia counties, implemented Nortel's contact center solution to replace its old phone system.

"We were looking to partner with a vendor that could provide upgraded capabilities, industry knowledge and leading edge technology," said Rick Owens, director of customer operations, Coweta-Fayette EMC. "Since implementing the solution, our customers have realized tremendous customer service improvements and faster response times. We view the Nortel applications as an integral portion of our overall customer support program."

In addition to the Nortel Application Center, Nortel announced three infrastructure enhancements that enable the delivery of IP communications.

--Survivable Remote Gateway (SRG) 50 is a new product based on the new Business Communications Manager (BCM) 50 platform. It extends desktop features and user interface to remote users giving them full access to the same applications that are available to headquarters locations. The system includes a complete set of converged voice services, voice applications and data networking services, to provide flexibility in meeting customers' needs.

--Communication Server (CS) 1000 Release 4.5 is designed to enhance Nortel IP Telephony solutions and ensures customer interactions are secure of the highest quality and whether they involve the main office or a branch office. It is capable of supporting an increased number of configured contact center agents located anywhere on the network. It features robust call routing, adaptive bandwidth management and active call failover capabilities.

--The Nortel IP Phone 2007, a full color screen phone, enables greater communication and information exchange between customers and across the enterprise via multimedia-based content such as Web pages, still frames and streaming video presentations along with a rich set of business telephony features.

About Nortel

Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.

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 outcome of regulatory and criminal investigations and civil litigation actions related to Nortel's restatements and the impact any resulting legal judgments, settlements, penalties and expenses could have on Nortel's results of operations, financial condition and liquidity, and any related potential dilution of Nortel's common shares; the findings of Nortel's independent review and implementation of recommended remedial measures; the outcome of the independent review with respect to revenues for specific identified transactions, which review will have a particular emphasis on the underlying conduct that led to the initial recognition of these revenues; the restatement or revisions of Nortel's previously announced or filed financial results and resulting negative publicity; the existence of material weaknesses in Nortel's internal control over financial reporting and the conclusion of Nortel's management and independent auditor that Nortel's internal control over financial reporting is ineffective, which could continue to impact Nortel's ability to report its results of operations and financial condition accurately and in a timely manner; the impact of Nortel's and NNL's failure to timely file their financial statements and related periodic reports, including Nortel's inability to access its shelf registration statement filed with the United States Securities and Exchange Commission (SEC); ongoing SEC reviews, which may result in changes to Nortel's and NNL's public filings; the impact of management changes, including the termination for cause of Nortel's former CEO, CFO and Controller in April 2004; the sufficiency of Nortel's restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 2004 and December 14, 2004, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions;

cautious or reduced spending by Nortel's customers; increased consolidation among Nortel's customers and the loss of customers in certain markets; fluctuations in Nortel's operating results and general industry, economic and market conditions and growth rates; fluctuations in Nortel's cash flow, level of outstanding debt and current debt ratings; Nortel's monitoring of the capital markets for opportunities to improve its capital structure and financial flexibility; Nortel's ability to recruit and retain qualified employees; the use of cash collateral to support Nortel's normal course business activities; the dependence on Nortel's subsidiaries for funding; the impact of Nortel's defined benefit plans and deferred tax assets on results of operations and Nortel's cash flow; the adverse resolution of class actions, litigation in the ordinary course of business, intellectual property disputes and similar matters; Nortel's dependence on new product development and its ability to predict market demand for particular products; Nortel's ability to 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; barriers to international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization and consolidation in the telecommunications industry; changes in regulation of the Internet; the impact of the credit risks of Nortel's customers and the impact of customer financing and commitments; stock market volatility generally and as a result of acceleration of the settlement date of Nortel's forward purchase contracts; negative developments associated with Nortel's supply contracts and contract manufacturing agreements, including as a result of using a sole supplier for a key component of certain optical networks solutions; the impact of Nortel's supply and outsourcing contracts that contain delivery and installation provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; and the future success of Nortel's strategic alliances.

For additional information with respect to certain of these and other factors, see the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by Nortel with the SEC. Unless otherwise required by applicable securities laws, Nortel 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, the Nortel logo, the Globemark and CallPilot are trademarks of Nortel Networks.

Use of the terms "partner" and "partnership" does not imply a legal partnership between Nortel and any other party.