Nortel Networks, BellSouth Expand Voice Solutions to Include Packaged IP Telephony Solutions for SMBs.

Business Editors/High-Tech Writers

ATLANTA--(BUSINESS WIRE)--Oct. 29, 2003

Small, Medium-Sized Companies to Receive Clear, Flexible,

Cost-Effective Choices for Convergence

Nortel Networks (NYSE:NT)(TSX:NT) has extended its relationship with BellSouth to supply IP (Internet Protocol) telephony solutions to mid-market customers. Through a packaged offering, Nortel Networks and BellSouth will provide small- and medium-sized businesses and branch offices with flexible, cost-effective voice and data convergence options that will offer both investment protection and customer choice in migrating to IP communications infrastructures.

"For 21 years, BellSouth and Nortel Networks have worked together to provide business customers with comprehensive voice solutions," said Dick Anderson, president, Customer Networks, BellSouth. "Now we are offering an expanded portfolio that allows customers to utilize their communications investments and migrate toward converged networks at their own pace as their business needs dictate. Every business is at various stages of technology adoption within their operations, and BellSouth's robust offerings provide multiple options that can be customized according to specific requirements."

Included in BellSouth's packaged IP migration solution are Nortel Networks Business Communications Manager converged voice and data platform and Nortel Networks Norstar Integrated Communications Systems. Together, these products give the small and medium-sized business community and enterprise branch offices a choice of pursuing either an IP-enabled or pure IP convergence strategy. In addition, these solutions offer unified messaging capabilities, multimedia contact center options, integrated security, firewall measures and wireless capabilities.

"With pre-configured, pre-packaged solution offerings, our allies can help small- and medium-sized business customers implement IP-based telephony easily and cost-effectively with minimal disruption to their business," said Malcolm Collins, president, Enterprise Networks, Nortel Networks. "By joining forces, BellSouth and Nortel Networks will deliver networking solutions and quality customer service so that customers can benefit from our combined, industry-recognized expertise in voice, data and converged IP solutions."

"This supports the Nortel Networks enterprise vision of 'One network. A world of choice.', offering enterprises deployment choices in converged solutions while allowing our customers to focus on what is most important to them -- their business," Collins said.

The combined networking capabilities of these solutions from BellSouth and Nortel Networks create an integrated, centralized platform for voice and data communications, messaging and management. As a result, enterprises of all sizes can benefit from a solution that is more cost effective than running multiple, overlay networks.

Nortel Networks Norstar Integrated Communications Systems, ideal for small- to medium-sized businesses and branch offices, are fully digital telephony systems that integrate many communications platforms directly to the desktop computer of the end user, including voice mail, fax, e-mail and telephone service.

Nortel Networks Business Communications Manager delivers to small- and medium-sized business and branch offices all of the capabilities and benefits of Norstar, along with converged voice and data capabilities on a single platform. Business Communications Manager also provides advanced features like universal Internet access; support for intra-site virtual private networks; secure connectivity for remote and mobile users; full redundancy; and browser-based management. These features result in a powerful communications network that is simple to deploy and manage.

BellSouth and Nortel Networks have jointly deployed over 40,000 small- to medium-size business equipment solutions, supported by BellSouth's 900 Nortel Networks certified technicians.

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 completion of the comprehensive review and the release of financial results and issuance of restated financial statements for 2000, 2001 and 2002 and the first and second quarters of 2003; the severity and duration of the industry adjustment and the continued reductions in spending by our customers; 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; negative impacts on our gross margins; the ability to recruit and retain qualified employees; fluctuations in cash flow, the level of outstanding debt and our current debt ratings; the ability to meet the financial covenant in our credit facilities; the use of cash collateral to support our normal course business activities; the dependence on our subsidiaries for funding; the impact of our defined benefit plans and our deferred tax assets on our results of operations, cash flows and compliance with our financial covenant; the 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 in the telecommunications industry; the dependence on new product development and our ability to predict market demand for particular products; 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 generally and as a result of acceleration of the settlement date or early settlement of our purchase contracts; the impact of the New York Stock Exchange minimum listing requirements and the proposed consolidation of our common shares; the impact of 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; 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 and intellectual property disputes. For additional information with respect to certain of these and other factors, see the most recent Form 10-Q and Form 10-K 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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