Nortel Networks Announces New Broadband Access Deployments and Key Relationships; Ultra Broadband Capabilities Enable Delivery of New Bundled Services.

CHICAGO -- Nortel Networks (NYSE:NT)(TSX:NT) announced today that it is continuing to build momentum in the broadband access market through new customer wins and new relationships supporting video distribution capabilities.

Red Electrica Telecomunicaciones, a leading infrastructure and broadband service supplier in Spain which operates under the brand name of Albura, will deploy an ultra broadband solution from Nortel Networks designed to give them the ability to deliver the suite of triple play services: voice, high speed data, and television, over a common infrastructure. Geneseo Telephone Company, a telecommunications provider in Illinois, is the first customer to deploy a broadband access solution with Nortel Networks utilizing the Calix C7 Ultra Broadband loop carrier (UBLC).

Albura will initially deploy Nortel Networks Broadband Access Services Gateway (BASG) 7720 in 80 central offices across Spain, the majority of which will be located in Madrid and Barcelona. The deployment, expected to be completed in September, will enable Albura to strengthen their wholesale ADSL service offer, in which Internet and content service providers can leverage Albura's network infrastructure to offer new and compelling services to both residential and enterprise customers.

Geneseo Telephone Company is deploying a Nortel Networks solution utilizing the Calix C7 UBLC. As a current Nortel Networks DMS-10 and DMS-500 customer, this ultra broadband solution will allow Geneseo to upgrade DLC equipment with new ultra broadband infrastructure to deliver voice and high speed access services.

"Today's broadband infrastructure must enable a differentiated and competitive services bundle," said Walt Megura, general manager, Broadband Networks, Nortel Networks. "Nortel Networks is focused on providing customers like Albura and Geneseo with a reliable and scalable ultra broadband network that is capable of delivering a range of new and profitable services. In addition, it is important that we provide our customers with investment protection by ensuring that our solutions have the capacity to allow for a full range of multimedia and video services yet to come."

Both the Nortel Networks BASG 7700 series and the Calix C7 products offer industry leading backplane capacities (ranging from 24Gbps to 200Gbps) that minimize the potential for stranded investment as very high bandwidth services such as high definition television (HDTV) start to be deployed. In addition, these products are triple play capable by supporting features such as video multicasting and TV channel change.

Nortel Networks triple play solutions are end-to-end in scope and thus require a complete set of supporting video infrastructure elements. Nortel Networks is working closely with leading video component companies such as Amino, Entone, Kasenna, Minerva Networks, and Westell to provide Nortel Networks customers with complete solutions that have been rigorously tested to ensure high reliability and product interoperability. Each of these relationships brings an important piece to the overall solution:

--Amino specializes in set-top boxes and gateway products for digital broadcast and on-demand TV, IP-TV, hospitality, and in-home multimedia distribution;

--Entone is a provider of video servers and residential gateways that enable the delivery of triple play video services based on open standards;

--Kasenna offers network operators a complete turnkey source of IP video infrastructure software, content, and applications for video services based on open standards;

--Minerva Networks is a provider of carrier-class infrastructure for the delivery of television services over broadband IP networks, which includes middleware and video processing platforms; and

--Westell is a leading manufacturer of high-speed DSL modems, routers, gateways and VoIP access devices for residential and small business broadband applications.

Nortel Networks strategic allies each play a vital role in delivering complete end-to-end solutions that cover the range of broadband access applications and markets. ECI Telecom provides the technologies that power the Nortel Networks Broadband Access Services Gateway 7000 series of products for the global market. Calix provides their UBLC product for the North American market, while KEYMILE provides a next generation digital loop carrier (NG-DLC) for regions outside North America.

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 or www.nortelnetworks.com/media_center.

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 Nortel Networks independent review and planned restatement of its previously announced or filed financial results; the impact of the management changes announced on April 28, 2004; the impact of the inability to meet Nortel Networks filing obligations on support facilities and public debt obligations; the sufficiency of Nortel Networks 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; continued reductions in spending by Nortel Networks customers; fluctuations in Nortel Networks operating results and general industry, economic and market conditions and growth rates; the communication by Nortel Networks auditors of the existence of material weaknesses in internal control; Nortel Networks ability to recruit and retain qualified employees; fluctuations in Nortel Networks cash flow, level of outstanding debt and current debt ratings; the use of cash collateral to support Nortel Networks normal course business activities; the dependence on Nortel Networks subsidiaries for funding; the impact of Nortel Networks defined benefit plans and deferred tax assets on results of operations and Nortel Networks cash flows; Nortel Networks dependence on new product development and its ability to predict market demand for particular products; Nortel Networks 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; changes in regulation of the Internet; the impact of the credit risks of Nortel Networks 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 Nortel Networks purchase contracts; the impact of Nortel Networks 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 future success of Nortel Networks strategic alliances; and the adverse resolution of litigation, investigations, intellectual property disputes and similar matters.

For additional information with respect to certain of these and other factors, see the most recent Form 10 Q/A and Form 10-K/A 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, the Nortel Networks logo, the Globemark and Business Without Boundaries are trademarks of Nortel Networks.